Finance in a relationship. Seven rules to follow

Every year in Poland, courts rule about 65,000 divorces, and many informal couples break up. Financial misunderstandings lead to the breakdown of nearly every tenth marriage. This is especially true for couples with a shorter experience. Beata Dudała is a certified ICI coach. For many years she worked in corporations at managerial positions in financial departments. We asked her about seven ways to get along better when it comes to money and expenses.

Talk to each other

Each of us has acquired some beliefs from home, and they also apply to money. Rarely have partners been brought up in families that follow the same rules. You should confront your views and expectations, do not assume in advance that your partner thinks the way you do, talk about it, determine how you will share expenses, whether you will have a joint or maybe a separate account, how you will make decisions regarding financial matters, whether you want to have joint property, or maybe on the contrary, you would like to sign a prenuptial agreement? Such a conversation is the most important rule, it helps prevent a lot of possible misunderstandings.

Plan your expenses

If a decision has already been made to run a joint budget, add up the income of both partners and then divide the amount into several parts. Calculate what percentage you need for living – paying bills, buying food and cleaning products, paying off loans and credits, maintaining the car. Allocate some part of the budget to larger expenses such as renovation, going on vacation, buying a new refrigerator. Don’t forget that while a holiday trip is usually planned, a refrigerator, washing machine or other necessary equipment usually breaks down completely unexpectedly. The third part of the budget is money for the development of both partners – studies, language learning, courses and training. Each of you would like to live on a higher level than trying to make ends meet, so you need to allocate a percentage of the budget for investments, even if at the beginning the amounts are very low. You can use this money to buy stocks, bonds, invest in real estate, etc., it all depends on the financial situation of the couple and their preferences.

Spend your money on pleasure

We work not only to pay the bills and save up for a better future, but also to be able to indulge ourselves. Decide what percentage of the budget you want to spend on that, let it be at least 5 percent. That should be money for going to the cinema, dining at a restaurant, weekend trips, theatre tickets, etc. You should agree that this is the money that you actually spend every month on spending time together. Don’t postpone this expense for the next months.

Part of the budget should go to the personal expenses of each partner. While a joint account works well for the part of the budget intended for living, this money should definitely go to separate accounts. You should have complete freedom in spending it, for example, on an expensive hobby. Don’t control your partner when it comes to what they spend money on, don’t not hold them accountable for it, don’t say, “Seriously, have you spent so much money on such stupid things?” It’s best not to ask at all what it cost. Even in a situation where one of the partners does not work, they should also have the right to freely use some part of the household budget. Denying their right just because, for example, they quit their job to raise children is economic violence. Having a pool of your own expenses does not mean consent to hide additional earnings from your partner, although there are exceptions, someone may save up money, e.g. for an expensive gift that is supposed to be a surprise.

Be consistent...

Once you have decided together that you spend, for example, 50 percent of the shared budget, you should stick to this principle. If in a given month you are at risk of exceeding the established limit, limit your expenses, and don’t shrug it off, assuming that it will somehow even out next month. If we have agreed that your partner will pay the bills and you will do the shopping, don’t not blame them when you run out of sugar or coffee.

...and flexible

We plan the budget based on the current financial situation, which may change at any time, hopefully for the better, but it may also change for the worse. In this case, go back to the first point, which is talking. If you started earning more, maybe you should spend more of the budget on investments, or maybe on the contrary, you want to spend more on various pleasures? When there is a shortage of money, look for savings, e.g. suspend the pool for education and self-development for the time being. Another solution is to take up additional work, but when the decision has been taken, you should not blame your partner for their constant absence from home. You must remember all the consequences of every decision.

A shared budget is not a universal recipe for the lack of conflict. If a couple wants to share expenses differently, they decide that, for example, one person pays the bills and the other does the shopping, there is nothing wrong with that. However, it must be a deliberate decision of both people. If one partner wants to keep an eye on the budget, and the other is not very good at controlling expenses, they may agree that only one of them will take care of it, keep an eye on the Excel spreadsheets, etc. Of course, the other person should be aware of what these amounts are.

Protect yourselves in case of failure

When engaging in a relationship, your financial situation may be very different, one person may have, for example, a house or flat, and the other may not have any property. I don’t think anyone gets involved in a relationship, assuming they’ll break up in the future, but that scenario can always happen. The situation of a divorcing marriage, where most financial matters are regulated by law, is different than that of an informal couple, where there is often no legal security. Therefore, just in case, document the expenses, collect bills, etc. They can come in handy when in the case of a dispute during separation and the need to settle the expenses incurred by both partners.

Think about the future, not only yours

When talking about joint expenses, consider whether in the future you will be able to live on the pension earned, or whether you have to save some extra money for old age.

At the age of twenty or thirty, you hardly think about death, but you should also take into account this darkest scenario. When a person in an informal relationship dies, the property is inherited not by the partner, but by the family. Use tools such as an insurance policy or a will. You should also remember about practical things such as even if only one person deals with household bills, pays rent, utilities and loans, the other should at least know the PIN to the card.

 

Author: Ewa Furtak

Photo: cottonbro (Pexels)

The text was published at wysokieobcasy.pl on 27 February 2021