There are so many stigmas associated with the topic of “romance and finance.” For many, it carries with it the idea that having romance is difficult if a couple’s finances aren’t in order. As the age-old adage goes, “No romance without finance.”
I started coaching couples and families on joint budgeting, debt repayment and credit repair some 10 years ago. During that time, I witnessed firsthand the challenges that debt, poor communication and lack of financial coordination had on their relationships. Some of my previous clients had gone as far as filing for divorce due to these issues. Others were hanging on to their relationships by a thread, practically one foot out the door.
My coaching sessions were designed to open the lines of communication around the sensitive topic of finances and to get couples working together to establish communications techniques, collective financial goals, ground rules for spending and managing their money, and of course, developing a joint budget.
While I’m proud to report that my years of coaching had a greater than 90% success rating in terms of placing couples on solid financial footing, I am more satisfied that couples considered the following pieces of advice when joining their finances together.
Check out these three considerations for joining your finances.
Consideration #1: Give your marriage a debt-free (or lower debt) start
I decided very early on in my marriage that I wanted to make a difference in our collective financial future. One of my very first orders of business was to eliminate my ex-husband’s debts.
While this may be a tough pill for some to swallow, you have to remember that marriage sometimes means assuming the other person’s debt. I guess that’s part of the whole, “for better or for worse” spill in your wedding vows.
To jump start this process, we took every cent received as wedding gifts and paid off his smaller debts. I then snowballed the larger debts over a one-year period, leaving us in a great place financially.
Making early decisions about being debt free can really help your marriage get on solid footing. Consider taking extra cash from wedding gifts or from savings (savings above and beyond your emergency funds) and paying off debt. Small steps toward debt elimination can help you accelerate other financial goals.
Consideration #2: Play on each other’s strengths
The beautiful thing that worked in my previous marriage was my ex-husband’s willingness to allow me to manage our budget once he knew I had a plan of action. I took on the role as manager and he served as overseer.
The manager is responsible for tracking expenses on a weekly, bi-weekly or monthly basis. I’m a fan of tracking expenses weekly however, this task should be completed no less than once a month. The manager’s role is to track spending, communicate any budget shortages, report surpluses in discretionary income, and inform the overseer if/when lump sums must be paid out from the emergency fund to cover major expenses.
The overseer is responsible for ensuring that each month there is oversight of the account. Their role is to double check the numbers in the budget to ensure everything balances out. The overseer and manager should have equal say with respect to major financial decisions.
Having clearly defined roles allows you to play on each other’s strengths and ultimately leads to greater financial harmony and communication.
Consideration #3: Develop a joint budget
One of the most challenging aspects of bringing two lives together is the art of combining resources. Many couples struggle because of beliefs around losing their ability to make individual decisions about spending or fear of account mismanagement by their partner.
Just as couples go through marriage counseling before the wedding, it is also a good idea to speak with a budget or other financial coach before combining your finances. Budget coaching helps couples:
Identify negative beliefs around money and work to create new, healthier thoughts, beliefs and actions
Develop a joint budget
Establish clear roles and responsibilities around managing and overseeing a joint account
Establish ground rules for making large purchases (i.e., communicating before making purchases more than $500)
Create financial goals they can work collectively to accomplish
Developing a R.E.A.L.I.S.T.I.C budget allows couples to experience greater clarity around their combined income and collective expenses. It also offers them a greater pool of discretionary income that can be used to accelerate financial goals. And one of the best parts about joint budgeting is creating a line item designed to support the couple in strengthening their relationship and intimacy (i.e., vacations, date nights, etc.).