Growing up, you may have observed your parents managing finances at home, and it may have appeared to be a seamless process back then. It wouldn’t be a surprise if, years later and as a married person yourself, managing domestic finances with your spouse feels like tricky territory. Effective financial management helps to budget, manage cashflows, and plan better for your future. It might seem challenging at first, but you and your spouse can achieve this by dividing the responsibilities based on your strengths.
Here are 10 tips for your spouse and you to make the most of your monthly earnings:
Share a transparent relationship
Being transparent with your spouse about your finances will increase the trust between you two. If your spouse is financially savvy, then you can get him or her to help you assess your expenditures and manage your assets.
Patience is key
In case your spouse is not well versed with dealing with finances, and you are, then be patient with them. Explain the importance of financial management to your spouse. Avoid being condescending; instead, educate your spouse. Help each other figure out the nuances of financial management.
You could split your expenses based on a ratio that both of you are comfortable with. You may wish to split the payments for your utilities, groceries, etc., in a 50:50, 60:40 or 70:30 ratio, depending on your individual financial capabilities and your expenses.
Set long term goals
Define your long-term financial goals together and chart out a plan that can help you achieve them. Both of you need to be aligned, at every step, to achieve these common goals. Make sure you create a workable plan and stick to it. Remember, you can achieve anything together.
Adhere to your budget
Creating and sticking to a budget is vital if you want a smooth financial journey. Together, you can define a monthly budget and work towards adhering to it. It is also advisable to review your budget every year, according to rising income and inflation. This can help you set new financial goals and ensure you stay on track.
Make smart investments
As a couple, if you are focused on how to manage your finances in the best way possible, you must follow the principle of Income minus Savings (and Investments) is equal to Expenses. Investing your money can also help you create inflation-beating returns over a longer period.
Build an emergency fund
Life is uncertain. There could be a sudden loss of income for a few months due to an unforeseen event or an unexpected urgent expense that cannot be avoided. Your emergency fund must be equivalent to at least 12 months of your monthly outflow towards savings and investments.
Depending on where you stay, healthcare could be expensive. You may also have financial dependents. So, invest in life insurance policies and health insurance for your family to secure your finances in case of emergencies.
Learn to manage debt
Credit card interest rates turn out to be higher than long term debt such as a housing loan. If your spouse is unable to manage credit card debt, bail them out by clearing it and guiding them to manage their money better.
Track your finances
Keep reviewing your financial plan and the path you have chosen to follow it. You can also seek the help of a professional financial planner.
Most importantly, stand by each other and your families even when your financial management goes awry. As expats, sending money back home to your family may be part of your monthly finances. Opt for Xpress Money’s convenient services to send money home and also save on your transactions.