Money, a frequently large source of stress in a relationship. With hopes of avoiding money conflicts, some couples keep their finances separate, others do the complete opposite and combine them fully, while still others do something in between. No matter what camp you are in – separate, partially combined, or wholly combined finances – communication is essential to strengthen your financial relationship.
Finances are just one part of our over all well-being, but they are a vital element. The same goes for your relationship. Knowing where you are as a couple financially and where you want to be further down the road is key.
If you are not on the same page or at least on the same team as your partner, your finances are likely to suffer. Understanding your partner’s financial needs and wants, as well as communicating your own, will go quite a way towards keeping things running smoothly over the long-term.
“Money may not buy love, but fighting about it will bankrupt your relationship.” — Michelle Singletary
Take steps early on in your relationship to establish an economic partnership. Create some healthy financial boundaries to avoid disagreements later. Continually check in with your partner to ensure your actions strengthen your financial relationship, not damage it.
Teaming Up Financially
- Have money conversations early and often in your relationship. Construct some ground rules you both will respect and adhere to. Discuss various scenarios including how you feel about them and what you would do in those situations.
- How do you think about debt, and how much if any do each of you bring to the relationship?
- Would it ever be okay to lend money to family or friends?
- Will you keep 1, 3, or 6 months of expenses saved in an emergency fund?
- What are your short and long-term financial goals?
- How would you handle a $10K emergency or a $50K inheritance?
- What does an ideal retirement look like to you?
- Consider having one person responsible for managing the household finances. Their job is to ensure timely payment of all bills, meeting of savings targets, and that you’re making progress towards financial goals. The home banker doesn’t always have to be the same person; you can alternate this role so that you both gain experience and understanding.
- It may be beneficial for you each to have your own spending money that doesn’t have to be accounted for with the other. It could be as little as $10 a week, or $500 a month. The important thing is that the amounts be agreed upon by each of you for whatever makes sense in your financial situation. Having your own allotted spending money should help you each not feel a need to hide funds or purchases, nor feel any guilt when spending your share.
- Hold regular financial dates to talk about your finances and check in on your progress toward long-term financial goals. What are the short-term savings goals you need to work towards? Is your current plan still meeting your needs? Should you alter or increase your investments? Tip: Scheduling something fun for after the money date may help your financial review feel less like a chore.
Can You Trust Too Much?
In our household, we combine our finances completely. I manage the finances daily and keep my husband informed about the general state of affairs. He has a pretty good sense of our monthly expenses, net worth, and progress towards our financial goals. However, lately, I’ve thought he needs to know more.
Recently I read, My Wife Trusts Me Too Much – Finances and Marriage, by Jim at Route To Retire. While the roles are reversed in our household, I could relate to what Jim discussed. His wife trusts him with managing their finances and is not too concerned with knowing all the daily details. He wants to ensure she knows all that she needs too in case he falls victim to a bear attack or other unfortunate event.
While I’m not anticipating a bear attack anytime soon, I do realize accidents happen without warning.
My husband trusts me completely with our finances, but I’m failing him in that I’ve not prepared him enough so that he could immediately pick up on our financial life wherever I might leave off.
While I have great tools that I use, they won’t do him any good if he cannot find them or log into them.
Do you manage the finances in your household? If so, are you keeping your partner – or another family member if you aren’t in a committed relationship – completely informed? Will they know where to find insurance policies and who are the beneficiaries? Do they know how to log into banking and investment sites?
If you leave the finances up to your partner, do you currently know where you stand? Are you aware of the balances in your savings and investment accounts? Do you know who to contact should something happen to your spouse?
Enter the ‘Big Book’ and ‘Financial Mapping.’
