Money can be a tough and scary topic. In most relationships, there is usually one person who handles the money, the bills, etc… and one person who barely knows how any of it works. For many years, my wife took care of all the finances. Now I am the one who is driving our financial future. It really doesn’t matter who is driving, as long as you and your spouse/partner know where you are going.
With that being said, here are five topics that need to be discussed when it comes to money…
You and your spouse need to be on the same page regarding how you pay bills. One common goal is that bills MUST always be paid on time, and if possible even early. In addition to paying the bills, you both need to know what the bills are. This will help you both understand where your money is going and help you identify what is needed and what isn’t. There is no need to have a great savings plan if your bills eat up most of what you have to save.
Couples need to know how much debt they are in. Too many times the person who is not paying the bills has no idea how much debt they have. People are surprised all the time when their spouse says to them that they are $20,000 in credit card debt. It can get away from you easily. Also, with debt, there is interest. And if your credit is bad, it is probably a lot of interest. Every dollar that goes towards interest is less money that can go towards something else. Share with your spouse your current debt situation and do your best to get out of it!!!
This can be a tough topic to cover as spouses often disagree as to where money should be going. But budgeting is important, so have the conversation right now. Agree to what you are spending your money on and see what you can do to ensure money is being spent for growth, not for more damage. Limit your liabilities as much as you can and work on buying assets that can make you money. Limit how much money you are spending by putting caps on categories of spending, like food, clothing, and nights out. It is pretty easy to spend a couple hundred dollars every weekend if you go out on both Friday and Saturday night. Not to mention the ordering in of food on Sunday because you don’t feel like cooking and cleaning up. Establish a budget, keep it within reason, and make choices to spend on assets, not liabilities.
What about children??? Well, how much money are you saving for their college fund? Do they get an allowance? How are you teaching them to be responsible with money? All questions that need to be asked and answered with their futures in mind. My wife and I give our kids a small budget of money every month so that they can learn how far a dollar goes and how to make good choices. I will write a post next Monday about our kids’ budget money, how it works, and what it covers.
And what about retirement? How are you saving for it? Here is some general good things to do:
– invest at least as much as your employer matches in your 401K;
– Pay Yourself First: establishing savings, capital, and charity before you pay any bills;
– consider a Roth IRA for your after tax dollars;
– figure out how much money you will need in retirement and make sure your plan will get you there;
– have a solid plan and just adjust the numbers depending on your current life circumstances.
This is a must have conversation as you don’t want to find yourself reaching retirement age with no money put aside.
It is important that you and your spouse are on the same page when it comes to your money and your finances. Both of you have to understand what you do with the money that comes in and how it goes out. Are you using it to pay off debt? Are you using it to save for retirement? Or are you just blowing your money and you guys need to wake up? Get together and have the conversation now. You want to be prepared for anything and you both need to be in a position to take over the finances if the other person cannot. Keep an open mind. Decide on what bank accounts you need to be successful, establish a plan, and put it into action. Like any road to success, it starts with knowing where you want to end up and figuring out the steps to get there. Good luck!!!