If you’re struggling to manage your finances as a couple, you’re not alone. Most married couples are living with a hindsight view of their finances.
With easy credit, impulse buying and poor financial planning, they live paycheck to paycheck and find themselves up to their eyeballs in debt.
They have a hard time adjusting to a different way of life, especially when it comes to managing money as a couple.
As separate individuals, your spending habits will differ. This is why you both need to make certain adjustments to combine the household budget.
I’m not a financial advisor or money expert but I have some experience with paying off debt and living paycheck to paycheck with little or no savings.
It got really tough when I had to organize my finances with my partner involved.
We are both huge spenders and following a budget strictly has always been difficult for us but with discipline and a proven strategy, we’re finally on the path to financial freedom.
Here are 8 simple ways you and your partner can successfully manage your finances as a couple…
HOW TO MANAGE YOUR FINANCES AS A COUPLE
1. Understand your money habits
One thing most couples face when trying to manage money together is not knowing their money habits.
When you don’t know how you handle money individually, you’ll fail at managing money together.
If you and your spouse have different beliefs when it comes to money matters, sit down and discuss them.
The key here is to be able to find a middle ground that will be mutually beneficial.
For some people, money is a treasure that needs to be saved and not spent carelessly.
Other people spend it luxuriously and look at spending money as a means to reward themselves for their hard work.
Still, other people are misers who hardly ever spend a cent of what they have earned.
They prefer to save everything for the rainy day without enjoying the benefits that money brings.
If you want to manage your finances well as a couple, understand that the way you both handle money stems from your family background.
When you understand your money habits, you can strategically work together to improve your financial situation without bad fights.
2. Share your money-saving skills with your partner
If you have different family backgrounds, you may have something to contribute towards organizing your finances.
Maybe you watched your mom create a family budget that totally worked, you can try out her methods with your partner.
If your uncle is really good at trading stocks or investing in real estate and you picked up some cool strategies from him, pass them onto your partner.
Enlighten each other of your personal financial history and habits then think of ways you can work together to effectively manage your finances as a couple.
3. Figure out your monthly income
Many people don’t know how to organize their finances because they don’t really know how much money comes in.
If you don’t know how much income flows in, you won’t be able to figure out what goes out.
Some people are lucky to have a consistent paycheck so they can track their monthly income easily and know how to organize their finances without hassle.
If you have a consistent flow of income, just write down what both of you earn every month and figure out all your monthly expenses.
If your income is not consistent, just write down the average household income.
Personally, at the beginning of every month, I sit down with my partner to figure out our cash flow and expenses for the past month.
This helps to bring to focus every aspect of our finances including earnings and expenditures.
Next, we revise our monthly budget, set aside money for savings, paying off debt and bills for the new month.
This way, our finances are well organized and we don’t lose track of our money.
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4. Create a family budget and stick to it
One tricky thing about paper budgets is that they’re easy to create but hard to follow.
You will need a lot of discipline and compromise to be able to pull through every month.
When we first started, we would create a nice budget and then forget to follow it.
Sometimes, we will throw caution to the wind and spend outside the stipulated budget.
Of course, this backfired and we had to struggle to make ends meet until another payday.
After this happened for three straight months, we made a firm decision to be more disciplined with our finances.
When you’re creating your family budget, remember to write down what you will spend on groceries, bills, transportation and every other thing you spend money on.
Next, cut down those expenses into half if you can and keep the remaining cash for savings or emergency funds.
If possible, set rules on how you will spend your combined income on utility bills, food, mortgage, transportation, etc.
Be accountable to one another and work together to create and follow a budget strictly.
Managing your finances as a couple isn’t going to be an easy ride; you have to be there for each other to give emotional support when it gets tough.
5. Have an emergency funds account
This is an idea that I suggested to my partner when we were struggling to organize our finances and it has really helped us in our journey to financial freedom.
Aside from putting money in a locked savings account that you can’t withdraw from until you reach a certain threshold, I advise you to have an emergency funds account.
This is an account that you can have to keep some money aside in case of emergencies. It can also be helpful when there is a delay in salary payment or bank transactions.
Our emergency funds account has saved the day more times than we can count.
It has also prevented us from having more debt; instead of getting a bank loan or borrowing from a friend, we just take out money from our emergency funds account and sort out the financial problem.
6. Set future financial goals
Goals are really important in every project we undertake. They serve as checkpoints to help us know if there is change or progress in our lives.
If you want to be know how to manage your finances as a couple, set realistic financial goals to be achieved in a certain period of time.
If you are newly wedded and you are planning to have a baby soon, start saving money to cover for hospital bills and other expenses that come with having a new child.
When your kids get enrolled in preschool or elementary school, open bank accounts for them and start saving for their college funds.
This can help to secure their future and give you both peace of mind.
Don’t just take out money from your bank on a whim; save ahead for anything you want to do including holiday travel, home redecoration and the purchase of a new car.
If you are a couple nearing the age of retirement, you can have a different bank account for saving your retirement funds so you don’t have to live off your children when you’re older.
Setting long-term and short-term goals will help you achieve your financial dreams.
When you have money saved for your goals, you won’t have to worry about spending it on what you want because you’ve saved for it beforehand.
7. Use a budgeting/savings app
I prefer to calculate my earnings and set my budgets myself but some people find it too tedious to do on their own.
Luckily, technology has made everything simple for everyone.
If you don’t have any financial background and maths has always been a struggle for you, I encourage you to use a budgeting/saving app to help you manage your finances.
But if you’re old-fashioned like me, you can use the Living well planner to track your budget and cash flow every month.
8. Analyze and track your money together
It’s very common to meet someone who has no idea about how their finances are managed because they leave everything for their spouse to handle. I don’t advise this at all.
Being aware of your money is important to help you understand your financial growth.
Even if you trust your partner completely, it’s still essential to be involved in the financial aspect of your life.
Ask your partner to involve you next time he’s doing the monthly financial audit or creating a new family budget.
If your partner is unavailable for any reason, you’ll be able to manage your finances on your own without stress.
Money is an important aspect of life so it’s necessary to keep it organized.
Couples who know how to manage their finances well tend to have fewer relationship problems.
By following these tips, you will be able to manage your finances better and lead a more comfortable lifestyle.