by Brad Tippett, Tippett Asset Management of Raymond James Ltd. –
February brings Valentine’s Day – timely for that romantic topic couples so enjoy: family finances. First let’s ask ourselves these questions …
Do happily married couples always agree on financial decisions? No. Do happily married couples ever have arguments over finances? Yes.
Communication. Simply discussing financial matters can cause tension in marriages and many problems occur due to communication failure. Avoid keeping money secrets from your spouse. Be honest and truthful. Communicating about your finances is just as important as communicating about any other issue in your relationship. If there is something you are not happy with, just talk about it with your partner. Discussing how money should be spent or invested can be a less than romantic experience, but agreeing on it can be.
Goals and priorities. Financial behaviour can reveal much about a person’s values. Discuss your short- and long-term goals. What needs to be addressed immediately and regularly? Prioritize your list of needs (necessities) to wants (luxuries). You will gain a clear understanding of each other’s philosophies.
Define roles. It is important that both partners are equally involved in financial decision making – even when one spouse typically handles the day to day responsibilities.
Budgeting and record keeping. Jointly prepare a budget for home operations and planning for the future. It will include incomes, expenditures, major purchases, retirement and education savings. Reviewing the prior year can help provide the necessary information. Both partners in a relationship must be aware of the overall financial situation. I suggest couples have at least one annual planning meeting and then schedule regular reviews. Keep separate files for bank accounts, expenses, taxes, investments and insurance. Prepare a summary sheet and store with other important documents in a fireproof container.
Plan for emergencies. Nobody expects an emergency or disaster, yet the simple truth is that they can strike anyone, anytime. Not planning for emergencies is a common financial mistake. Emergencies will cause emotional and usually financial stress. Few people can think clearly and logically in a crisis. If only one spouse is handling the finances it is imperative to prepare an emergency kit with statements and advisor contact information. Think of insurance as an investment in peace of mind.
Have FUN with it. If you change the way you look at things, the things you look at change. We would all rather play than work – so make this a game.
Be teammates, not opponents. Make a chart, stick it on the side of the fridge and track your successes.
A great way to learn about investing is to open online practice investment accounts – have a spouse stock market contest.
Create a “change jar” for coins.
Reward yourselves for staying on budgeting or reaching goals.
Some couples have agreed on each having a personal “mad money” account. There are no set rules – it is just important that both spouses know the rules.
Life is too short not to be happy and couples who make joint decisions are more likely to be happy.
Brad Tippett is a financial advisor with Raymond James Ltd. Information provided is not a solicitation and although obtained from sources considered reliable, is not guaranteed. The view and opinions contained in the article are those of the author, not Raymond James Ltd. Raymond James Ltd. member of Canadian Investor Protection Fund.
