For better or worse, money effects families. And often, stress related to money can cause dysfunction in relationships. As part of our Money and families series, , financial consultant Robert McMillen is sharing part two of his expertise with us.
3 money habits to discuss with your partner
It’s one thing to have financial goals and ideals, but if you’re not on the same page as your partner, you won’t meet them. That’s why it is crucial to talk about these money habits together. Following these habits will give you both accountability and structure as you work together.
While you may have big financial goals, the key to achieving them is practicing modest, daily money habits. Here are three money habits that will reduce financial stress, save energy and help you build your financial stability together.
- Money habit 1: Lend and borrow carefully
Rather than going through more traditional routes, such as borrowing money from a bank or other financial institution, people are turning to relatives and friends for help. When someone you know is in a financial bind, lending money to relatives and friends might be a nice gesture, but it can be awkward it results in disputes or financial problems.
Before you say yes, consider your own financial situation. You could be asked for a loan, but if you have no safety net, you are unable to pay for unexpected expenses; don’t have enough credit history to get a personal loan or a line of credit; or may need the financial security due to sickness or job loss. Talk about these factors with your partner and come to a decision together.
If lending money, you should be careful about who you lend to. Limiting loans to friends or family members you trust to pay back will save you money and time as you need to understand whether you loan money to family or friend in the right way. Figuring these things our early could also save you friendships in the long run.
- Money habit 2: Plan your purchases in advance
Instead of rushing to the supermarket for a few products here and there, organise your shopping excursions ahead of time. Make a list of everything you want to buy and how much you want to spend. You’ll be better at avoiding impulsive purchases and picking up goods you don’t actually need if you make a list and adhere to it.
The same is true for internet purchases. Determine what you truly require, how much you can afford, and wait at least a few days before purchasing. If the item isn’t absolutely necessary, wait 30 days before adding it to your cart.
In any healthy relationship, each partner has a certain level of trust and flexibility with one another. This is also true of mutual finances. So, discuss what expenses, or what amount of money, is available to you both without checking in on each other. Also decide on this price range or amount of money available before hand, and make sure it is equal and proportionate to each other and your family’s costs.
You may also consider setting a specific cost amount, so if either of you want to purchase something at or above this price, you promise to check in with each other first.
- Money habit 3: Make a budget and review it
It’s critical to not just make a budget, but also to stick to it. This goes above and beyond simply keeping track of your spending. Instead, you’ll have to think about how you spend your money and seek methods to save money on your outgoing expenses.
Begin with a daily examination, and look through your budget to remind yourself how much money you have to spend in each area.
Then, once a week, spend 30 minutes doing a bigger budget review, in which you look at the overall picture of where you’re spending your money and evaluate if you’ve been keeping to your plan.
When it comes to saving money, various families have different priorities, so it’s vital to figure out which savings objectives are most important to you. Choosing how long you can wait to save for a goal and how much you want to put aside each month to help you achieve it is a part of this process. As you go through this process for all of your goals, prioritise them and set money aside in your monthly budget accordingly. Keep in mind that choosing priorities entails making decisions. If you want to focus on retirement savings, certain other goals may have to take a back seat while you make sure you meet your main priorities.
Families have different methods for who oversees the finances. You may prefer one partner takes care of it (especially if they have a knack for finances!) or may opt to do it together. Irrespective, make sure you both have equal access to the finances and financial records, and stay transparent with each other about it. Finances can be challenging, but by keeping communication open and honest, they can help you build a future together.
Read Part 1 in our Money and Families series ‘7 Money-Saving Tips for Young Families’ here.
Is your family splintering from stress? Do you need support to get on the same page and have open communication? Contact Colleen on 0434 337 245 or Duncan on 0434 331 243 for a FREE 10 minute consultation on how we can best help you or book online now.