Tips for taking your relationship's money health out of the red.
Sometimes looking at what smart couples are doing to create "great" situations helps to turn the tides on a "bad" financial situation. Experts Denise Wade and Anne Alexander Vincent weighed in on this topic and offer the following quick tips as a menu. Even one or two of them done consistently will help to bring your money situation from the red into the black (or the green!) 25-Year Study: Unhappy Partners, Money, Power Don't Make Us Happy
1. Push through the dreaded "money conversation"
When entering a relationship, we usually bring a financial blueprint from our family of origin. Smart couples candidly identify destructive beliefs around money that trigger limiting behaviors such as overspending, excessive frugality, scarcity, or unreasonable demands. By consciously recognizing and eliminating unhealthy patterns, assumptions, and impractial habits based upon parental influence, social programming, and socio-economic upbringing, they co-create new beliefs around money that will serve their household budget, lifestyle, and potential goals better.
2. Align your priorities
Values drive priorities; priorities drive choices. The majority of economic conflict stems from different perceptions of necessities versus luxuries. Ask your partner to define necessities, and then define luxuries. My research with 1000 couples indicated that 77 percent of fiscal squabbles originate from disagreements over exactly what items in the budget constitute expenses and what constitute extras. For many savoir-faire couples, the key is mutually aligning the priorities by defining necessities and jointly negotiating the luxuries.
3. Expect the best and prepare for the worst
Many of us, at some point, may experience financial struggles through no fault of our own, such as job loss, stock market decline, or an unforeseen illness. Couples that consciously strategize and agree to live within their means give themselves financial breathing room should they experience unfortunate circumstances.
A good rule of thumb, especially early for younger couples, is to allocate 10 percent church/charities and 10 percent to savings, with 80 percent to live on. If you can, put away $50 to $100 month for one year, then raise that amount to get into consistent savings for retirement or any financial surprises that may arise. 5 Sexy Ways To Spend Your Tax Return As A Couple
5. Create a budget
Devise a mutually agreed-upon budget and then meet together quarterly to review it. Create a plan to start an educational fund for children as soon as possible and get rid of credit card debt as soon as possible. It's also wise to have a definite plan for checking accounts. Will you maintain separate accounts, have one joint account, or perhaps each contribute to a household account?
When creating your budget, create a detailed list of all of your joint expenses, personal expenses (non-household) and your savings plan. Detail out the expenses in the order of priority and check to see where you're in agreement and where you need to negotiate—remember that it's OK to not agree on everything in principal, but it's important to agree to the bottom line for how money is spent.
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