If you are married, live with a boyfriend/girlfriend/partner, or have anyone else in your life that you substantially share your money with, it is super important to make sure you are on the same page with your money priorities. My wife and I have an open and ongoing conversation about our money, and the best way to get started is with a weekly family business meeting.
Your Family IS a Business
In the past I have written extensively about treating your own money like a business. You have income and expenses, you have a net worth, and you decide how to invest and use your financial resources for your future.
When you are single, you can make all of the business decisions for yourself. You don’t have to justify it with anyone else. Whether it is a good or bad decision, it is all up to you. And if you make a good or bad decision, you solely live with the consequences.
Now that you are in business with a partner, you share the decision-making and the consequences. Whether you are the sole income earner, share the money-making, or don’t financially contribute, you should have an equal say with your partner on how to handle the money.
Set a Family Business Meeting Time and Itinerary
In my new family, we have short chats about money almost every day, but I know that I’m the weird finance nerd who always has this stuff on my mind and I get excited with money planning. I am lucky to have a wife that is as engaged as I am (or at least pretends to be) in our regular financial planning and budgeting.
If you are like most people, however, you rarely talk about money. So for you, it is best to set a time each week to chat. It is best to have an itinerary for your weekly meetings. A sample itinerary might look like this:
- Discuss upcoming bills
- Discuss any upcoming major expenses
- Look at how you are doing on your budget so far this month
- Hug again, go back to what you were doing. If you are on track for your budget, have a celebratory, um… Celebrate however you’d like.
These meetings don’t have to be long or drawn out, but it is a great idea to hit the high points. Major expenses, monthly bills, and tracking your budget are the biggest financial implications that will impact each other and your long-term financial standing.
Breaking the Ice on Money Talk
Talking about finances isn’t something most of us grow up doing, so you may find it a bit awkward the first couple of time you talk about this kind of stuff. I promise, it will get easier over time.
Just ignoring money talk because it may be uncomfortable is a recipe for big arguments down the road. Think of this scenario. You both put your earnings into a joint bank account each payday. Your spouse, a photography enthusiast, decides it is time to upgrade to a new camera. His new Canon Rebel EON t5i package will come with two lenses, a carrying case, and a free SDXC memory card, all good things for photographers. But he forgot to mention it before buying this $1,200 camera package.
Wouldn’t you be pissed?
Remember, this is a two-way street. We all have different priorities, habits, and probably treated our finances a little differently before getting married or moving in together.
Setting the Family Business Ground Rules
Some good ground rules will trigger great discussion in your family business meetings. As co-CFOs, you shouldn't have to run every little purchase by each other, but big plans should be shared.
Try setting a purchase limit where you have to talk before buying. Depending on your income and comfort level, you’ll want to pick a number that is good for you. For my family, we talk about any purchase over $100 other than groceries. I don’t go to my wife for permission on some big expenses, like when I bought business software for $200 so I could make sweet videos for this site. However, I did talk to her about it first to make sure she didn’t object.
Work together to create a common budget that you both agree to follow. A free tool like Mint will take care of the tracking part for you, so when you sit down you can look at what you’ve spent on each category without doing a lot of prep work.
You should also set shared savings goals, so you can work together on getting ready for retirement. Planning out things like 401(k) and Roth IRA contributions, emergency fund savings, and what to do with other savings and investments should be a shared decision. If you work together, you will prosper together.
Work Toward Financial Compatibility and Partnership
Financial incompatibility is one of the biggest reasons for marital dissatisfaction and divorce. Don’t become a statistic, work together to find common ground on goals, spending, budgeting, and other financial habits before you start to fight.
If you work as Family Co-CEOs, you will do much better than just trying to wing it.
How do you plan money with your significant other? Do you share in budgeting, planning, and large decisions? Any horror stories or success stories, or questions? Please share in the comments.