10 ways to establish your financial independence in marriage

In the United States, roughly fifty percent of marriages end in divorce and the number one reason for this is financial challenges. Sometimes one partner is a saver and the other a spendthrift. In other cases, one partner has a high-paying job while the other may only work part-time or stay at home raising the family. This article offers ten ways to establish your financial independence in marriage. 

The goal of this article is to show there are ways to reduce your chances of becoming a statistic. This quote by Colleen McCreary, Chief People Officer at Credit Karma sums up this sentiment. “If you are both financially independent, it can mean more of an equal balance in the relationship”.

1. Regular communication

There are many choices for where to start this discussion, however, for me, the number one way to a happy life and financial independence is regular communication. Both partners need to be willing to openly and honestly discuss their hopes and dreams when it comes to items money is spent on. This means setting up regular financial date nights. We will discuss topics to cover later in this article, however, unless you set time aside on a regular basis, you will not do this and over time disagreements will arise that might have been avoided if they had been discussed earlier. Maybe financial date night does not sound sexy or even fun, however, the act of sitting with your partner and discussing financial plans on a regular basis, which I recommend at least once per month, can ensure you are both working toward the same long-term goals.

2. Discuss financial topics

Now that you have established a financial date night and put it on the calendar, what do you discuss in these meetings? In two words, anything financial. Do you want a new tuxedo, a new designer gown, a new car, or a new home? Each of these topics would have different parameters as the tux or gown may fall under an individual discretionary category, while the new car or home might be joint ownership and joint contribution toward the outcome.

3. Decide on separate, joint, or hybrid accounts

Do you want to keep things separate or joint, or maybe a hybrid approach works better for your situation? Here are the different options:

A. Joint ownership plan: All income is put into a single joint checking account, which is used to pay bills, and money is transferred to savings or investment accounts. All accounts are joint ownership.

B. Separate accounts: Each person maintains their own account and decides who pays for what item.

C. Hybrid approach: Each partner has their own accounts and joint accounts. Joint accounts are funded by each partner putting funds from their individual accounts into the joint account for joint bills.

4. Review existing bills and set financial goals

Once you have established how you will pay the bills, ie. joint account for everything, individual accounts, or a hybrid approach, it is time to review the existing bills and set financial goals. Maybe you are renting and want to buy your own home. Then one of your goals might be to accumulate a twenty percent down payment in the next five years. Or your car is no longer reliable transportation, so you want to save up for a new car. Or maybe you want to take that dream vacation but don’t want to put the whole trip on your credit card.

5. Brainstorm financial goals

Establish some time to brainstorm ideas for financial goals. You might decide to create separate time from your financial date night to devote to this activity. Maybe even do it individually and then get together with your partner during financial date night and discuss and prioritize the various financial goals.

6. Create a budget

Now that you have a list of all the current bills and the short and long-term goals that you are working towards, it is time to create a budget. A budget does not need to be anything complicated or scary. It is simply a list of income and expenses that give you a snapshot of your financial picture at a point in time. It also helps you see at a glance if your financial plan is on track or needs adjustment. You can also think of it as a cash flow statement. You list all your income at the top of the budget and subtract all your expenses from the income. If there is anything left over after paying all the bills and setting aside money for financial goals, that is money available for investing. 

Though one partner may enjoy working with budgets and agree to maintain them, the budget-building exercise is a joint exercise. There will be items to negotiate such as which short and long-term financial goals will be added to the budget and how they will be funded. Therefore, though one partner may maintain the budget, it should be created jointly and reviewed during each financial date night.

7. Build an emergency fund

While building your budget, you want to also build an emergency fund. This account is easily converted to a cash account, that you can access in case of unexpected expenses. This could be for the car breaking down, the water heater breaking or anything that happens that you could not plan for that needs to be taken care of right now. This account is not to be used for vacations or financial splurges because you had a bad day at work and need retail therapy to feel better.

8. Review investing options

Now that you have decided on your plan for how bills are paid, what financial goals are being pursued, and have built a budget, you can review investing options. This assumes that you have money left over after paying all the bills and funding your emergency account and financial goals. Maybe you want to buy a rental property so you can have a stream of income every month. Maybe you want to invest in stocks and bonds or something more exotic like collectables, artwork or cryptocurrency. When it comes to investing, consider taking classes or consulting professionals, so that you can make informed decisions on the appropriate investments for your situation. You and your partner need to both be comfortable with your investment strategy to avoid issues in the future should the investment not earn the return you were hoping for.

9. Schedule financial date nights

Consistently schedule financial date nights with your partner. These regular meetings will help ensure you both understand where the money is coming from and going to and can see forward progress.

10. Avoid financial arguments

Not arguing over money will increase the chances of a successful marriage. Financial problems are a top reason marriages end in divorce. By having regular discussions about finances, you reduce the likelihood of misunderstandings and disagreements.

Conclusion

Establishing financial independence within a marriage is crucial for fostering a balanced and harmonious relationship. Byfollowing the ten strategies outlined in this article, couples can create a robust financial plan that includes regular communication, setting financial goals, creating a budget, building an emergency fund, and exploring investment options. These practices not only ensure both partners are on the same page financially but also help mitigate the common financial stressors that often lead to marital discord. Consistent financial date nights and open discussions can significantly reduce the likelihood of financial arguments, thereby enhancing the stability and longevity of the marriage.

About the author

Josette Mandela is an MBA-trained author and financial wellness coach focused on teaching women basic financial skills.  Before becoming an author and coach, she consulted for several financial institutions. Though the money was good, there was little job security. She saw women struggling to make ends meet and unsure how to get ahead financially. Josette decided to leave the corporate world and help other women become empowered money managers. 

Connect with Josette at www.josettemandelathemoneygirl.com or  www.facebook.com/themoneygirlontwitter.