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Things to Consider When Managing Money in a Relationship

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Combining finances with your partner is a game changer. By pooling your resources and sharing expenses, you can end up with stronger growth potential and a larger safety net.

While combining finances is great, it comes with the shared responsibility of managing that money. When both of your livelihoods are at stake, tempers can flare and worldviews can collide. It’s no wonder that money issues are the second leading cause of divorce, behind infidelity.

Thankfully, managing money with your partner isn’t rocket science. Here are some simple and effective tips for budgeting as a unit.

1. Divide Discretionary Funds Equally 

Money can breed resentment in a marriage, especially when one or both parties feel like they’re getting the raw end of the deal. For example, if you’re buying new shoes while your partner is wearing the same pair for five years, they might feel like you’re being too frivolous.

That’s why it helps to allocate the same amount of money for discretionary, or non-essential, purchases.

When you divide up the money, set some basic ground rules on what it should be used for. Should you use it if you’re grabbing lunch at work with coworkers? Does it include gifts for the other person’s birthday? Ironing out these details beforehand will make the transition smoother. You can use online savings platform to manage and set aside the funds. Fundall for instance can help you set limits on your spending.

2. Recognize Each Person’s Priorities 

Part of committing your life to another person is being involved in their interests. If your husband cares about orchids, you should ask questions and care about them too. If your wife starts taking martial arts classes, you should learn the difference between a high kick and and a front kick.

But caring is more than just lip service. It’s also recognizing when those interests, values and priorities influence the budget, and allowing for some leeway to accommodate them.

If your partner really cares about retiring early, then saving more than 15% for retirement is a priority you need to respect. If you really love to travel for extended periods of time, then saving money in a travel fund is something your partner should support.

Understanding your partner’s priorities is key to a healthy financial partnership. When you don’t respect their decisions and choices, that’s when conflict sets in.

Sit down together and make a list of your personal short-term and long-term goals. Then, make a list of your mutual goals, like buying a new house or saving for your child’s college education.

Go over your budget and decide how much to allocate for each goal. If you don’t have enough for all of them, decide what’s most important to both of you. Recognize that sacrifices will need to be made, and try to be as equitable as possible.