The Personal Finance of Relationships

2016-08-13T17:28:10+00:00By |Personal Finances, Self Development|0 Comments

Why is there an article on relationships on a site primarily focusing on personal finance?

couple

Personal Finance in a Relationship

Well, truth be told is that our wealth & well-being is very much interlinked with the quality of our relationships. This is especially true for your significant other (SO) especially if you are married. Finances is indeed one of the important areas to deal with in a relationship especially as all of us come with different habits & thoughts on finances. Take the time & effort to invest in your personal finance as a couple.

  1. Set a day every month to sit down & talk without interruptions on personal finance
  2. One person who is better with finances should take charge of overall tracking as a couple. This doesn’t mean the other party can just wash hands off! The other party needs to keep updated & act as the vice-finance minister too.
  3. Set a maximum limit for purchases that one can make on own. If it’s higher then the limit (say $200), you should consult your SO.
  4. Set out medium & long term goals whether individual or as a couple to achieve. Putting goals into writing (or on your PC) makes it highly more likely to be achieved.
  5. Decide whether to keep individual or joint bank accounts (or a combination of both). There is no fixed formula so see what works best as a couple.
  6. Track your net worth both as individuals & a couple. This should be reviewed at least annually to see how your net worth is changing (hopefully positively!) over time.
  7. Plan out your budget for the year. Know how much will be your income & expenses. Decide which expenses are shared & which are individual. Some couples find it useful to divide up expenses approximately based on the percentage % of how much each person is earning. Some people also find it helpful to divide it into category (i.e. he pays for the mortgage, she pays for the bills).
  8. Stick to your budget as much as possible. Allow a small room for slack. As a guide, you should be keep spending below 60% of your net income. You should invest at least 10% of your net income.
  9. Decided in advance how you will spend/allocate your bonus/increments. Money unguarded tends to flow just like water along the path of least resistance 😉
  10. Consider your current expenses & how much you would need for retirement factoring in inflation. A few myths to debunk that everyone need 3-5 million bucks to retire – It actually depends on your lifestyle & spending habits. Another myth is that your expenses will go down drastically after your retire. In truth, most people’s spending after retirement is about 80% of what they used to spend when working.
  11. Consult  a personal finance advisor who puts your needs first & is not pushing products. Whether you both feel very confident at finances OR it feels like a chore, a good personal finance advisor will help share with you ways to plan better, grow wealth & help keep you accountable as good stewards of money 🙂

love-couple

Depositing in Your Relationship

Besides the personal finance portion, it is very (or even more so!) important to make another type of deposit – into your relationship. A relationship is like a bank account whereby you make regular withdrawals. To keep your account (relationship) healthy, you need to make regular deposits into your relationship as well. How?

  1. Be confident in yourself. Do not fear intimacy. Try to let old fears go.
  2. Learn your partners love language & show him/her your love.
  3. Set time aside to date every week. This is especially important if you have children.
  4. Dress up once in a while. It can become a routine & you may be so comfortable with one another that your dressing becomes more & more casual. Find an occasion to dress up & celebrate once in a while.
  5. Do activities together. Whether you’ve been together for a short time or a long while. Continue to plan & do activities that both of you enjoy together.
  6. Do housework together. It finished faster, there’s a sense of satisfaction doing things together & you get to utilize time doing chores with some time together.
  7. Do something your partner enjoys. Consider it an investment in your love.
  8. Set time aside daily to talk & communicate. It would be best for at least half an hour daily. If busy, you can find time just before sleeping or early in the morning by waking up earlier. If really unable to find 30mins on some days, find at least 10mins. And make up for it by spending more time talking & communicating on a rest day together.
  9. Avoid bringing your work (problems) home. It is good to talk about each others days, share a funny story or an occasional frustration. But if every time you talk you start ranting about work & asshats at work, you may want to tone it down some.
  10. Talk about problems & issues. Do not clam up or start stonewalling every time things go wrong. Talk calmly & without being accusatory. Avoid words like “always” & “never”.
  11. Put “us” before “you” and “I”. Let him/her be the most important person in the world to you. And show that to your significant other.
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