How to Successfully Manage Financial Goals as a Couple
Managing money as a couple is different from managing money when you are single. As a couple, you will have multiple income streams and different spending habits. Both partners will have different dreams and goals. This makes managing money complicated after marriage.
You need to be honest, transparent, and open to communication when planning finances with your partner. Partners should feel comfortable and confident sharing their financial situations and goals. To build a successful relationship, you need to balance your financial habits. Your goals must align, and you should start making decisions considering both your needs and values.
One important thing you can do to build a strong and lasting relationship is to manage money together. To help you manage money as a couple, we have a comprehensive guide that will equip you to handle everything from budgeting to financial goal-setting together.
Communicate openly with your partner
Communication matters in smooth money management as a couple. Before jumping into the numbers, understand each other’s attitudes toward money. Many financial issues between couples start from different views on saving, spending, and handling debt.
How to Talk About Money as a Couple
- Make time to discuss finances without distractions. Approach the discussion as partners working toward shared goals.
- Share your financial backgrounds, as each person’s upbringing and experiences shape their approach to money.
- Discuss what financial security and success mean to each of you. This will help align your financial goals.
If you grew up with a strict savings-focused approach, but your partner believes in enjoying their life, acknowledge these differences. Find a balanced approach so both of you can manage your need
Combining Your Finances
Should You Combine Finances?
There is no perfect approach here. Some couples prefer to combine their finances. Others keep their finances separate. Some couples choose a hybrid approach. Here are some common methods:
- In fully combined finances, all income goes into a shared or joint account from which all expenses are paid.
- In partially combined finances, people maintain individual accounts for personal expenses and a joint account for shared expenses.
- Others choose to have separate finances. Each partner keeps their own accounts, contributing separately to household expenses.
Pros and Cons of Each Method
- Fully Combined: Offers transparency but may feel restrictive.
- Partially Combined: Provides independence while managing shared goals.
- Separate: Offers autonomy but can make financial planning challenging.
If you choose partially combined finances, you can contribute to a joint account for household costs and savings goals while maintaining separate accounts for personal expenses.
Setting Shared Financial Goals
Types of Goals to Consider
- Short-term goals (1-2 years): Emergency fund, vacations, or high-ticket items like a new phone.
- Medium-term goals (3-5 years): Buying a car, planning a wedding, or saving for home improvements.
- Long-term goals (5+ years): Buying a home, children’s education, or retirement savings.
SMART Goals for Couples
SMART is an acronym for Specific, Measurable, Achievable, Relevant, and Time-bound. It is a useful framework that you can use to set clear and actionable goals.
Instead of simply saying, “We need to save more,” you can set a SMART goal. With a SMART goal, you can say, “We will save ₹60,000 over the next 12 months for a vacation by setting aside ₹5,000 a month.”
Budgeting as a Couple Using the 50/30/20 Rule
What is the 50/30/20 Rule?
This rule divides your after-tax income into Needs, Wants, and Savings/Debt Repayment.
As per this rule, you can set aside:
- 50% of your money for your Needs like rent, groceries, and bills.
- 30% for Wants like Dining out, movies, and hobbies.
- 20% for Savings, Investments, and Debt Repayment.
Implementing the 50/30/20 Rule Together
Implementing this rule is easy. You just have to calculate your combined income after tax. You can adjust the categories based on your goals as a couple.
For example, if your combined monthly income is ₹1,00,000, you can use ₹50,000 for your needs. You can use ₹30,000 for your wants and ₹20,000 for savings or debt repayment.
Managing Finances as a Newly Married Couple
Key Money Tips for Newly Married Couples
- Set Up a Joint Budget: Track expenses to clearly understand your joint financial health.
- Plan for Big Purchases Together: Whether a vehicle or a home, decide how you’ll save and finance these big purchases.
- Save for Emergencies: Aim for an emergency fund that covers at least 3-6 months of expenses. This fund can protect you both in case of unexpected job loss or emergencies.
Setting Boundaries and Allowances
Establish spending limits to avoid overspending in areas that could lead to financial strain. Some couples set a spending threshold. For example, they discuss before making purchases over ₹5,000 with each other first.
Example: Let’s say your partner loves buying gadgets. Setting a ₹5,000 threshold means any gadget purchase over that amount needs to be discussed to avoid disrupting your budget.
Avoiding Financial Infidelity
What is Financial Infidelity?
If someone is hiding their secret accounts or loans from their partner or spending excessively, they are committing financial infidelity. This can be a reason for mistrust in the relationship.
How to Prevent Financial Infidelity
- Set Up Regular Check-ins: Schedule monthly financial reviews to stay updated on your financial status as a couple.
- Be Transparent: Be honest about expenses, debts, and financial mistakes.
- Have an Open-door Policy: Both partners should feel comfortable sharing financial concerns and decisions.
Making Joint Financial Decisions Smoothly
Handling Different Spending Priorities
You and your partner have unique spending priorities. You might be interested in traveling. Your partner may like to dine out. Instead of trying to change each other’s spending habits, you can allocate part of the budget toward each other’s interests.
Planning for Investments Together
Start discussing investments early. This can include:
- Mutual Funds: SIPs (Systematic Investment Plans) are great for creating steady wealth.
- Fixed and Recurring Deposits: Safe and low-risk, ideal for short-term goals.
- PPF and NPS: For long-term retirement planning.
Managing Debt Together
Assess Existing Debt
If you have a pending debt, loan, or credit card payment, let your partner know. It helps if both of you make efforts to close any debts.
Deciding on Debt Repayment Priorities
- High-Interest First: Pay off high-interest debt (like credit cards) to save on interest in the long run.
- Balance Between Debt and Savings: Ensure that repaying debt doesn’t hinder your savings. Aim to allocate at least 20% of income toward debt while still saving.
Adapting Financial Goals Over Time
As life changes, so will your financial needs. Review and adapt your financial goals periodically. Major life events like having children, buying property, or changing jobs can shift priorities, so set aside time annually to adjust your financial plan as needed.
Open communication, setting goals, and adapting to your partner’s financial situation is very important to making life easy for a couple. This guide will help you with different ideas to make finances easy for couples. You can choose what works best for you and apply them. Build a strong financial foundation together and be the couple that supports each other’s dreams.
FAQ on How to Successfully Manage Financial Goals as a Couple
At least once a year, review your financial goals with your partner. You can also do it during major events like a job change, moving to a city, or starting a family.
Set a monthly allowance for discretionary spending. Doing this allows both partners to spend money on personal interests without affecting joint financial goals.
Not necessarily. A fair approach is to contribute based on the income ratio. This allows both partners to support household expenses without creating financial strain on the lower earner.
Take time to reflect on yourself. Have a conversation about your concerns. Stay calm and focus on finding a solution that works for both.
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