How do Successful Married Couples Handle Finances?

Introduction

Contrary to popular belief, money disagreements are not the number one cause of divorce in the United States.  They are however the third leading cause of divorce according to The Institute for Divorce Financial Analytics and we think that is plenty enough reason to pay close attention to money in a marriage and how successful married couples handle finances.  No one sets out to end up divorced but the truth is that financial stress and autonomous financial decisions contribute to a lot of marriage breakups.  So what are the common money habits of successful married couples?  Let’s dive in below.

Successful Married Couples Establish Financial Priorities as a Couple.

“A house divided against itself cannot stand.”  This famous quote from former President Abraham Lincoln was originally uttered to address an issue far different than household finances however the sentiment is 100% applicable.  A husband and wife aiming their financial resources at differing financial priorities is a recipe for failure every time.  Imagine two people rowing a boat in opposite directions.  Even worse is the absence of any priorities at all.  A couple not in sync with their financial priorities is playing tug-of-war even if they don’t know it.  While your future earnings can be unlimited, your next paycheck is a finite number.  Successful couples aim those dollars like a team; in the same direction.

Successful married couples handle finances toward an agreed-upon priority.

1. Set a time together to discuss what you want your financial lives to look like in 5, 10, and 20 years.
2. Decide together what goals should be set to reach your shared vision.
3. Create a monthly budget that aims your dollars toward your goals.

Successful Married Couples Create a Joint Budget

Successful married couples handle finances by evaluating their daily spending decisions against a monthly zero-based budget they have created together.  A budget is a practical tool that allows married couples to handle finances toward their goals and priorities.  Voluntarily submitting their spending decisions to the boundaries of their budget is a strong signal of future success.

Creating a zero-based budget together is a habit of successful money couples. 

Successful married couples list each dollar monthly that will be earned and assign each dollar a job.  After all household expenses are covered, dollars left over are committed to their shared goals and priorities.

1. Write your total household income for the month on the upper right-hand corner of your paper.
2. List each household expense along the left-hand column and budget (assign) a dollar amount to that expense.  Write the total of all expenses at the bottom.  Examples of categories are mortgage, groceries, gas, debt payments, phones, utilities etc…  Get a free budget planner here.
3. Compare your income to your expenses.  If your income is more than your expenses assign those dollars to your goals and dreams.  If your expenses are more than your income, trim expenses until you have enough dollars left over to apply to your goals.  Every dollar gets a job.  No dollar should be left unsigned.  This is what a zero-based budget looks like.  It will take at least 3 months to zero in on your budget and get the details down.  Be patient.  It will pay off.
4. In the following months work on the following:
   • Include any previously missed budget categories.  We are trying to acknowledge and catch every single dollar earned and spent.
   • Spend only within your budget.  Don’t hide expenses from each other.  Married couples handle finances successfully when they are open and transparent about their spending and their budget.
   • Adjust dollars assigned to each budget category to meet your goals.

Successful Married Couples Communicate About All Financial Decisions

Married couples handle finances by communicating effectively about money matters.  Life’s circumstances change budgets from month to month and occasionally create new goals and eliminate others.  Life happens.  The key is to communicate with one another.  Married couples handle finances by learning to recognize when a financial threat is present and address it up-front with each other.  Remember, when you are married it takes a team to win with money.

Communicating about money leads to success which in turn fuels better communication.  Married couples are successful with money & marriage when communication lines are open and strengthened.  An often unexpected benefit of married couples handling finances together successfully is that the marriage is strengthened thru trust and team accomplishment.  When each person trusts the other with money, and each person can see the effects of their teamwork on their goals, a closeness develops that was not present previously.  Trust me.  It’s true.

Each month, when you build your zero-based budget be sure to share any concerns or changes you see on the horizon.  Remember, a budget is not a set-it-and-forget-it proposition.  Talk.  Communicate.  Share.  Discuss.  You’ll be glad you did.

Successful Married Couples Handle Finances by Planning for Long-Term Financial Security

Daily life can have its financial challenges and surprises.  In a marriage, you spend a lot of time and money trying to balance all of life’s daily demands.  But successful married couples handle finances by also keeping an eye on the long game.  This is why your monthly zero-based budget is so important.  It provides a place for your long-term security needs to be planned for.  If your monthly budget isn’t allowing for long-term saving and retirement investing, then your income needs to go up or your expenses need to come down.  But successful married couples plan together for the day they’ll no longer be able to work.

Retiring with dignity takes planning. 

Successful money couples plan for their long-term security by contributing at least 15% of their household income to retirement investments.  Use the following priorities.

1. First and foremost take advantage of your employer’s 401K retirement match program.  Max it out.  If they will match 10% do it.  If they use a lesser amount do that.  But max out their offer.  It is free money!!!
2. If, after maxing out your employers’ offers you are not contributing 15% to retirement savings open a ROTH IRA for each of you.  You can contribute up to $6,500 each ($7,500 each if you are 50 or older).
3. If you are still not at 15% set up an Independent Retirement Account (IRA) and contribute whatever amount is needed to reach 15% of your household income into retirement savings.

Successful Married Couples Operate Out of a Single, Shared Joint Checking Account

Married couples handle finances successfully when they combine finances in one joint account.  Transparency is the name of the game!  Married couples cannot win with money if they hide income or spending.  If you are serious about winning with money, together, on purpose, then operating out of a single shared checking account is a must.  The result will be accountability.  Accountability will lead to the results you both want.  Hiding spending habits in separate bank accounts or hiding income under the mattress will inevitably lead to conflict and mistrust.  And rightfully so.  Successful married couples handle finances by sharing a single checking account and allowing themselves to be accountable to each other for their expenditures.

Successful Married Couples Handle Finances By Working Together.

Married couples who handle their finances with transparency are most likely to win with money, reach their goals and retire with dignity.  It is a lifelong endeavor that pays huge dividends.  Communicating in marriage about your finances and expenditures leads to more trust and overall greater satisfaction.