One of the most powerful tools you have to tackle and master your finances is not some fancy calculator or new app, but your spouse. You two are in this journey together and that means using this opportunity not just increase your net worth, but to actually becoming closer.
10 Things You Two Can Do to Build Your Net Worth
When I first started Couple Money, I shared some tips on building a financial plan together. Now older (and hopefully just a little bit wiser), I’ve adjusted my suggestions and added two more. Whether you are newlyweds or have been married for a few years, there are ten things you two can do together that will build your net worth.
- Create and share a list of all your debts and assets. This is a difficult step for most people because it can be scary to see where exactly you stand financially. Resist the urge to minimize or feel overwhelming guilt about the numbers. The point of this step is not to place blame, but to get a starting point. Owning up to mistakes can be productive, but only if you use it as motivation to change your money habits.
- Work out long and short term goals. Now that you two have an idea of where you are, take some time to just talk about your goals and dreams, nothing else. This is the fun part – the two of you can work out what you’d like to do and where you would like to be next year, in five years, and beyond. Do you want to travel? Do you want to start a family? Have you thought about becoming business owners? Whatever it is, talk about it, in detail. The more you can see it, the more likely you two can work towards it.
- Have joint accounts. If you haven’t already, have a joint checking and savings account for your bills and mutual goals (like a house down payment). Make sure the accounts are accessible to both of you. Whether or not one handles the day to day deposits and withdrawals, you are both accountable.
- Create a spending plan together. This is the step where the two of you allocate your income to reach your goals. The easiest way we’ve found for getting there is by automating our payments and transfers. Use your bank or credit union’s bill pay system to handle all of your regular bills, debt payments, and savings.
- Make paying off debt a priority. Think of your debts as dead weight, slowing you down on reaching your goals. Cut down drastically so you can eliminate your high interest debts (like credit cards) as quickly as possible. Begin with your smallest debts and move up to larger ones so you can get motivational boosts as you knock out each debt.
- Build an emergency fund. Prepare for the unexpected and relieve some stress in your marriage by having a financial cushion such as an emergency fund. Try and save $1,000 or one month’s worth of expenses and go until you both are comfortable with your buffer.
- Keep your essentials affordable by being conservative. One of biggest favors you can give yourselves is having a low overhead for your necessities. For us, that meant looking for places that we could afford with one income. That gave us some peace of mind and the second income was used to take care of debts and increase savings.
- Drive used cars. If you have to own a car, take the time to find a dependable one within your budget and if at all possible, avoid car loans. If you already have one, make paying off your car loan early a short term goal.
- Do a monthly review. With your system in place, schedule a time each month to check on your progress. Talk about what went well and what didn’t the past month and think of ways you can improve. The goal is communication, not arguing.
- Celebrate each win. Finances isn’t just about the numbers. When you two reach a goal, like paying off that department store credit card or saving $1,000, take some time to acknowledge the occasion – take a weekend trip, have a party, or just dance. The point is that every accomplishment deserves recognition.
There you have it – a handy list of tips you two can use to grow your money faster.
Thoughts on Building Your Finances Together
I know of course that these tips are not the only thing you can do, so I’d love to get your feedback on how you have done it. How have you worked together to accomplish your financial goals? What helped you to reach them?
Photo Credit: Danumurthi Mahendra