The addition of these tools can help strengthen your financial relationship. The Big Book is a compilation of everything you, your partner, or anyone after your passing would require knowledge of:
“In a nutshell, it is a notebook filled with all of the information anyone could possibly need to know about you. The idea is that in our lives we have countless things that we are involved in. On rare occasions, other people need this information, and no one knows how to get it. That’s where the Big Book comes in. By filling this out and keeping it current, you can simplify the effort others have to take on your behalf.” – Erik A. Dewey, Compiler of The Big Book of Everything
Erik’s Noted Uses for the Big Book Are:
- For after you pass away. Others will know what accounts to cancel, have access to your email, know where important papers are kept, and otherwise streamline what is already a painful process.
- When filling out applications. The information in the book is often requested on various applications; by having the book, you can look that stuff up at a moments notice.
- To ensure you know what and where your assets are. By going through and inventorying all of your assets, you have a better idea of where you are financially.
- Forcing you to prepare for emergencies. By filling out the forms, it will force you to be better prepared when an emergency strikes.
It will take some time to complete the book, but it will take you far less time now to fill it out, then it would require you or your loved ones later should the information be needed and not already compiled. For most, all the pages and spaces will likely not apply.
Mapping It Out
Early this year I read Apathy Ends post How Complex is your Financial Map? He created a visual financial map to see the many different accounts and deductions he needed to keep track of throughout the year.
At the time I thought about creating my own map. I did not follow through, however, as I felt comfortable easily referring to our online accounts and my spreadsheets to know how our financial life looked.
Then Budget On A Stick and many other personal finance bloggers (shown below) started creating their own money maps based on Apathy Ends post, and I began to wonder if I was missing the point.
While I still wasn’t feeling a need to create a financial map for my own benefit, I started to see how it would help me efficiently share information with my husband and family. So I jumped on board.
The map is pretty self-explanatory, but there are a couple of things worth mentioning. We use our credit cards for most expenses and then pay them off monthly so that we never carry a balance. My paycheck primarily funds our investments, and my husband’s paycheck mainly pays for our daily life.
- Green denotes incoming money
- Blue is for our checking and savings accounts
- Purple our after-tax investments
- Red and orange indicates expenses
Other income includes our rental property, my freelance writing income, and other miscellaneous income. Nearly all transactions are automated. I merely log in to accounts to adjust amounts or pay dates as needed and to verify transactions.
The visual layout of our money map allows one to see the in-and-out flow of money quite easily. Combining the map with my spreadsheets, Personal Capital, and our completed ‘big book of everything’ I know my husband is more informed and won’t just be taking my word for things. That makes us both more comfortable.
Strengthen Your Financial Relationship
- Communicate regularly about your finances, I recommend quarterly but at a minimum annually.
- Map out your money. I used Microsoft Power Point for ours; Apathy Ends used Draw.io (free).
- Fill out The Big Book of Everything keeping it updated as time goes on. Store in safe & secure place. The book is available as a pdf or an excel document on Erik Dewey’s site.
- Follow your agreed upon Financial Path.
Do you keep your money separate or do you combine finances with your partner? Do you have a money map and/or book of everything? Have you found any other tools that help you strengthen your financial relationship? Please let us know in the comments.
View additional personal finance bloggers money maps via the following links (there are many ways to do one) and if you are a blogger interested in joining the chain see Budget on a Stick’s post for the details:
The Official Money Map Chain Gang:
- Anchors: Apathy Ends, and Budget on a Stick
- #1: The Luxe Strategist
- #2: Adventure Rich
- #3: Minafi
- #4: Othalafehu
- #5: The Frugal Gene
- #6: Working Optional
- #7: Our Financial Path
- #8: Atypical Life
- #9: Eccentric Rich Uncle
- #10: Cantankerous Life
- #11: The Retirement Manifesto
- #12: Debts to Riches
- #13: Need2Save
- #14: Money Metagame
- #15: CYinnovations
- #16: I Dream of FIRE
- #17: Stupid Debt
- #18: Spills Spot
- #19: Making Your Money Matter
- #20: Life Zemplified
- #21: Trail to FI
- #22: The Lady in the Black
- #23: Smile & Conquer
- #24: Her Money Moves
- #25: Full Time Finance
- #26: Abandoned Cubicle
As always, thank you for reading.