Two Couples Open Up On How They Manage Money, Together

By SoFi General | Feb 16, 2017 | invest, Lifestyle, Money | No Comments

Far and away, money issues are the leading cause of stress in relationships. It makes sense when you consider that nearly 13 million Americans withhold financial information—including bank accounts and credit cards—from the people they love.

Obviously, that’s not exactly a healthy way to engage in a relationship. That’s why, instead of allowing money issues to balloon into financial infidelity, or to become even a minor source of tension between you and your partner, it’s important to talk about how the two of you plan to manage your money as a couple.

SoFi members Jennifer Nichols and Anthony Latta learned over time what it takes to successfully combine their individual financial lives with that of their partner’s through trial-and-error in their own relationships. Here’s their advice for merging money in a relationship, from what works well to what definitely doesn’t.

Step 1: Get talking early

This might go without saying, but the simplest way to avoid a feud over finances is to share your thoughts on money openly and honestly right from the start.

Anthony Latta, a Managing Director at Chemonics International, recalls talking to his wife of three years, Emma Clark, about money before they even started dating.

“We had two friends—a couple—who split everything in their marriage 50-50, even though he made a lot more money than she did,” Latta says. “Emma and I had conversations about that when we were just friends. To us, that didn’t make sense. We’re not going to get in a fight or split costs because one of us bought lunch instead of bringing it from home. Couples fight because one person spent $300 on something and didn’t discuss it with the other.”

Similarly, Jennifer Nichols, the Associate General Counsel for a real estate company in Chicago, Illinois, and her husband of 10 years, Lennon Jones, began discussing money long before they exchanged vows. Back when the couple fell in love 17 years ago as college students, Nichols remembers asking her then-boyfriend if he really thought it was wise to finance one of their pub-crawl dates with a credit card.

“I’ve always been super open about money,” says Nichols. “I don’t understand why the topic is taboo.”

Fostering open dialogue about money early in a relationship not only helps promote peace of mind, but also provides an opportunity to address the often uncomfortable topic of student loan debt.

Latta says his wife wasted no time in discussing their student loans; they quickly chose to take a team approach to paying them off. When Latta discovered that refinancing with SoFi provided him a five-year loan at 4.9% interest on the $25,000 he had left of his student loan debt, his wife followed his lead just one month later, refinancing her $95,000 in student debt with the same terms. Because they had talked about it in the first place, both were able to take advantage of a better pay back plan.

Talking about taking control of their student loans also made the two realize they have shared goals around how they wanted to get rid of debt, too. Though the five-year loan terms they’ve both chosen are somewhat aggressive, Latta says it’s because the couple discussed it, and decided they both prefer the peace of mind that comes from being debt-free.

Step 2: Making and sticking to a budget

Once you have finance details out in the open, it’s time to create a budget that works toward paying off debt effectively and that targets short- and long-term savings and investment goals as a couple.

While some couples might be tempted to continue budgeting as individuals, with each handling 50% of the household expenses, doing that could invite frustration and failure.

Nichols and her husband first attempted to split household expenses and other bill payments equally, but that became complicated. So they committed to joint banking and budgeting as a couple.

“All the money goes into the joint bank account,” Nichols says. “I manage all of it and make sure the bills get paid. The remainder goes to either debt or savings.”

Nichols uses both a paper planner and the Balance My Checkbook app to record the couple’s income and expenses, but uses a spreadsheet to track their student loans and mortgage. She also manages three checking accounts to which she and her husband contribute a percentage of their paychecks. One checking account covers the utilities, mortgage, and student loans; another is used to pay off the monthly credit card bill (the couple uses just one credit card for monthly expenses); and the third, a credit union account, earns 3% in interest, so it serves as a savings account.

Latta and Clark were forced to make a big change in their budgeting style a few years after getting married due to the birth of their daughter, Margaret. Refinancing their student loans was one of the first ways they prepared for Margaret’s entrance into the world.

“Refinancing brought the interest rate down, which helped to make daycare much more affordable,” Latta says.

The couple also tweaked their budget more and shifted their savings strategy. “We looked at our total income and our ‘must’ expenses—mortgage, car payment, insurances, and child care,” says Latta. “Then, we looked at what was left and decided how much we wanted to save each month. We now now max out only my 401(k), which allows us to aggressively pay down Emma’s higher student loan debt.”

The remainder each month gets put into buckets for variable expenses like groceries, clothing and non-essentials.

Step 3: Set and tackle other debt and savings goals

Talking honestly about money and budgeting effectively helps couples act as a strong financial team. But those steps won’t necessarily reduce financial tension on their own—to really get to financial harmony in a couple, you both have to actually tackle the money goals you set out.

After years of carrying credit card debt, auto loans, and a mortgage, Nichols and Jones became hyper-focused on ditching those burdens. The couple started by minimizing their lifestyles—”but not to the point of living on ramen,” Nichols notes. By December of 2016, they paid off their credit card debt and auto loans, and then turned their attention to saving. Their goal for 2017 is $40,000.

“We chose that amount because we know it’s possible—it’s the same amount we paid off in 2016,” Nichols explains.

When their $40,000 goal is reached, it will provide not only a healthy emergency fund, but also a cushion should they pursue starting a family.

Conquering financial goals, such as credit card debt repayment and building a healthy savings, requires coming up with plans that are actionable—and then doing them. Latta and Clark know that well.

“We don’t just say, ‘We want to save cash’; we determine exactly how much of our take-home pay to save in case of an emergency, such as if one of our employers go into default,” Latta explains.

Latta and his wife also created specific plans when determining how much to save and spend on upgrades to their home, then make a point to stick to them as they’re carried out.

Step 4: Continue to keep yourselves honest and motivated

To stay on track with all your debt repayment and savings goals, hold regular meetings.

Latta and Clark sit down once a month, typically after bills have been paid, to debrief on spending, analyze progress toward goals, and tweak the budget if necessary. Nichols and Jones don’t schedule regular money meetings, but they check in with each other once or twice a month when Nichols shares the finance “highlight reel,” which includes progress toward their goals and any setbacks that may have occurred.

Right now, Nichols and her husband are focused on their goal of saving $40,000 and staying out of credit card debt in 2017. Latta and his wife continue to balance fully funding his 401(k) with saving for home improvements, including a new front door and gutters.

For both couples, creating a team mentality about money has truly been the secret to success.

Are you looking for ways to better your financial relationship with you honey? SoFi can help. Check your rate for student loan refinancing, or speak to a member of the SoFi Invest team.