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Practical Tips To Help You Learn How To Manage Finances In Your Marriage
My first marriage failed in part because of financial issues. We were young and dumb, spent too much money and didn’t know how to budget or communicate about money. It was a lose/lose situation that eventually led to lots of hurt feelings and divorce.
I swore I wouldn’t make the same mistakes in my second marriage.
I’m sure you’ve heard the statistics multiple times – financial problems are one of the leading causes of divorce. If you don’t learn how to manage your finances in your marriage then you will most likely either be really unhappy in your marriage or eventually, your marriage will end in divorce.
I’m not sugarcoating this one at all. I know from personal experience how draining it is to be constantly fighting over money and never having a clear plan for managing finances in your marriage.
My second marriage ironically enough started out in a very negative position financially. Unfortunately, when Aaron and I got married we tabulated our debt and realized that we had $446,000 dollars worth of debt.
It is such a high number, I literally couldn’t comprehend it. If you look at the smaller numbers it is still kind of crazy. We were spending $4,175 per month on our debt $2,200 of which was for interest.
It took us five years, but we finally paid off everything but our personal home, which left us with $153,000 of debt left on our home.
Now nine years into our marriage we are down to $102,000 on our home and will be completely debt free by our 13th anniversary.
There is no way we could have made our goals if we hadn’t learned to manage our finances in our marriage.
If we had made the goal to get out of debt, our marriage would not be where it is today. To be totally honest, I shudder to think of where it would be.
With that much debt hanging over our heads we would have been constantly under stress. I don’t think that we would have been able to nurture and love each other to the same level.
I gained so much respect for my husband through our journey and I know he feels the same way about me. Working towards a common goal unified us in ways that I can’t describe.
Fighting over money is one of the most draining experiences a couple can experience in their marriage.
There is nothing worse than the day to day negativity that comes from constantly fighting.
As I was writing this post, I was reminded of the good, bad and ugly that we went through during this process. It wasn’t always easy.
There were plenty of times when we both wanted to give up (fortunately they weren’t at the same time). There were times when I was frustrated with his spending and there were times when I messed up too.
We did not keep our budget every single month. We overspent at times, we made poor financial decisions, including the loss of $55,000 in a failed business. At the time it felt like we made every mistake in the book.
In all honesty, the only mistake we didn’t make was taking on more debt. We stuck firm on that goal.
How To Manage Your Finances In Marriage
I’ve broken this section down into four steps. On the surface, these steps seem really simple, but once you start working on money management in your marriage you’ll realize that they take a lot of work and dedication. In the end, I’ve got additional information to help you stay on track and work towards your goals when times get tough (because they will)!
1. Create a vision of your future life together
You’ll never stick to your financial plan without a shared vision of your future. You need to create a vision that will get you through all of the times when you don’t want to live on your budget, when your spouses messes up, when the kids want/need stuff, when you want to keep up with the Joneses . . . . . There is always something that gets in the way of your financial goals as a couple.
You must create a vision that is so strong you can literally see it every time you want to overspend.
For Aaron and I, it was a shared vision of being able to afford to travel, take care of our kids, and eventually being able to retire in style. We sat down and made some very specific goals and gave ourselves rewards for accomplishing certain milestones.
Most of our goals were long term. The long term stuff is great, but sometimes it is hard to keep going when your five-year goal is to get scuba certified and finally be able to go on a scuba trip with your friends. It was a great goal (and one we accomplished), but it was too far away to be effective all the times.
You need to create a short term vision as well. We set small milestone goals as well. One of our milestone trips was going ice climbing in Colorado. Notice that we spend money when we hit our milestones. I firmly believe that doing stuff together while working towards your financial goals in marriage is one of the biggest keys to success.
One of the big drivers for me was the knowledge that by managing our money, we would significantly decrease our stress. I felt like our debt was literally sucking us dry. I knew that with such a large monthly debt payment we would never be able to get ahead.
We also wanted to have more children eventually and I wanted to be able to stay home or work part-time. This was one of the biggest incentives for me as we worked toward debt freedom.
When I would start to get frustrated or down on our progress, these are the things that I thought of that would help me stick to the plan.
Take a few minutes and write down some goals. What would you love to be able to do in 1 year, 5 years,10 years if you could manage your money in your marriage?
Find the common ground in each of your dreams and then work backward.
Another trick that really helped us was talking about how our life would be when all of our debt was gone. We talked about the decreased stress, the ability to help others and spend our money on adventures, rather than interest.
As we talked about your plans for the future and really gave them a vision everything else started to fall into place.
2. Create a plan of attack
I’m assuming that most of you reading this post are like us and have a decent amount of debt. If so, I’m so sorry!!! Debt sucks – just remember that when you manage your finances in your marriage you can dump your debt!
The only way you will ever truly get ahead in your marriage is to begin managing your money. This means you need to have a plan of attack.
I believe in a two-prong approach to money management.
Step 1 – Pay Yourself First!!!!
I can’t over emphasize this point enough, to be successful at managing your money in a marriage you have to prioritize yourself. Start today and begin paying yourself first. Every single time you get paid set aside a portion of your money into a savings account. I recommend 10%. I know it sounds like a lot, but once you get started you’ll be surprised at how easy it is to save when you see the money start to grow.
