Interesting fact: Couples fight about money than anything else and it is the cause of divorce even more than infidelity.
Money is about more than being able to buy something (the currency itself). It is about control, dreams, habits, values, freedom, and security. Our feelings about money are partially a result of experiences we had in childhood. If we grew up in a poor family, we may be very careful about spending any money. If we grew up in a family where money was not a problem, we may feel much freer about spending it and spending on things like shopping, dinners out, and vacations.
When we get married or start living together, we have to decide how we are going to manage our money as a couple. Will it all go into one big pot? Will each person keep their own money and be responsible for certain things? Or will it be a combination where some of the money goes into a joint account for household items and then each person gets to keep the rest to spend as they please? There is no right answer and each couple may try several different combinations until they come up with the one that works best for them.
The first step is to sit down and discuss your money situation. If you have enough money and you are both happy about how it is being spent, you probably would not be fighting. How much debt do you have? What are your monthly expenses? What are your long-term goals such as vacations, retirement, and college for the children? Face these topics opening and honestly and without blame.
Here are some steps for every couple to take:
1. List all your expenses and how much you spend each month. Be honest and accurate.
2. Make a budget, showing each expense and its amount and listing each source of income and its amount. Add the expenses up and the income up. If the expenses are more than the income, you either need to start looking at where you can cut costs or how you can increase your income, or a combination of the two.
3. Agree on who is responsible for paying the bills each month.
4. Create a balance sheet. This is a listing of all your assets (your car, your house, your savings account, what is in checking, your 401(k)s, etc.) and liabilities (your school loans, your mortgage, your car payments, your credit card debt, etc.) Total the assets, then total the liabilities, and see what your net worth is. If it is a negative net worth, some hard choices need to be made to get you into positive territory.
5. Be sure you have the insurance you need, including life insurance, car insurance, and homeowners or renters insurance.
6. If you don’t have a will, get one written so that you, not the state, will determine where your money and other assets will go and who will take care of the children.
7. Decide on your long term financial goals (retirement, saving for children’s college, rainy day savings, etc.) and start putting money away toward these goals. It is important to get started early since the power of compounding is so great.
The article below tells how one couple decided to manage their money.