Saving as a couple is part 3 of a 3-part look at ways to save money as a couple. To see the full series you can Click here to read Part 1.
Managing ones own finances can be difficult. But when two people are trying to work in sync to meet common goals, there can often be times of disagreement. Each individual has their own unique ideas on how to save, how to spend and how to account for progress. The reality is that agreeing to disagree can often be the healthiest way for a couple to move forward with their savings goals as a couple.
Saving toward Common Goals
To make the long term relevant, couples need to do two things; plan and agree on common long term goals and work backwards from the long term, to the short term.
By having common long term goals, the relevance of managing finances in the short term becomes clearer. If the goal is to save for a house, have a child, retire sooner or take a world trip, the discipline of managing the finances between each individual of the couple is shared. This dynamic is important as both individuals then work together rather than compete with one another. It is a lot easier to move forward as a couple when both individuals are moving in the same direction.
Once long term goals are agreed upon a financial value can be attributed to each goal and a time frame and budget can be constructed, working backwards from the end goal. This then allows for a couple to see what has to happen in the short term to ensure the long term goals are achieved.
The classic case in point is when a spendaholic feels they are being nagged by their partner for spending too much money. If a goal and budget are in place, then quantitatively the couple can see whether an individual is spending too much money or whether another individual is being too thrifty.
Emotion can be removed from the situation and facts can be used to determine whether an individual of the couple is adhering to or deviating from the plan.
Our Thoughts on Couples Finance
When combining finances couples need to think about how they will share accounts, who will pay for what and how debt is to be managed. There are no right or wrong answers, but there are effective ways in which couples can manage finances that suit both personalities.
As individuals, personalities around money and finances will often vary, so it is unlikely a couple will agree 100% on how to manage their finances. However, by identifying common goals and having pre-determined methods of meeting financial obligations, financial management does not have to be a dry or painful task. In fact, achieving common financial goals can be an area of excitement for a couple.
It is important to note that the long term goals that are most likely to succeed will have a level of emotional meaning. Don’t just assume that as a couple you must buy a house or you must enrol your children in a private school. These are both fine goals to aspire to, if you truly want them, but if you don’t then the short term discipline of budgeting will be all the much harder.
If long term goals need to be emotional or qualitative, then short term budgeting needs to be numeric or quantitative. The great thing about quantitative measures is you cannot lie to yourself or your partner. You are either on budget or not.
Finally, third party perspective can be useful. In preparing your goals you may have differences of opinion. You may not know where to start. You may not know how to work backwards to calculate a budget. Or you may need someone to help you stay on track once you do have a plan.
If you are going to engage a third party find someone who is neutral to you both and has your best interests in mind. A financial adviser is an obvious place to start, but if you do engage an adviser, enquire about their experience and ask them how they have helped others in the past.
Cashflow management plays an important role in ensuring a healthy relationship. Financial concerns can be a source of stress between individuals of a couple, so it is smart to be proactive, rather than reactive to your personal finances. After all, sharing long term goals and achieving them should be seen as a great outcome of a successful partnership.
This is part 3 of a 3-part look at couples’ finances. If you haven’t already, check out part 1 where we look at whether a couple should have joint or separate bank accounts and how to manage debt.
Are you a couple that needs help with savings goals?
At Perron we work with Couples to achieve financial harmony with their finances.
Contact us on (07) 5437 9243 or at firstname.lastname@example.org for an obligation free discussion to see
how we can work with you.