If you struggle to save money then begin simple by using a program like Digit! Digit will literally do the work for you and you’ll be surprised at how quickly you begin to save money. I love, love, love this app and can’t believe how much money it has helped me save. As you can see from my screenshot, I’ve managed to save $7,303.79 in 8 months using Digit.
Step 2 – Manage your money
Okay, so this is super broad, what I mean by managing your money is that you need to create a budget, reduce your debt and begin saving for retirement. I know that is a ton and you are probably checking out emotionally as you read this.
Here is the deal though, it doesn’t need to be a crazy elaborate plan. If you struggle with budgeting then use a minimalist percentage-based budget. The 50/30/20 budget is surprisingly simple and works for most people and honestly doesn’t take anywhere near as much work as people expect.
Getting out of debt is hard, but again, keep it simple. Add up all your debts and then begin using the debt snowball method. Pay off your smallest debt and then add the extra payment to your next debt and gradually work up your list. Yes, it will most likely take you a few years (hopefully not as long as us), but when you are working towards a common goal in marriage anything is possible.
Related Post: How To Begin Your Debt Free Journey
Now comes the fun stuff, remember the money you’ve been paying yourself, start putting it to work for your retirement. There is nothing better than watching your retirement savings grow while you watch your debt load decrease!!!
Creating a plan is easy, sticking to it take a bit more work.
Aaron and I made a ton of plans and we constantly reworked our plan more times than I can remember. What mattered though was that we had a plan, made goals and did our best to stick with them.
Don’t feel bad if you don’t instantly succeed at your budget. Most people need at least 3 month’s before the budget starts working for them. Some months are going to be hard and you are going to mess up. Who cares – suck it up and get back on track today. Don’t wait until next month or tomorrow. Start making good financial decisions today.
3. Don’t tell your spouse what to do
This a common mistake I see with many couples. One spouse gets gung ho about reducing debt and goes full force into money saving mode. They tell the other spouse that they will be living on a budget and all kind of other crazy things that the spouse doesn’t understand or want to do.
If this is you, you need to put yourself in your spouse’s shoes. How would you feel if they came home and suddenly started to dictate to you how much money would be spending and how you would be spending it.
Needless to say, it doesn’t go over well.
It kind of goes back to the Golden Rule, but in this case, don’t expect someone to do something they haven’t bought into.
This is one of the reasons that I recommend creating a shared vision as your first step.
Marriage is hard and managing money in a marriage is even harder. Your spouse isn’t always going to want the same things in life as you do. It is okay, your job is to ask them open-ended questions that will hopefully help them get on the same page.
Just remember in the process that telling them what to do isn’t right or fair.
On a total random side note, if you are struggling to communicate with your spouse one of my all time favorite marriage books is Men are Mars and Woman are from Venus. You can never go wrong with Dr. Gray’s advice.
4. Make sure your partner has an equal say
To be an effective team, each spouse has to have an equal say in the budgeting and planning process.
For example, I create the budget, but Aaron and I review the budget together before making a final decision on our spending. There are times when he doesn’t agree with how I’ve allocated our money and we have to go back to the drawing board.
Both of us have to agree with the final budget and our spending goals.
This is so hard for both of us at times. We have different priorities and sometimes meshing our priorities just doesn’t always work. We’ve had to go back to the drawing board many times to make financial planning within our marriage work for us.
What I’m trying to say, is don’t give up just because you aren’t on exactly the same page. Keep working towards the areas you have in common.
What matter is that all the major decision are done together.
Each Partner Needs Fun Money
One thing you don’t have a say in, is the other person’s discretionary fun money. When you are creating your financial plan always make sure you incorporate some discretionary fun money. It may only be $20 a month when you first start but give yourself some fun money.
Your fun money is what will save your marriage and help you stay on track.
Aaron can spend his fun money however he wants and I can do the same.
I don’t always agree with how he spends his money, but I know he feels the same about my spending as well.
Managing Your Finances Together in Marriage is 100% possible
All of this is well and good, but how do you actually make it happen?
I wish that I had all of the answers, but every couple is different. I do personally believe that by following the four steps above you have a much better chance of succeeding as you work towards your financial goals as a couple.
I’ve found that for Aaron and I it is all about our shared vision of our financial future. When we agree about your vision it is so much easier to respect one another opinions and find workable compromises as we make our financial decisions.
I’m not going to say managing your finances in marriage is easy.
Honestly, there were times when I really don’t agree with how my husband wants to spend money. We are two different people. There were times when we were trying to get out of debt that all I wanted to do was make the minimum payments and not worry about getting out of debt so quickly. There were times when I was frustrated with Aaron and annoyed with him and I can guarantee he felt the same.
What we didn’t do was play the blame game. If one of us messed up, we talked about it and moved on. When you start to play the blame game everything changes in your marriage.
The best advice I can give is to love your spouse enough to give them some grace. Help them pick themselves back up and move on.
All you can do is continually move forward. Every month that you make an extra debt payment is one month sooner to getting your financial freedom.
You can do this!