Most couples combine finances with a partner when they get married, if not before. But living a joint financial life is about more than just paying your shared bills from a joint account. When you’re sharing a life and finances together, you also need to share financial goals.
Shared financial goals may not be so important when you’re a young couple just starting out. But as you both get settled in your careers and start to think about buying a home or starting a family, setting achieving financial goals for the family becomes more important. Of course, sharing financial goals with a spouse or partner doesn’t have to mean giving up your own, individual financial goals — it just means compromising with your partner and prioritizing your financial goals as a family. Start by sharing your individual goals with one another, setting new joint goals together, and building a strategy to achieve them. Once you’re both working toward your goals, you need to keep each other accountable.
Share Your Individual Goals
Before you can make shared goals as a couple, each of you needs to be honest with the other about your individual financial goals. If you’re both working and/or have individual assets, you’re both going to have your own ideas about what should be done with that wealth.
Some of your individual goals may be the same. You may both want to save for retirement, buy a house, have kids, and put them through college. However, one or both of you may want to buy a new car soon, go to the salon or eat out on a regular basis, earn a graduate degree, or any one of a number of other goals, large and small. Both of you should write down your financial goals, including short-term (to be achieved in less than one year), medium-term (to be achieved in one to five years), and long-term goals. Include things like how much pocket money you want to have or what standard of living you want to achieve — and if you have a mind to get a new job or further your education, those are financial goals, too.
Set SMART Goals
In order to make sure you’re setting goals you can reach, you should make them SMART:
Using this metric can help you eliminate unattainable, unrealistic pipe dreams from your goal setting, and help you succeed in reaching your realistic goals. For example, let’s say you decide to set a goal of putting $5,000 in your emergency savings over the next six months. That’s specific — you know exactly what you’re setting out to do. The amount you’ve chosen to save is measurable — it’s not just “set up an emergency fund.” It’s attainable — assuming you have the extra money coming in. It’s relevant to your financial situation. And it’s time-bound — you’ve given yourself a time frame in which to work towards the goal, so you’re more likely to achieve it than you would be otherwise.
Make a Plan
Once you’ve set some goals, take a close look at your finances and decide how you’re going to reach them. Money management software can be a great help with this, especially desktop apps brimming with features that allow you to split past spending by categories, track spending across multiple accounts, generate reports, and look back over your past financial activity as well as project your future situation based on your behavior now.
The specifics of your strategy will depend on your individual situation and goals. Maybe you want to get out of debt, so you agree to stop using credit cards, pay more than the minimum every month, consolidate debt onto a zero-interest balance transfer card, and work towards building up an emergency fund so you don’t have to rely on cards again in the future. Or maybe you want to save up for a comfortable retirement, so you visit a financial planner and agree to set aside a certain amount each month based on his or her advice. Regardless, it’s important that you make your plan as detailed as necessary to achieve your goals.
Keep Each Other Accountable
It’s normal to backslide a little when working towards financial goals. The cost of living is going up, the economy doesn’t look great, and it’s easy for even the most highly disciplined person to be occasionally tempted into a frivolous purchase. You and your partner should be able to keep one another accountable when working towards financial goals, but cut your other half some slack when he or she needs it. And remember to stay flexible, and re-evaluate your plan when changes happen — when an emergency forces you to dip into your emergency fund and you need to replenish it, or when one of you loses a job, for example.
Setting and reaching financial goals together is an important part of being in a committed relationship. It can also be one of the trickiest, especially if you don’t communicate openly with your partner about money. Work together as a team to meet your financial goals, and you’ll have much more success.