Many people avoid discussing money and investments like the plague. It’s complicated and really, really boring. Yet, it’s no secret that arguments about money remain as the top reason for divorce and broken relationships all over the world. There’s no other surefire way to extinguish the romance than to argue about how to pay this month’s bills, right? This often-ignored link between the lifespan of your relationships and the state of your finances makes it a crucial point that couples, especially married ones, need to discuss openly and responsibly if they want the relationship to last.
While financial matters can be quite stressful to talk about, there are actually simple steps on how to manage your money well that every couple can easily incorporate into their daily lives.
1. Add up your expenses.
It can be tiring to list down every single cent that you spend, but experts say that mapping out your cash flow can really help couples manage their finances well. At the end of each year, make it a point to sit down with your partner and list all of your assets and subtract all of your expenses. Agree on what the fixed expenses are (such as rent, utility bills, and groceries) and try to identify flexible ones (vacations, movies). Set exact amounts for all expenses and try to stick to the plan. Also, agree on a savings plan—such as allocating a fixed amount for savings each month or each quarter, whatever works best.
2. Save, save, save then invest.
Once you figure out the state of your cash flow, it’s time to examine your savings and investment plans for the year. Set a feasible goal for savings and investment—and do your best to achieve that. If you have a joint account, be honest with your partner on how much money you actually have and how much you plan on investing for things.
3. Don’t let debts rule your life.
Thoroughly examine all of your standing debts and settle them as soon as possible. The only way to stay on top of your debts is by paying up promptly—if you don’t, these will accumulate and grow like a monster in your closet that can overwhelm you! Share the task of settling debts with your partner—one can pay the bills while the other monitors it. That way, both of you know what has been paid and what still needs to be settled.
4. Compute your net worth.
Your net worth refers to all of your current assets, minus all of your debts. Once both of you know what you’re really worth, it’s easier to plan on how to make it grow.
5. Get an insurance plan that fits your needs.
Apart from life and disability insurance plans, couples should also do their research on the other kinds of insurance suited for their needs. Plan on having children? Scope the market for educational insurance plans that can guarantee your child’s education. Have other special needs? There is a wide market of insurance plans—all you have to do is research to find out which one is the best for you and your partner.
6. Organize your files.
This should be a no-brainer but many couples are actually very disorganized when it comes to storing important documents. Make it a point to keep important documents – wills, powers of attorney, marriage license, birth certificates, insurance policies, passports, social insurance cards, and other papers – in a safe yet accessible place that both of you can easily obtain in the case of an emergency.
7. Jot down important names and numbers.
Apart from emergency phone numbers, you should also list down the contact information of your lawyer, your financial planner, and insurance agents. Keep the list in a safe place accessible only to members of the family. Doing so will make it easier for your spouse or kids to contact them if the need arises.
8. Get ready for retirement.
After all of your hard work, both you and your partner deserve an enjoyable retirement. It’s never too early to start saving up for a retirement plan—you can even start your pension fund in your twenties. That way, you’ll only have to save a small amount of money each year to reach your target pension.
Bonus tip: Keep communication lines open 24/7!
Money can destroy your relationship only if you allow it to. Avoid arguments by being open and honest with each other regarding financial matters. Not only will it lessen the burden, talking about it can also strengthen your ties to one another.
Did you find these tips helpful? Do you know of other money management tricks that worked for you?