I think we can all agree that finances play a key role in our married lives. It’s the need to provide a quality life for our family that drives most of us to work, and we know that the way we spend our resources directly affects our lifestyle now and down the road.
Money stuff is important.
That is not to say that money is the center of life or that managing the family finances must be an oppressive burden. In fact, financial success is really just a matter of making good choices consistently. And as readers of Simple Marriage, do you know the best path toward achieving your financial goals?
Keep it simple.
Really. In a world dominated by consumerism, credit card commercials and crazy derivative stock options, you will be well-served to take a deep breath and consider what you really want from life. If you are wise enough to be a regular reader of Simple Marriage, I’m willing to bet that your true priorities fall close to home and close to your heart.
If so, I have some advice that I trust you will value. This isn’t earth-shattering and it’s really not original. In fact, it is the same advice we have heard from our grandmothers our entire lives. It’s not complicated, but it sure is effective.
Six Simple Steps for Financial Success
1. Build a basic budget…together.
OK, so maybe you hate idea of having a budget and counting every penny. Honestly, I don’t care how detailed and meticulous you want to be with this. In fact, simple is better. The two key components of a meaningful family budget are: (1) to proactively plan ahead for how you will spend your money and (2) to create it with your spouse. And the real beauty lies in the latter.
You and your spouse must create your budget together and you must agree to follow the same budget, pinkie-swear and spit-shake. When you take this approach, a budget can become a surprisingly valuable tool in your marriage. Real communication is needed to formulate a plan, and real trust is developed when you both stick to it out of respect for your spouse.
2. Work together from a single account.
Do you and your spouse operate with separate checking accounts or a “yours, mine and ours” approach to your family finances? I would strongly encourage you to consider simplifying your life by consolidating everything into a single checking account. Not only will it be easier to keep track of, but you will benefit by shifting your mindset to one of unity with your money. As a bonus, you can expect that the openness and communication required to make a single account a success will carry over and enhance other aspects of your married life.
3. Eliminate your debt.
None of us enjoy sending out those payments to the bank, car finance company or student loan office each month, right? In fact, I think we can all agree that it sucks to have your income spoken for by debt payments before you even receive a paycheck. So, if we all hate the payments, why do so many families have them?
It’s a matter of mindset. If you feel like you’ll never have anything of value without an accompanying payment book, you’re probably right. However, if you are fed up with being normal (i.e., deeply in debt), you can shed the debt and achieve financial freedom. You set the priorities, and you make the decisions that will allow you to dumb the debt. My wife and I paid off over $53,000 in debt in around three years, and I can tell you that it’s not easy but it is worth it. And the lack of payments really simplifies your financial life.
4. Stick with simple (and effective) investments.
As a rule, if you don’t fully understand something, you should not invest in it. If you chase the latest hot trend and buy what everyone is recommending, you are almost assuring yourself of poor returns. Keep in mind that if thousands of highly-paid professionals spending their entire lives studying the market cannot beat it, neither can you.
Instead, take a simple approach and focus your investing in areas with a long track record of success. Personally, I think it is tough to beat a diversified mix of index mutual funds for retirement investing. They are not sexy or flashy. But they are very effective, low in cost and easy to understand. That’s a formula for long-term success.
5. Enjoy the simple things in life. Live within your means.
At the end of the day, it really does come back to living on less than you make. I hope you make a lot of money and love what you do to earn it. However, the critical point here is that you really don’t need a ton of money to be financially successful.
The key is contentment. Quit placing your value in material things and trying to maintain a high-cost lifestyle. When you learn to appreciate your family and value the simple pleasures in life, your need to impress the neighbors really does start to fade.
6. Pass it on.
In my opinion, the best part of simplifying your financial life and finding contentment with your lifestyle is the impact it has on your relationship with your spouse and the example it sets for your kids. When you break the cycle of debt dependence and fights about money, you set the stage for financial success for generations to come. You literally have the ability to change the future shape of your family tree.
Were these suggestions brilliant, original and completely unexpected? Of course not. I’d venture to guess that you knew these things, but you may not be living them. The key is to take action.
Simplify your financial life and invite new success with your money and, most importantly, your marriage.
How do you feel about these suggestions? Where can you improve your finances by taking a simpler approach?
Photo courtesy kevindooley
We currently have our own separate checking accounts (into which our salaries go in) and then a joint account for all our joint expenses.
We budget how much we will need for our month’s expenditure and put this amount into our joint checking account plus an agreed fixed amount into our joint savings account.
Although I see the advantages of having only joint accounts and we sometimes consider it, I always hold back because of the usual suspects: ‘what if I want to buy him a present? He’ll always be buying himself half and know how much it costs!’ or ‘what if I think I deserve a latte as a treat? I don’t want to be spending my partner’s money on things for myself as he is more frugal than I am (though I’m also quite frugal!)’.
