Last Friday I shared some stats about Canuckistan couples and money that surprised me. To my amazement, BMO's survey found just a third of couples share most of their finances. Of the majority that do not, 69% stated they would start if it could save them more than $15 a month.
Well, sharing finances has huge advantages from a savings, investing, and taxation perspective. Sharing finances is also a key part of our personal success with reverse budgeting. These add up to much more than fifteen bucks.
Aside from the $15 thing, some of the biggest holdbacks to sharing finances revolve around differences in money decisions, independence, and fear of breakups. Not surprising at all when 1 in 5 couples admit to fighting weekly about the green stuff. I'd be worried about independence and a break up too if I fought with my wife weekly--especially over an issue as important as finances.
The solution is simple: get on the same page by working together, respect each other's input, and don't get separated. If only it were that easy...
Sharing Means Less Fighting About Money
We Canucks have a bad habit of kicking the can down the road. Our political parties are famous for short-termism, despite having majority governments. Household finances exhibit the same characteristics.
Can't save for a house so I'll buy one with a borrowed 5% downpayment and pay it off later. Can't save for retirement now, maybe I'll save later when I make more. Want a new car but have no money, I'll get a 72 month loan so I can make the monthly payments.
Not sharing bank accounts, financial decision making, and savings strategies is part of this same issue. It's time to stop this pathetic cycle that will keep you poor!
We don't want to talk about finances with our squeeze because it might get us upset. But millions of us admit to fighting about money every week anyways... So why not talk about it and start setting goals; start reverse budgeting, make agreements on spending behaviour, and agree to hold each other accountable on discretionary items.
If excessive discretionary spending is an issue, plan to save more aggressively so there's less left over to spend. If debt accumulation and being behind on bills is the problem, talk about it together and formulate a game plan to kill the bills together with a spending challenge.
Talking about finances and getting ahead of problems through planning will prevent fighting and strengthen your relationship. You will save money on fees, save money on taxes, spend more efficiently, and invest more for a better future.
There are very few people who get rich by chance or luck. There are millions of couples who get rich by working with their partners, planning the way forward, controlling their spending, and investing successfully.
Sharing Builds Trust
I believe my wife and I have a good relationship after 7 years of marriage. One key characteristic of our relationship is that we plan together, we share everything, and hold each other accountable.
After our reverse budget monthly investment contribution and payment of our mandatory expenses (rent, food, utilities, gas, insurance, etc.), what's left is free for either one of us to spend wisely as we choose. We trust each other to spend in line with our values.
Having shared long term goals and an aggressive savings plan, I trust my wife to spend valuably on discretionary things. She also trusts me to spend reasonably on my discretionary expenses.
Our savings are taken care of first, so as long as we remain debt free with our leftover spending we're both happy. However, everything is there for either one of us to see because it's still important to hold each other accountable for spending.
On Friday we're going to talk more about housing and next week we'll share another update on our finances and the example RM Balanced Portfolio.