Did you know that financial problems are cited in 55% of divorces, according to a study from the University of Denver? It’s an unfortunate fact, but if you’re married and want to steer clear of money problems, it’s important to start out on the same financial page.
In fact, planning for a shared financial future is key for all couples, whether you’re married or not. As soon as you know you’re in a committed relationship for the long haul, it’s a good idea for you and your partner to start planning for the future. Want to get started? Try following these 4 steps and you’ll be on your way.
Step #1: Decide on shared financial goals
Chances are that you both have common goals. After all, if you had absolutely nothing in common, why would you be together?
The trick here is to figure out what’s most important to you both. To get started, try this exercise: Get out two blank sheets of paper. One is for you and one is for your partner. Set a timer for 10 minutes, and until the timer goes off, write down a list of your individual financial goals. This can be anything from buying a house, to saving for retirement, to saving up for a drum kit. Don’t worry about how expensive your goals are. Just focus on how much you want them. Then, rank them in order of most important to least important.
When you’re done, compare notes with your partner. Do you have any similar goals that you’ve both ranked as very important? These will be your shared financial goals. They’ll be the compass that you use as a couple to make financial decisions together.
Step #2: Decide on individual financial goals
I’m going to tell you this right now: you and your partner won’t always have the same financial goals, and that’s totally fine. But, you still need to find a way to pay for both of your individual interests so that you don’t go stir-crazy and give up.
A good way to do this is by setting up separate “fun money” accounts that both of you can use to buy whatever you want, completely judgment-free. This has really helped in my own relationship with my husband. Before we set up these separate accounts, I would get so annoyed when he spent money on video games. Another Final Fantasy game? Really?
Now, he can buy his video games and I can purchase a $300 personal fitness training package – as long as we both stay within our limits. Better yet, we can do this guilt-free.
Step #3: Decide how to reach your shared goals
Now that you know what’s most important to you, you can come up with a plan to reach your goals. The best way to do this is with a budget.
Find a budget that works best for you and your partner, and tailor each line item according to your priorities and goals. For example, if paying off your debt is a top priority, set aside a certain amount per month that you can afford in your budget. If you can afford more in any given month, great! But if not, at least you’ve reached the baseline level.
You can also consider hiring a fee-only financial advisor to help you create a budget and plan for your shared financial future.
Step #4: Check in with each other on a regular basis
It’s important to check in with each other regularly to make sure you’re meeting your money goals. A good way to do this is to set up regular money dates. This way you can evaluate your progress. For example, have you saved up enough for your weekend getaway? Or, how close are you to saving for a down payment on a house?
These dates are a great time to discuss any new goals as well. Does your partner want to go back to school to earn a master’s degree? Do you both want to move cross-country in the near future?
Step #5: Don’t forget about retirement
Retirement is such an easy thing to forget about, especially when it’s so far off. But don’t let that fool you. You likely do not want to work as a department store greeter when you’re 90 because you didn’t save enough money.
Most experts advise saving at least 15% of your income towards retirement. To get started now, try contributing to either an employer-sponsored 401(k) or an individual retirement account (IRA). If a 401(k) is available to you, this is often your best bet as many employers will match your contributions up to a certain percentage. And, this means free money for you! If a 401(k) isn’t an option for you, you can still save into an IRA. For more information about the different options for retirement savings, see the IRS’s website.
By saving for retirement when you’re young, you and your partner will be able to enjoy your golden years together rather than worrying about money when you’re least able to earn it.
As you begin navigating finances together, it’s important to remember that it’s OK for your goals to change over time—in fact, it’s actually healthy. The things that are most important to you both at age 25 might be very different by the time you’re 45. At the end of the day, handling finances together is never easy, yet it’s essential if you want to try to avoid major money issues in your relationship.
This page is for informational purposes only. Chime does not provide financial, legal, or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for financial, legal or accounting advice. You should consult your own financial, legal and accounting advisors before engaging in any transaction.