Would be interested to know if anyone has ‘overcome’ this mentality and how?
Thank you!
I’d say that my wife and I opening up separate accounts dramatically improved our marriage. She’s a CPA and was constantly going over every detail, which didn’t sit well with either of us.
Joint accounts taught me to take care of money better and helped her let go of every detail better.
Won’t work for every couple but worked for us.
Hey Corey, I think your wording has me a bit confused. Did you and your wife move to a joint or separate accounts?
Oops, should have stated separate accounts taught us the most with this issue.
Thanks for the great comment, Ines! Like I stated in the post, I think that a single, combined checking account is the way to go. It encourages (or even forces) strong, clear communication in the area of finances and it builds in accountability.
My wife and I use this system and don’t feel at all that it has hampered our ability to give surprise gifts to each other or have some personal “fun money.” The key is in the budget: we know in advance how much we’ll generally spend on gifts and we each have “fun money” budgeted that we can choose to spend as we please…including on each other which makes it very special.
The overall goal in my advice is simplicity, unity and open communication with the money in your household. I personally don’t think that “his and mine” applies when you are talking about your household income…you are married and your money is married as well…
There are definitely legal advantages to having separate accounts (and a joint account that both spouses put a predetermined amount of money in every month). Those advantageous occur when 1) one or more spouses have debt or 2) there is a large disparity of income between spouses.
In general, though, I think that combining accounts can be a great move depending on the couple!
“Keep in mind that if thousands of highly-paid professionals spending their entire lives studying the market cannot beat it, neither can you.”
Also keep in mind that many of those professionals had no idea what those mortgage derivatives were, and we all witnessed the fallout from that.
These are great points.
Thanks, Hayden! I see your point about certain situations where legally it could be advantageous to hold separate accounts. However, in general and when the marriage benefits are held as the top priority, I still think joint accounts offer the better solution for most couples.
And, yeah, those professionals lost even more credibility the last few years!
These are wonderful tips. My husband and I were not following most of these a few years ago. So I made him sit down with me to see how much we were over spending every month. So we got everything in check and are doing much better now. Everything you wrote is vital to making ends meet.
God is a key ingredient too.
Thanks for your kind words, Louise! It sounds like working together and embracing open communication about your money has made a world of difference in your marriage. That’s awesome.
And, yeah, I totally agree that keeping God central in your life is key to success, especially in the area of finances.
PLEASE NOTE: I have created a new thread in the forums here under the topic of “Money and Finances” where we can talk further about the issue of joint vs. separate checking accounts (given the strong interest).
Please leave your comment here and then head over to the forums to really squabble over this issue in detail.
Dustin this is a very good article. Great job.
As someone who has learned to use these same key principles to improve our financial situation, I can vouch for just how effective it was to creating unity that we didn’t have before. It truly taught us to communicate better and forced us to deal with the problems that convince couples to separate their finances.
I believe that when you unite and become one in your marriage it is a mistake to separate in the area of finance.
I do not consider my income to be mine just because I earned it—it’s ours. This mindset would make a spouse that stayed at home feel guilty whenever they wanted to buy something for themselves.
Combining accounts and seeing the income as one builds unity that cannot be achieved otherwise. It is better to learn how to communicate through the issues that are of concern rather than just avoiding them by placing a wedge in between you and your spouse.
Amen, Brad! I think it’s safe to say we see eye-to-eye on this issue.
So what if the couple has separate accounts that are both joint? Meaning they each have access to the others account. I completely agree with the “our” money idea, but sometimes it seems that creatively working through this issue as well as being upfront and talking it through can be beneficial.
Corey, with all due respect, my initial response would be “What’s the Point?”. If you are working together in your finances, you have a simple budget, open communication and a spirit of collaboration, where does the need for multiple checking accounts come from?
I know we both agree that a simple approach is often the best!
Can I jump in here? Dustin, I already mentioned this on Facebook but just read through the comments and wanted to add my two cents!
My Husband and I have separate bank accounts. I think this is mostly due to the routine we established when first living together, before getting married. At the time, our financial goals weren’t always the same. I’m a saver and while my husband wasn’t a huge spender, he didn’t care about saving like I did. For the sake of my sanity, we agreed separate accounts were best.
5 years later and we’re on the same page financially. We both save, we’re both working to pay down debt and both not spending money on junk, but the separate accounts remain. We’ve talked about combining our accounts, but the control freak in me comes out when I think about it.
It just works better for us. We both have access to each other’s accounts and we both have the mindset that “my money is your money – our money”. The separate accounts are just semantics. We discuss goals for each account on a regular basis and have a full-disclosure approach.
It works for us, so neither of us see any reason to change this. We also talked about opening a third, joint account but we don’t see any reason to make our finances more complicated. Maybe I’m naive about this, but I don’t see how having one bank account will make us feel more united.
