SAVE, SPEND, INVEST: 3 Guidelines for Making Financial Decisions as a Couple

Last week we talked about sharing financial responsibilities as a couple -how to share the common expenses. Today I’ll continue this conversation and talk about making financial decisions as a couple!

Managing money is NOT just about figuring out how to share the expenses.

It’s also about making sure the responsibilities of managing money are equally distributed. It’s also about planning your savings and spending, and making investment decisions! So, managing money as a couple is much more than simply paying the bills, it’s also about making financial decisions together….

Based on my clients’ successes and my own experience of making financial decisions in my own relationship, I want to share with you these THREE Guidelines for Making Financial Decisions as a Couple:

GUIDELINE #1:  HAVE MONEY DATES TO DISCUSS YOUR FAMILY FINANCES

It is very common in a committed relationship that one partner takes on a role of a money manager and the other partner just kinda knows what’s happening but…not really.  And I must admit that when one person does all the money tracking and makes all the decisions, it may seem simpler and, therefore, easier…on the surface. 

WHY?

Because being willfully ignorant about your family financial matters can backfire…and it often does. 

Besides, not being intimately involved in making decisions that affect your family finances may lead to a sense of dis-empowerment and disconnect in the relationship.   

Interestingly enough, making important financial decisions together improves the level of bond and trust in the relationship. 

For that reason, I recommend to all my clients to have regular casual money dates. The main purpose of the money dates is to make sure that BOTH partners are on the same page when it comes to family money and that the person who is mainly in charge of paying the bills and managing family money is not the ONLY person who knows how much money there is, where it’s going and where it’s kept.

I’m going to talk about specifics pertaining to money dates next week but for now just contemplate the idea of having the money dates with your partner routinely. 

 GUIDELINE #2: MAKE SAVING & SPENDING DECISIONS TOGETHER

I believe that SAVING for the future is a super important aspect of managing family finances. Therefore, it’s a good idea to make your savings’ decisions together, based on your family’s long-term and short-term goals. 

Once you decide how much you want to save and for what purpose, you can then make your spending decisions easier because you’re both motivated to achieve your financial goals.

Your short-term financial goal could be to take a family vacation next year or to buy a house in a couple of years. And your long term goal could be to retire in 10 years and move to a sunny place by the water, or to travel the world. 

Whatever your own short and long term goals might be, make sure your partner not only knows about these goals, but is also on board with them. 

First of all, it’s more fun to have common goals with your partner. And also, when you’re both motivated to save toward the same goals, you will get there faster.

When you discuss how much you are both going to contribute toward savings, don’t forget to take into account your individual contributions toward retirement accounts (e.g. 401(k) or IRA contributions), which could be automatically deducted from your paycheck (if you’re an employee) or you could set up to contribute automatically yourself (if you’re self-employed). 

For example, if you are putting 4 percent into your 401(k) and your partner is putting only 2 percent, have a discussion about how you will both meet your retirement goals, and whether those contributions need to be adjusted.

Once you commit to a savings’ level that you are both comfortable with, deposit that amount monthly into your joint savings account.

GUIDELINE #3: MAKE INVESTING NON-NEGOTIABLE 

Whether your partner wants to invest, or is skeptical about investing, or lacks knowledge about investing, it’s important to have a conversation about it and make investing some of your family money non-negotiable. 

It’s very likely that one of you might want to be very aggressive in your investing while the other partner is content with keeping family money in a low-risk, low-interest savings account. 

If that’s the case, consider taking the investment training together, so that you’ll be on the same page in terms of your investment knowledge. Being well educated about strategic investing will likely help align risk-tolerance dynamics between the two of you. 

In addition, you may consider meeting an investment adviser who could  review your financial goals and available investment capital and come up with an investment strategy that would not duplicate your individual investing efforts and would make sense to both of you.

Whether you choose to invest on your own or decide to outsource your investments to financial professionals, I want to encourage you to make sure that you are both aware of where your money is invested, how well those investments are doing, and whether you’re on track with your retirement goals. 

The Bottom Line:  Both partners need to be on the same page when it comes to family money. Making important financial decisions together improves the level of bond and trust in the relationship. 

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To your Health, Wealth, and Freedom!