Nine Tips for Working with your Spouse on Money

One of the biggest financial challenges my clients face is getting on the same page with their spouse regarding money. When married couples don’t discuss money or set combined dreams and goals for the future, this holds them back financially and leads to financial infidelity, credit card debt, not saving for the future, and other relationship and financial issues. Financial problems are one of the top cited reasons for divorce in our country.  But enough with what’s wrong, I want to tell you what’s right and what works! Today, I’m going to share with you what I’ve learned over the years in dealing with women and money and my own personal tips and tricks for leading encouraging, productive, and even romantic conversations about money with your spouse. This is important stuff, so get ready. 

Tip #1:  Teamwork makes the dream work. 

I advocate for combined finances in my financial coaching business.  Yes, both of you should have your own “fun money” accounts (see below), but when finances are combined, you are inviting teamwork, creating collaboration, establishing trust, and setting yourselves up for financial and marital success. My favorite way to do this is having one bill pay account that all income gets distributed to and from which all bills are paid and savings accounts funded. This combined finances approach, teamed up with annual goal setting and monthly money management practices, is the exact combo of aligned actions that creates financial success for my clients. 

Tip #2: You each get a “fun money” account. 

I advocate for fun money accounts for my married clients. Each person has a separate account to have individual purchasing freedom for a set amount of discretionary spending each month. There are many problems solved with this equal funding approach. If each of you gets the same amount of funds in a fun money account, there is no need to squabble about discretionary spending. Fair is fair. Many money arguments are completely avoided. Less fights, more fun. 

Tip #3: Have visibility into all accounts. 

Nobody should have a private account the other person doesn’t know exists. This is a huge red flag that there is a problem in the relationship. This is called financial infidelity and if you are guilty of doing this, stop. If your spouse has accounts you aren’t on (unless it an IRA/401k), this says loud and clear “I don’t trust you” or “I’m not trustworthy”. It’s as simple as that. Couples can argue with each other (or their financial coach) about why it is necessary to have private accounts, but at the end of the argument, one truth stands: Private accounts show lack of trust. This is a surefire way to create rifts in the relationship and derail funds from financial goals. 

Tip #4: Know exactly how much income each person makes. 

I know women who don’t know exactly how much money their spouse makes. What? Get yourself out of a 1940’s mindset and have control over your financial life. If you said, “I DO”, you are entitled to know all things in your marriage, including your spouse’s income. If you are one of the women who are currently in the dark, keep reading, because there are good ways, and bad ways, to approach this subject with your spouse.  

Tip #5: Have your own credit. Take care of it. 

I know women who are only an authorized user on their spouse’s credit cards. I also know women who are not on their home mortgage. I know women who are not on their car loan. Every person in the marriage needs to have credit, use it wisely, and take care of it. Why is this so important? Because, if anything horrible were to happen to your spouse or the marriage dissolve, you want to be able to stand on your own two feet financially. Credit is an important part of modern financial life and I encourage each partner in a marriage to come to the table with excellent and well-cared-for credit. When you both have good credit, you will rise together. 

Tip #6: Create and manage a household monthly spending plan and short-term savings account. 

Yes, I’m talking about a monthly budget here, but I don’t like that word, so I use “monthly spending plan”. It sounds more proactive and less restrictive in my mind. The goal of the monthly spending plan is to put every penny to work. Figure out your monthly income and divide your expenses into three categories: mandatory, savings, and discretionary. A good guideline is to spend 50% on mandatory expenses, 20% on savings, and 30% on discretionary items. With the 20% going to savings, I advocate for 10% to long-term and 10% to short-term savings. Your short-term savings account is where you hold your emergency money and funds for things that tend to pop up during the year like vacations, birthday gifts, and car/home repairs. The goal is to have at least 3 months of mandatory expenses set aside for emergencies only. Create these two plans together. Both parties need buy-in and agreement on these plans. Managing these two tools on a monthly basis together is a great way to get on the same page with your finances. Once it is flowing smoothly, one person may be the designated driver, but you both need to be in the car to get to the destination–financial harmony and success. 

Tip #7: Create a net worth statement and update it every year. Celebrate your successes. 

The best way to get clarity around your combined personal finances is to create a net worth statement. A net worth statement lists out how much you own (assets) vs. how much you owe (liabilities). When you add up the assets and subtract the liabilities, you are left with your net worth. This simple tool is an excellent conversation starter and goal setter. Numbers do not lie and this exercise will provide instant proof of where you stand together today. The trick here is to apply the no-shame-no-blame philosophy. Simply acknowledge where you are right now and have a conversation about how you both want to grow assets and comb down liabilities. Set 3-5 realistic goals together. These are now your combined annual financial goals. Congratulations! Write them down, work on them together and update your net worth at the end of the year. How did you do? I guarantee you made forward strides if you set combined goals and worked together on them by adhering to your monthly spending plan. Review it together over a romantic meal at the end of the year. I’m serious. This is something to celebrate. Don’t know where to start on your net worth statement? There are plenty of free tools on the internet to explore, so find one you like and start gathering up your accounts and data. Once you get in a flow with managing your finances together, you will use this tool on an annual basis to keep pushing your finances upward.  

Tip #8: Set regular meetings about finances in a fun and relaxed setting. 

When couples are first getting started or resetting their finances together, I advocate for a weekly meeting to go over the monthly spending plan. Until this piece gets nailed down, you both should work on it together on a regular cadence. Set an hour each week, grab your favorite beverage, and sit down together to review your progress. You will have challenges and an occasional set back, this is normal. But, if you make this a regular habit, before you know it, usually three months, things start to flow. Then, you can move the meetings to monthly, quarterly, semi-annual and then annual. I meet with my spouse on finances once a year. We update our net worth statement, celebrate our successes, and set new goals. It’s that easy. We never fight about money and always have open communication when it comes to money. The money argument does not exist. Dealing with the kids? That’s an entirely different issue. 

Tip #9: Dream together. Dream big. 

Money talks should be about the fun you want to have as a couple and how you want to stretch and grow together. Do you want to go on a dream vacation? Do you want to own a home? Do you want to own a dream vacation home? When you both come to the table to talk about your dreams for the future, there are bound to be great (and even romantic) conversations. When you both know the dream for the future, you can start to align your spending towards these goals. When we don’t take time to dream big together, it feels like we are on the spinning hamster wheel of death when it comes to money. You both deserve to make your money work hard to realize your dreams. When we align our money with the things that matter most to us, managing finances becomes a lot easier and even enjoyable. 

This was a long one, but I hope you grabbed a few awesome takeaways from my tips. Let me know what you think and if you want to discuss how I can help you further, schedule your free Q+A with me here. I wish you all the best and want you to be confident and in control of your finances. Until next time. . .