Thanks for the great comment, Sam! I totally get where you are coming from with your approach, and it sounds like you and your husband have the important part of the issue covered: intent.
You guys are working together (now) and you view your money as a completely shared resource, which is not separated into “yours and mine.” In my opinion, that’s the vital part of this whole discussion. I truly believe that when we agree to marry and work together as a couple, we should combine our finances in common purpose.
For most people, separate accounts are a symptom of an underlying issue where they do not see their finances as truly combined or they lack trust in their spouse. I personally don’t have any problem at all with multiple accounts that exist for the sake of mechanics. In the interest of simplicity, it just seems that one checking account with everything going into and everything coming out of it according to plan is just easier…and it doesn’t allow for a mindset of separate finances (at least not for very long) in general.
Thanks for commenting here, Sam. And thank you for adding to the discussion at the Engaged Marriage Facebook page as well.
Sam – I’m in total agreement with you. Separate (joint) accounts have been the best method for us, too. We both see each other’s accounts and know everything going on. It’s just easier to not have to track down the checkbook or get annoyed with differences in how we record transactions…
Dustin, seems like you are making a sweeping generalization about having two accounts. You could just as easily have a “yours” and “mine” mindset with one account – breadwinner v. homemaker, etc. You are correct with the idea that intent/meaning placed on money is the crux of this discussion. But I believe there are mutliple ways to achieve a successful financial life and marriage.
Thanks for the comment, Michelle! By the way, this may end up in the wrong place because I couldn’t reply directly to your comment (we’ve got too many replies going
)
You are totally right about me making broad generalizations. Actually, as I re-read my reply to Sam, the next to last paragraph came across much more harsh than I intended. Instead of “For most people, having separate…” I should have written “some” or perhaps “many people” instead. I apologize if that came across as trying to sound all-knowing or something.
I hope the rest of my comment was clear enough to convey that I do think the important stuff comes down to intent. While we choose a joint account both for relational reasons and simplicity, I understand that some folks somehow find it simpler to keep multiple accounts.
I was just cautioning that strong feelings about keeping our money separated can be a real sign of trust issues and poor communication…but not always.
By the way, between these comments, the forum here, the EM Facebook page and Twitter, I think I’ve heard from around 25 couples on this issue. I have learned two things about those that responded: (1) Most couples keep a single, joint account and cite the same reasons I did in this post and (2) People get fired up about their family’s personal choice of checking accounts.
I Love It!
Love how you open the topic up for people to even discuss! We do operate two checking accounts, or I should say – both are joint, but I have an account I pay all household expenses, which I am responsible budgeting for out of that account, which ends up making things a lot easier for both of us. We have a great budget outlined and set expectations – I manage all household expenses off a set amount, and hubby tracks all other expenses. It has really made a huge difference for us. Less fights about money – which means more lovin’ in our house!
Thanks for encouraging couples to really take on their finances in a way that will create positive changes!
Awesome, Susan! It sounds like your system is working well for you. And you are absolutely right that less fights about money means more time, energy and enthusiasm for the REALLY important things in life!
You sold me on this! Thanks, Dustin! Just talked to my husband about your ideas and we’re going to move to having one account. I can see how it will help with communication, in a very similar way that NFP does as you make decisions for the family together. Keep up the great work!
Thanks so much, Marianne! You just made my day. And not because you decided that joint checking is the way to go (despite the fun discussion here, I’m not THAT much of a stickler about something like that). You made my day because you talked to your husband openly and you guys agreed that good communication and openness with your finances is important to you. That’s just awesome.
For those of you who may be a bit confused by the rest of Marianne’s comment, NFP stands for Natural Family Planning. It’s something I am quite passionate about, and it has become one of the most popular (i.e., read by the most people) topics over at my site. I encourage you to check it out for more information.
And if you thought joint checking accounts create fiery discussions, just wait till you start talking about sex and family planning issues!
Dustin, it always amazes me how many young adults have no idea how to manage their finances. They tend to buy whatever they want on time payments and not worry about saving for a rainy day. Too often, they only care about the monthly payment, such as for a car for the next 72 (!!!) months, rather than the overall cost.
On the other hand, most older people have been through tough times, such as the Great Depression, WWII or a serious recession, so they tend to save first before they purchase something. I applaud your trying to show people the value of setting a budget and saving regularly. I will encourage people to watch for your blogs.
Thanks so much, Beth! As Dave Ramsey likes to say, this is God’s and Grandma’s way of handling money. And I think we know these are both wise paths to follow!
All of the great comments here motivated me to write an entire article on the debate between joint and separate bank accounts. If you’re interested, please check it out here: http://www.engagedmarriage.com/finances-careers/should-married-couples-have-joint-or-separate-bank-accounts
Thanks!