Sharing financial responsibilities in marriage to help manage expenses

#Managing your money

Working together with online budgeting tools can help couples achieve their financial goals more quickly

Instead of letting money become a source of tension, couples can work together to manage household finances. Their relationship will benefit, as will their financial future.

By sharing the role, both spouses can better grasp the financial components of managing and maintaining a household. This understanding and transparency can help show the importance of avoiding ill-considered splurges.

Working together can also help couples reach their goals faster and more equitably.

The incentives

Building a budget and financial security plan and sticking to it isn’t always easy. By definition, saving means not consuming, and for many people, that doesn’t sound like as much fun. We all need goals to keep us motivated.

For younger couples, this is a fantastic opportunity to understand each other’s aspirations. It can also be a great equalizer. Even if one spouse makes considerably more money, decisions should be unanimous.

Cash flow - the ins and outs

Think of your household as a company, except with co-bosses. Earnings come in and bill payments go out. Whatever is left each month is profit, or in this case, savings.

Online tools make it easy to build a budget document of monthly income and expenses.

Utility bills, insurance payments, property taxes, car expenses, student loans and rent or mortgage payments will make up the biggest chunk of monthly expenses. Other household costs include groceries, keeping vehicles fuelled and insured, eating out and entertainment.

Instead of breaking down individual personal expenses, such as clothing, gym memberships and pocket money, you can set a monthly amount for each of you.

Income is the easy part. You know how much you each take home and when deposits are made. If either of you contributes to a pension plan or registered retirement savings plan (RRSP) through work, that money should be included as savings.

Managing household expenses together in the early days of your relationship sets the foundation for lifelong financial security planning success.
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Joint venture

A joint bank account may be an ideal way to manage day-to-day expenses, even if one spouse looks after bill payment using the joint account.

Reoccurring bills can be paid automatically from this account. You can also set up automatic transfers to one or more shared high interest savings accounts for big ticket items like a new car or down payment for a house. Like exercising, saving money is easier when you have someone with whom to do it.

All this transparency also provides checks and balances to help prevent one partner from making a rash spending decision or putting money into an ill-advised investment.

Sharing credit

Credit cards with the highest rewards and other benefits have annual fees of $100 or more. But typically, they don’t charge extra for adding someone to the account. You’ll save on fees and your combined spending means you’re accumulating rewards faster.

You may also wish to consider having separate no-fee, low-limit credit cards. These cards can serve as a backup if one of your main credit cards is lost or stolen. Plus, it may be difficult to surprise your partner with a birthday gift if he/she has already seen the charge on a credit card statement.

Having your own credit card can also help build your credit rating score.

Sharing debt

Paying off debt offers better returns than most investments, especially high-interest debt such as outstanding credit card balances. As a family, it doesn’t matter whose name is on the debt. Paying it off should be a shared priority.

Practice makes perfect

Managing household expenses together in the early days of your relationship sets the foundation for lifelong financial security planning success. Expenses and spending are easier to track. Once kids come along, the budget will expand but the system is already in place.

Early success saving together for something special such as an exotic trip sets the stage for bigger and more important objectives – an automobile, home, kids and retirement. Understanding finances and working as a unit are essential ingredients for making money work for you to help attain financial independence.

The information provided is based on current laws, regulations and other rules applicable to Canadian residents. It is accurate to the best of our knowledge as of the date of publication. Rules and their interpretation may change, affecting the accuracy of the information. The information provided is general in nature, and should not be relied upon as a substitute for advice in any specific situation. For specific situations, advice should be obtained from the appropriate legal, accounting, tax or other professional advisors.

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