When it comes to household tasks and chores, most married couples take a “divide and conquer” approach. One spouse might handle weekly shopping, the other might handle garbage and recycling. The first spouse might handle laundry and cleaning while the other might handle yard work and maintenance. Or one spouse might drive the kids to school, the other might handle pickup and extracurricular activities.
But household spending and budgeting are among those responsibilities that are best tackled jointly. Money issues are often one of the biggest sources of marital tension. They can also serve as a leading factor in divorces. Here are five ways that you and your spouse can make sure you agree on your household spending, avoid surprises, and maximize the benefits your money provides. (As discussed in this blog, financial planning takes teamwork.)
1. Have an open and honest discussion.
Many couples assume their attitudes about money are aligned. Then one day, the roof needs an emergency repair that taps a savings account, or someone walks in the door with an unexpected splurge purchase (or worse yet, hides it!).
Stressful situations are not the ideal time for a couple to discover significant differences in spending habits. Sit down with your spouse and thoroughly review your finances and your monthly budget. Find compromises that will allow you to save for the future while still enjoying your present. (Please see this blog for some suggestions to help you get the conversation started.)
2. Understand the total household cash flow.
In many households, one spouse pays the bills. This can lead to misunderstandings, and arguments, about where the money goes every month.
Both spouses should understand how much the household spends every month, and how bills get paid. If you’re the one who’s usually in charge of bills, take an hour to walk your spouse through your process. Show him or her how to access financial accounts online, which bills are paid electronically, which are paid by check (if any), the monthly amounts and due dates, etc. This won’t just help both spouses understand the monthly cash flow, it will ensure that both spouses can handle household finances in the event of an emergency.
3. Be transparent about all assets and liabilities.
Newly married couples might still have banking or credit accounts that are only in the original account holder’s name. The other spouse might not find out about these accounts until a credit card is maxed out, or a checking account is overdrawn.
Again, the less stressful your reason for talking to your spouse, the more positive the outcome will be. Financial secrets tend to come out at the worst times, compounding stress, hurting feelings, and straining your budget.
Your spouse should be a cosigner and beneficiary on all your accounts, and vice versa. If one of those accounts carries a large liability, get out in front of the problem. Put a plan in place to start paying it down. Discuss the ramifications of combining any large individual assets with a tax professional or your financial advisor.
4. Agree on a budget.
If one spouse is responsible for budgeting and bill pay, that person often becomes The One Who Has to Say “No.” No eating out this week. No weekend trip to the waterpark. Not any new cell phones either. As for new clothes, no way.
Nobody likes being in that position, especially the one who has to say “No” to everyone. Eventually, you or your spouse will resent being the one who has to say “No.” You should both understand the household’s monthly cash flow and agree on how your money is – and isn’t – spent.
5. Get help
The financial planning software Apprise uses is just one of the many apps and web services that help households set and maintain a budget. (Others include mint.com and quicken.com.) If you’re a small business owner, Intuit offers a line of bookkeeping and tax prep solutions to fit most needs. Automating select bill payments and regular contributions to retirement and savings accounts can also help to clarify your monthly budgeting picture. (Adopting a “Pay Yourself First!” approach can make it easier, too.
Finally, if there’s a spending gap between you and your spouse that seems impossible to bridge, we can be an excellent resource. It’s important to us that we understand where clients’ attitudes about money come from, how they’ve developed, and how they can diverge between couples. Facilitating this dialogue helps make sure both people have the best life possible with the money they have. If you would like some help, please schedule a free Strategy Session.