Many couples struggle with money. If not managed well financial misunderstandings can cause a lot of strife in your relationship and can be a precursor to separation. In this article I will share some of the things I practice with my wife regarding our finances. This may not be applicable to everyone but I will illustrate some general principles we use to manage family finances.
At the beginning of each year we go for a family retreat. During this time we map out where we should to be in the next year and also in 3 years time. We specifically set goals across different life categories for example financial, spiritual, health, career, family, social, and personal development. We develop individual goals and also joint goals. These goals are written down and shared on email for accountability. As the leader of the household it is critical for the man to take charge of this process and provide leadership in the family’s finances. For example in 2012 we set out some financial goals to own our home; have annual individual savings of at least 35m; invest at least 20m in a business which should generate 1m per month. Looking back in 2019 many of these things have actually been accomplished.
Celebrating small milestones
We try and celebrate any financial milestones at our monthly date night. The milestones could range from completing a land purchase; hitting a savings goal; getting out of debt; getting a promotion, etc. Celebrating milestones makes the long journey to financial freedom a bit of fun. We also do at least one vacation towards the end of the year where we reflect on the past year and set sight on the next year.
Taking Massive Action
When we typically agree on something we then take a lot of massive action to get it done. For instance while we were trying to get out of debt a lot of things were suspended including car repairs, home renovations, etc. Since we are clear on what we need to achieve this is quite easy to do.
We try to be as transparent as possible when it comes to money. For instance we know what each other earns. We know each others phone passwords and mobile money passwords. We share bank statements and other financial records. We typically consult or inform each other of key financial transactions.
Holding each other accountable
We share our annual goals with each other on email at the beginning of the year. At our monthly date nights we review among other things how we are progressing generally. For example at our last date night I shared that I had gotten out of debt and was making significant progress on starting up a new business venture. My wife also demonstrated good progress towards her investment and career goals. In fact she has recently started her own Law Practice.
We each have a baseline target to read and share at least one book per month. I generally share books and resources I think she will find interesting and she does the same. We have attended marriage seminars and personal finance workshops together. Doing this enables us to have a similar state of mind and understanding which allows us to pursue a common vision regarding our finances.
We have a monthly budget for home expenses. Personal expenses are at individual discretion. We also have an annual investment plan for big ticket items like land, rentals, business, etc. The individual contributions to the budget are in proportion to our incomes.
My wife is in charge of managing the home including most of the shopping. On a monthly basis I remit my contribution to her account and everything gets taken care of. The actual shopping is delegated to the home caretakers.
We jointly hold most of the assets. All real estate is jointly held. We have a joint unit trust account with UAP. The investment accounts are separately held. We don’t do joint bank accounts though this is something we did in our earlier years of marriage.
Freedom to pursue different projects
We are free to pursue our individual ambitions and desires. I have done all sorts of fun but loss making projects. My wife tried her hand at a wedding gown venture. Part of the annual investment budget is dedicated to such projects. This gives each of us the freedom to fully exploit our individual potential.
Proper financial records
We have each installed expense tracking apps on our phones and have been tracking our expenses for over a year now. I consolidate all this information in a detailed financial report which I share with her on a monthly basis. So we basically know and track our net-worth as a couple and other key financial metrics. Having such clarity on our financial situation gives us leverage to undertake various investment opportunities and ventures.
These are some of the basic principles we use to manage our finances as a couple. Feel free to share your experiences and thoughts on how you handle money as a couple in the comments below.