Managing your finances together can be tricky when you are in a committed or serious relationship. However, you can employ several strategies to avoid headaches and arguments surrounding money.
#1: DISCUSS ABOUT YOUR FINANCIAL GOALS
There are a handful of Singaporeans who tackle life from paycheck to paycheck. These people deal with the expenses as they come without forethought about their retirement fund. Do you want to be in the same situation?
You have to realize that financial stability is important in strengthening the future that you want to build together. So, start by establishing at least three financial goals. These initial goals are short-term and realistic. Whether you want to save up for a getaway in Bali or a broadband bundle, your short-term goals will serve as an encouragement to take on bigger goals that will lead up to financial security.
#2: KNOW EACH OTHER’S FINANCIAL STATE
Tying the knot or living with someone who has a bad credit score may affect your finances. Imagine taking out a mortgage. Your partner’s credit rating may affect the potency of your combined credit score. This is not good!
Mutual disclosure can help you reduce conflicts over financial matters. As early as possible, carefully examine each other’s financial state and exchange useful tips. Are there any spending habits that you want to help your partner with? Do you have some outstanding student debts? Familiarize yourself with his or her deeply rooted attitudes and habits toward money.
#3: CREATE A MUTUAL UNDERSTANDING
As a couple, aim to distribute the control of your finances equally. Educate your partner about the facets of personal finance no matter how uninterested he or she might be. Financial literacy is necessary.
Aside from mutual disclosure, mutual understanding is crucial to your success. This means that you need to be aware of what you two can and cannot afford. Furthermore, you must contemplate on the process of dealing with unfortunate events.
#4: MAINTAIN JOINT AND INDIVIDUAL ACCOUNTS
A couple’s joint account is primarily used for shared expenses such as groceries, utility bills, phone bills, and mortgage repayments. Maintain this along with your individual accounts. You are entitled to a separate account because you must treat yourself or your partner personally without affecting the “household fund”.
You might say that this burns the bridges of sharing, but not really. The foundation of having individual accounts is that both would have access to each other’s account to prevent from keeping secrets. Spending beyond the threshold of your personal account is something that you need to discuss with your beloved first.
#5: DIVIDE YOUR MONETARY RESPONSIBILITIES
Compromise could be your best bet when you are sharing the responsibility for your finances. This goes hand in hand with the above statement. Having a joint account and two separate accounts helps to keep your independence and to stick with your budget.
Here are just some things that you must contemplate on when you are dividing your monetary responsibilities:
a. What are the bills that you want to pay using your joint account?
b. How much shall each one contribute to the joint account?
c. Which of your partner’s spending habits do you want to keep and to ditch?
May these tips help you to foster good financial management habits as a team!