Couples do so much together — make a home, have a family. It’s time that they get their finances in sync as well.
Taking time to discuss and evaluate finances can go a long way toward eliminating fights about money and keeping financial goals on track.
Following are several smart financial moves for couples to take this Valentine’s Day — or any other day of the year:
1. Have a financial date night
Establish a recurring time to sit down together to review your progress toward your existing financial goals, or to set new goals and plan out how you will reach them.
Eric Roberge, a certified financial planner and founder of Beyond Your Hammock, a Boston-based financial services firm, has a financial date night with his wife each month.
“My wife and I have monthly money meetings where we come together and do a review of our budget, spending, goals (and progress to them), and during that meeting we also give each other the space to share whatever might be on our mind about our money or upcoming decisions. We can then iterate on our plan and make adjustments as we go.”
2. Consider joint accounts
Consider opening joint financial accounts with your loved one, or at least adding each other to your existing individual accounts.
Money Talks News founder Stacy Johnson warns against one-size-fits-all approaches in “Ask Stacy: Should My Wife and I Have Separate Checking Accounts?”
Many spouses do opt for joint accounts, though. Stacy explains:
“Keeping everything together has advantages. First, when everything’s combined, it’s faster to get a quick, complete overview of your money. It’s also harder to keep money secrets, which can be a source of friction for some couples. Finally, if something should happen and one of you becomes incapacitated, the other has access to all the family funds.”
Separate accounts also have advantages, however.
Whether joint or separate accounts is better depends on your situation. So, you and your significant other should have a conversation about which option better suits your relationship and your finances.
3. Label and use images with financial accounts
Getting creative with your financial accounts can help motivate you to stay on track with financial goals.
Rick Vazza, a certified financial planner at Driven Wealth Management in San Diego, recommends that couples open accounts that are specific to their goals and name the accounts based on those goals.
“(For) example, (a) couple has a travel account, a down-payment account and a college account for their child. Most institutions will allow you to nickname the account so you can label it appropriately. If possible, it is even more advantageous if you can upload an image to associate with the account. Research shows labeling and imagery to be powerful motivators toward reaching savings goals,” Vazza says.
4. Automate accounts
Set up recurring automated transfers from your checking account to your savings and investment accounts based on your goals.
Try to schedule these transfers for shortly after you receive your paycheck so that you are less likely to even notice that the money left your checking account.
“Having a system in place that automatically funds the goals that are significant to both of you will provide you peace of mind that you’re on track to achieve your priorities” Vazza says. “You can then use the money left over on the things you really love doing as a couple without having to constantly ask yourselves, ‘Can we afford this?'”
5. Increase your emergency reserve
An important financial goal for couples is increasing that all-important emergency fund.
It should be large enough to cover living expenses — for both of you and any dependents — for anywhere from a few months to a year, depending on your situation.
For ideas to help you boost your reserve, check out:
6. Take advantage of spousal IRAs
One of the financial perks that Uncle Sam extends to married couples is the opportunity to stash cash in what’s known as a “spousal individual retirement account,” or “spousal IRA.”
The beauty of a spousal IRA is that even if you or your spouse does not work, you still might be able to contribute to an IRA — a tax-advantaged account — for the nonworking spouse every year.
As we explain in “5 Ways Marriage Can Make You Wealthier“:
“There are hitches, such as that the IRS restricts spousal IRAs to couples who file joint tax returns. But a couple who qualifies for a spousal IRA can collectively save as much as double the individual contribution limit in their IRAs. For tax year 2018, that amounts to at least $11,000 per year.”
And for tax year 2019, that amount jumps to at least $12,000.
What’s your best advice for couples who are seeking to strengthen their finances? Share it by commenting below or over on our Facebook page.