There is no single model for managing expenses as a couple, but here are a few tips based on the 5 most common mistakes couples make when managing their finances:
1. One of the two takes the economic burden.
We could say that there are 2 main types of economic organization in the couple:
- Those who add their income in the same account to which they associate all their expenses.
- And those who have totally separate accounts and share 50% of the expenses.
Within the second group there are couples who decide that one of them will assume all the common expenses and the other one, on the other hand, will pay his part month by month; and other couples divide equally the bills to pay… Up to here, no problem.
The problems come when one of the couple feels that he/she carries all the economic weight on his/her shoulders and the first tensions arise, either because your partner is late in paying you his/her share and you do not make ends meet; or because in the distribution of bills you have had the worst part… or so you think! And it makes you suffer because of the enormous burden it places on you now and in the future.
How could we improve it? To make an equitable distribution of bills, the first thing to do is to know where the money goes, that is to say, to detect all the recurrent expenses of each month to be able to make a fair division, and to make a budget of maximum expense per category.
It is important to take several months of common expenses so that you can easily detect which are the fixed monthly expenses that each one pays: supermarket, electricity, telephone, restaurants… In this way you will know exactly where each euro goes and it will be easier to make a fair division.
If you are the one who has to pay 50% of the expenses to the other person, unify all the payments in a single income on the first day of each month, and treat it as if it were the rent payment; you will soon get into the habit and your partner will stop worrying about receiving the money on time.
Having separate accounts and sharing one for common expenses is another tip that can help avoid problems in the couple, and increase each other’s (financial) intimacy. This way, with what you have left over after paying the agreed amount, you can treat yourself to something else.
Do not forget to take into account the income of each one of you. In the case that these are very unequal, the best thing is to define the percentage of the salary that is going to be contributed to the common account to be really fair.
2. Our way of spending affects our partner.
When you have covered your part, it can happen that the percentage that you have left over and that you dedicate to yourself is much higher than you think. It is not good to ignore how our spending pattern affects the other person, as it can affect the health of the relationship. Maybe your partner prefers the day-to-day pleasures that you also enjoy: dinners, details… but you are a born saver.
How could this be improved? No matter how far apart your accounts are, life together always affects the other. Always ask their opinion and try to be more neutral so they don’t feel coerced by your wishes. There must be communication in order to avoid conflict.
3. Financial contingencies.
Normally couples forget to take into account financial contingencies in their financial management. When there are two of you, the economic unforeseen events are doubled… The dismissal of your partner, for example, can be more than enough reason for your personal economy to falter and lead to more problems, even a breakup.
How can we improve this? With an emergency fund that protects you from unforeseen expenses (your partner’s or your own dismissal, car breakdown…). You will live calmer and your economic and personal stability will be more shielded.
The money you allocate to this emergency fund will depend on your needs. Normally it is recommended to have enough saved to be able to cover at least 3 or 6 months of your recurring expenses (remember that these recurring expenses multiply if you have a family, etc…).
If you still don’t have an emergency fund, don’t worry! Getting one is easier than you think, it’s a matter of getting organized, also a good solution is to take out an insurance policy that covers the main bills in case of unemployment or illness.
4. Wasteful vs. stingy.
Whether you are the spendthrift or the stingy one in the couple, these are factors that can negatively affect each other.
How can this be improved? A good way to deal with the disparity of view on spending that some couples have is to set common savings goals: a trip, buying a car or having a baby, are common goals that will motivate you to stick to your budget getting very good results.
5. Talking about money once is not enough.
Things change from one day to the next: a change of job, a move… are situations that drastically alter our savings goals and we go back to the confusions and irritations we were talking about before?
How can this be improved? Set something like “let’s talk about money” day on the calendar (I’m sure you’re more original… At least a couple of times a year you and your partner will rethink your goals together, and adjust your budget according to the new circumstances. This is a way to build trust and avoid quarrels. Don’t forget to start from scratch and check the origin of all expenses and income to avoid confusion.
6. Not educating yourselves together financially
One of you will always have better notions about personal finances. One of you will have more savings, one of you will have more debt, and so on. The key is to educate yourselves together, to learn how to manage your finances as a couple. Be clear about financial concepts, speak the same language and make decisions together. The responsibility will always belong to both of you. For example: if you decide to take out a loan, you should both be aware of the amount, the monthly payments, the interest and the plan you will have to face the financial responsibility.
Unfortunately there is no single answer to managing finances with your partner, as depending on each situation there will be some things that will work better than others.