In a marriage, differing opinions about finances can trigger arguments, tension, anger, stress and worry. Money differences can drive a wedge between you. It is important for you to work together and develop a way to manage money in your marriage—not just when bills are due, or when the debt is overwhelming, or when a large purchase needs to be made, but every day.
If you’ve been married for a long time and the way you handle money in your marriage evolved over time, it’s time to visit those assumptions.
If you are a newlywed, you need to figure how to manage money as a couple. Either way, here are eight important financial decisions to discuss:
Yours, mine or ours?
Many couples keep separate accounts and divide the financial responsibilities so they each have certain bills to pay without ever joining forces. What happens when one of them loses their job? What happens when some of those financial responsibilities are related to the children? What happens when one of the spouses wants to be a stay at home parent?
In our experience the couples who pool their money and manage all the money as one resource have much stronger marriages because they are working together as a team.
What’s our Money Management Process?
Unless you are as rich as Bill Gates, you only have a certain amount of money to spend each month and it’s important to have a plan for managing that money. Otherwise it seems to slip through your fingers and you find out you have too much month left at the end of the money.
One of you can be the family accountant who is responsible to pay the bills and keep track of the budget. But the other person should know where everything is and how to pay the bills. There are apps, spreadsheets, software, and a bunch of different ways to track income and outgo. The important thing is to define a plan that works for both of you know how much money is coming in each month and where it is going.
How do we make money decisions?
Along with determining how to manage money, the third point is defining your decision process related to money, which makes things a lot easier when you come to a point where you are not on the same page.
The husband and wife need each other to achieve the proper balance for a correct decision. Regardless of your spouse’s business background or financial aptitude, the husband and wife should agree, because they both will experience the consequences of money decisions in marriage. Even if their choice proves to be disastrous, there are no grounds for an “I told you so” fracture in their relationship.
In these situations praying for wisdom helps. In addition to prayer, create a list that helps document each other’s thoughts and feelings regarding the decision. Get down to facts by having the calculations in front of you showing the financial impact of two different options.
How Big is Our Emergency Fund?
We know there is always something that pops us and ruins our best laid plans, so it’s good to have an emergency fund, and that means deciding how much you feel comfortable having on hand for emergencies.
Obviously more is better and the amount may change as you move through different seasons of life. But if you don’t talk about and plan for it, that emergency fund will never become a reality, and when there is no emergency fund, you can be sure a budget buster is going to come along.
We recommend building the emergency fund to $1,000, then 3 months income, then 6 months income, then one year of income.
How Much Are We Going to Save?
A savings plan is an important part of your financial future. In addition to an emergency fund, discussions about savings need to include short term goals such as money for Christmas or vacations; mid-term goals such as replacing a car, buying a house or renovations to your existing home and long term goals such as retirement or sending the kids to college.
Each of these savings goals are important and with different time frames, there are different vehicles to use for saving. The critical thing is to be on the same page about your goals, how much you are saving for the goals and what savings vehicle suits your purposes best.
How Much Are We Going to Give?
Hopefully you and your spouse are on the same page spiritually, if you aren’t, giving to the church can be a bone of contention. Start by talking to your spouse about an amount that they are comfortable giving on a regular basis. It is important for you both to agree—peace in your marriage is much more important than giving a specific amount. Continue to revisit the amount you are giving as you review your budget each year.
How Much Debt is Too Much?
The average household credit card debt equals a little over $16,000. Student loan debt averages about $40,000. Car loans add $15,000, and the average mortgage is in the neighborhood of $150,000 to $200,000. When it’s all added together, it’s easy to see how a couple could have $300,000 – or way more in debt
Nobody planned to get into that much debt, it just happened gradually over time. We highly suggest you have a discussion about limiting the amount of debt you have. Maybe it means you stop using the credit cards once your unpaid balance reaches a certain amount. Or maybe you decide you will never have two car payments at the same time. Or maybe you set a cap on the mortgage amount, or decide not to buy a house till the student loans are paid off. Having a discussion about debt limits helps keep you out of financial bondage when the debts become overwhelming.
How Do We Plan to Teach the Kids About Money?
Ideas on how to teach the kids about money usually vary based on how successfully or unsuccessfully your parents taught you, and how your childhood experience helped or hindered you when you became an adult.
There are no right or wrong answers. Will you give your children an allowance? Will you have the children save a portion of any money they earn or get as gifts? How will you teach them to give and be generous?
The important thing is for you two to be on the same page and to be consistent with the children. If one of you is the ‘bad guy’ and the other bails the kids out anytime the need money, you really aren’t teaching them anything.
All of these suggested money decisions are to help you communicate about money so it never becomes an issue in your marriage. Couples who talk about money on a regular basis are happier in their relationships than those who discuss finances less frequently.
Here’s a little Bible math: when it comes to marriage, 1 +1 = 1. Jesus himself tells us this fundamental truth: “So they are no longer two, but one flesh” (Matthew 19:6). This unity is designed for every aspect of a couple’s life together: physical, emotional, spiritual, and even financial.
Join us on the Compass Catholic podcast for more about making financial decisions as a couple.