When it comes to money, few couples are soul mates. Typically, one of you is a saver and the other is a spender. One of you is more conservative and the other is more of a risk-taker. And both of you are convinced that your way is the right way. That’s why conversations about money so often deteriorate into arguments.
But it doesn’t have to be that way. You can create a system for handling finances that will satisfy you both. Here’s how.
There’s room for more than one attitude about money in a marriage. Recognize that both your viewpoints are valid. You don’t have to see eye-to-eye on everything. But it’s essential to respect your partner’s feelings about money; otherwise, you won’t be able to come up with a plan you’re both comfortable with.
If the saver’s happiness depends on being able to feel financially secure and the spender’s happiness depends on being able to feel free to enjoy life, it’s a good idea to earmark some money every month for both savings and fun purchases. Establish common ground by identifying the important financial goals you can agree on: funding retirement, paying for college, taking an annual vacation, etc.
No matter how close you are, your marriage should allow some space for individual independence. It’s important to have a little money you can spend or save—without consulting each other. It’s a good idea for each of you to have one account in your own name, even if you maintain joint checking and savings accounts for household expenses, and for long-term goals like retirement and college.
It’s also prudent for each of you to establish your own credit record; otherwise, you may find it difficult to borrow independently. So keep one credit card that’s in your name only, even if you use a joint credit card for your household purchases.
You need a system for paying bills that feels fair to both of you. Some couples pay their household bills from a joint account to which both spouses contribute. Others divide the bills, with each partner paying his or her share from their individual accounts.
What’s important is to make it an equitable division. For example, if one of you earns $75,000 a year and the other earns $25,000 a year, divide your shared expenses proportionately: The high earner pays two-thirds and the low earner pays one third of the household expenses.
If you and your spouse each have a workplace retirement savings plan, sit down together and decide on a portfolio mix that uses both plans’ investment options. Once you’ve agreed on an overall allocation—say, 50% U.S. stocks, 15% international stocks and 35% bonds—implement your strategy by picking the best-performing funds from each plan.
This sounds easier than it really is. Most couples are so busy working, raising kids and running a household that they hardly have time to talk to each other. You may have to go out of your way to schedule a conversation about your finances twice a year. Treat it like an important work-related appointment you must keep.
Discuss whatever is on your minds, including your household budget, retirement portfolio, vacation expenses, the kids’ allowances, and college funding. Plan to have this conversation in as relaxed an atmosphere as possible (perhaps over a nice meal when the kids are in school or at summer camp).
Marriage is a financial partnership—and like any successful partnership of equals, its depends on compromise and mutual cooperation.