Getting Rich Requires You Work Together

Money and money fights are leading causes of divorce.  Often it is actually the burden of debt that drives people apart, but certainly it is very difficult to grow wealthy unless both partners are aboard with the plan.  Just as you’ll only go in circles if one person is paddling a canoe on one side with more force than the other is putting in on the other side – no matter how hard the stronger person strokes – it is impossible for one person to out-earn the spending and poor financial management of the other.

An issue with many couples is that they never really come together with their finances.  Despite the preacher declaring them “one,” there is a still a sense of her money and my money, his debt and my debt, her earnings and my earnings.  In a two earner household it doesn’t matter who earns more money.  Likewise, in a one earner family where one parent is raising the children it doesn’t matter who is doing the important work and who is working the 9-5 job.  It is still “our” money, and “our” debt.  It also needs to be “our” plan.

The first step in working together is developing and agreeing to a budget.  More than just a plan on spending and saving money, the budget is an agreement on what to do as a couple.  Because most important decisions involve money, this has the side benefit of opening up communications about goals and needs.  There should be no asking permission to make purchases – purchases should be agreed upon in the budget and then the budget executed without further questions.

Before the month begins there needs to be agreement on how money will be spent, saved, and invested.  The best approach is to have one person construct the budget and then have a meeting to discuss it and agree on a final form.  It is very important that both people have an equal vote – no running one spouse over or just giving the cop-out “whatever you want to do.”  This only builds resentment.

Once the budget is constructed and agreed upon, it must be binding on both individuals.  If something comes up, try to resolve it within the budget.  If it absolutely can’t be resolved, get back together and determine how the budget must be adjusted.  In doing so, the impact of the decision is seen.  “We can buy that new TV, but it will reduce investments by $500 this month.  Is this really what we want to do?”  Note that a small amount of money each month, say $100, should be given to each individual to spend any way they wish, no questions asked.

 A second consideration is to primarily have only joint accounts.  There should be no “my account” and “your account.”  There should be no hiding of money or spending.  If you trust the person enough to sleep beside them you should trust them enough to have access to your money.  (A special exception would be if one person had an addiction to gambling or  substances, but this is a special case).

The exception to having only joint accounts is that in the event of a sudden death of one spouse, assets in a joint account might be encumbered, depending on the laws of the state.  It is a good idea to ask this question of an attorney when doing a will (which everyone should have).  If access to money might be an issue, having separate accounts with a few month’s worth of expenses would be wise.  These accounts should be primarily dormant – all spending and income should go into the joint accounts.

So, before saying “I do,” be ready to merge everything, including accounts and debt.  A strong marriage is built around working together.  Remember also, one of the primary factors millionaires site in gaining their wealth is a supportive spouse.

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Disclaimer: This blog is not meant to give financial planning or tax advice.  It gives general information on investment strategy, picking stocks, and generally managing money to build wealth. It is not a solicitation to buy or sell stocks or any security. Financial planning advice should be sought from a certified financial planner, which the author is not. Tax advice should be sought from a CPA.  All investments involve risk and the reader as urged to consider risks carefully and seek the advice of experts if needed before investing.

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