To continue practicing what we preach, my Wife and I just finished talking about our finances and money plans together. Here’s how we incorporated the above two elements of being a happy money couple:
• Money Talk: We discussed some major upcoming expenses (trip to Rome with our Mothers in September + Dental Surgery) and how we will handle those expenses while keeping our cash flow in order (i.e., not dipping into savings).
• Money Plan: We discussed where we currently are with our savings goals. We’re behind for the month due to some expenses related to moving a couple months ago + some additional large expenses, but are still in a good position to come close to our end of year savings goal.
My Wife and I know that couples who have regular money talks and create money plans put themselves in position to be as happy as the couple looks in the picture above. But why just take a chance at being this happy? Why not go all in and make sure you are happy as a money couple? Let’s not settle for deuces people! Let’s shoot those Steph Curry Trifectas instead!
That’s exactly what my Wife and I did by incorporating the third element of happy money couples into our money meeting: Creating A Money System:
• Money System: We set a credit card balance threshold for each month. Staying at or below this threshold will help ensure that we stay on track with our money plan by avoiding using planned savings to pay our credit card statement balance in full. Paying our credit card balances in full is one of our key financial habits… and so is consistent saving.
Swish! Trifecta completed. Now let me show you how you can complete your own happy money couple trifecta as well, because couples who “systematize” their money achieve these kinds of money shots:
They get out of debt quicker because they have organized how they handle money in order to prioritize eradicating their debts.
They avoid overspending because they have spending thresholds in place that help keep their spending in check.
They have more in retirement savings because they automate how much they save.
They have more peace of mind because they know exactly where their money is going and when.
They are happier because they are telling their money what to do!
It’s time to seal the deal on becoming a happy money couple. Here’s how.
Agree on a Money System
You and your partner will need to agree on a money system. A “money system” is simply how you and your significant other will divide financial responsibilities and handle your finances in general. Essentially, it’s a common understanding of how you all will handle your money. Notice that I say “common understanding” – This means that you both agree to guidelines on how you will handle money, instead of defaulting to assumptions which could easily lead to misunderstandings and disappointments; assumptions such as these:
• “I’m not good with money. I’ll just leave it to her to handle all of the finances. She’s so good with everything else anyway.”
• “Why do we need to organize our money? Everything has worked out in the past just fine. Just let it continue working out!”
• “I don’t have the energy to deal with these debts. I guess we’ll deal with it one day. Too much going on right now anyway.”
• “If she was really concerned with how much we’re saving, then she would speak up. She must be fine with how things are going.”
• “She created this bill, so I assume that she will make sure it gets paid every month.”
• “He’s the “man of the house.” Let him take care of the bills.”
We all know what assuming does… and we’ve all felt the effects of assuming instead of taking care of business. So instead of assuming, squash your assumptions by setting up some guidelines for how you and yours will handle money. Here are a few guidelines and agreements in our money system, in no particular order:
• We have both agreed to make saving a priority through automatic contributions to retirement and investment accounts.
• We have both agreed to pay our credit cards in full every month.
• We both receive a bi-weekly allowance that we’re free to spend on whatever we want.
• We have both agreed to set aside a specific amount each month for giving to others.
• We have agreed to inform each other anytime we need to make a purchase greater than $100 using money outside of our personal accounts.
• We have agreed to have joint bank accounts – our “personal accounts” are simply additional joint accounts tagged with our names in online banking for easy reference.
• We have agreed that my Wife will handle contributions to our local church (we have agreed on a set giving amount each month as well).
• We have agreed that I will handle paying most bills, except for water, gas, and electric which my Wife handles (we don’t have many bills as of now, and everything is automated, but I keep track of any bills aside from the aforementioned).
• We have agreed that I will handle investment decisions – I’m into investing but my Wife doesn’t want to be bothered with it. That said, to keep myself accountable, I run all investment decisions through her first so that she is aware of what is going on.
Does the above mean that we never have disagreements about money or purchases? Not at all. We still disagree on purchases and decisions at times. However, having a “constitution” of sorts to refer back to makes the discussions a bit easier!
The Basics of What to Cover In Your Money System
The above may seem pretty detailed, but keep in mind that we’ve been at this for 6 years, learning along the way and perfecting how we approach money together. To help you get started, here are seven areas that I recommend addressing to get your money system started:
1. Address Responsibilities: Divide up major responsibilities. Who will be responsible for making sure the bills are paid on time? Who will keep track of cash flow? Who will take out cash from the ATM if needed? Who will be responsible for making sure the checking account doesn’t go too low?
2. Address Purchase Thresholds: Set a “big purchase” threshold. This is a trigger amount for informing your partner that a big purchase is about to be made. Setting this threshold will help you both adjust spending accordingly and allow the other to object to a purchase before it’s made. The trigger amount is up to you all, depending on your savings, income, spending tolerances, and so on.
3. Address Spending Limits: Agree on a monthly spending limit. This can be in the form of a budget, where a spending limit is set up for specific categories, or a monthly spending limit for all purchases.
4. Address Credit: Agree to how you will handle credit. Will you carry a balance each month or pay in full? Will have a credit card at all? How many credit cards will you have if so and when should they be used?
5. Address Debt: Agree on how much debt you all will take on and/or maintain, if any, and how the repayment of debt will be addressed. What are the requirements for taking on debt if you all do have a debt threshold? Will debt eradication be a top priority or will you all take a more measured approach?
6. Address Saving: Agree on how saving will be handled. What percentage of your income do you all want to save? Will you all pay yourselves first or last? Will your main savings vehicle be 401(k) contributions or a savings account?
7. Address Automation: Decide what areas of your finances will be automated and which will not. Do you all prefer to decide how much to push over to savings each month or do you want to “set it and forget it” through automated transfers instead? Will you all automate debt and bill payments as well? Will your credit cards be set to automatically pay the minimum payment each month, the statement balance, or the full current balance on the due dates?
Putting structure to the above seven areas of your finances will put you well on your way to creating a solid money system that works for you all. Here’s to being happy financially!