Managing your money in your 20s can be fairly simple — pay your rent, stay out of debt, and save what you can.
But when you bring a spouse, kids, a house, college tuition, and retirement into the picture, it’s easy to lose track of your finances if you’re not disciplined.
Coming up with a system for managing joint finances can help contribute to a successful marriage.
Joanne Bradford, the chief marketing officer of online lender SoFi, and her husband developed their own system early in their relationship.
On a recent episode of the “So Money” podcast, Bradford explained that a habit she started with her husband 26 years ago has been the key to managing their money, amidst moving, raising children, and changing careers.
“[W]e have every dollar that we’ve [had] as a married couple classified into budget categories and can go back and look at what we did, bought, spent in every category throughout our entire marriage,” the former Microsoft and Yahoo executive told host Farnoosh Torabi.
At first, Bradford said they used the ritual to develop a “very tight budget.”
“Now, we have a little bit more leeway, but we still really enjoy looking at it and saying, ‘Gosh, this seems a little out of control, or this doesn’t seem out of control,” she said.
As Business Insider’s Lauren Lyons Cole reported, to be compatible, you don’t need to have the same financial skill set as your significant other. But you do need to be able to talk about money with each other, starting before you get engaged, and continuing for many years to come.
Talking openly about money builds trust, which is an essential part of any lasting marriage. Trusting each other with finances leads to greater feelings of security, fewer arguments and — added bonus — a more fulfilling sex life, according to a survey from MONEY magazine.
If you can learn to talk about money, which is difficult for many couples, you’ll be better at talking about other challenging topics in your relationship. Talking about money helps establish a good foundation for communicating with each other.
A detailed review of their joint cash flow also helps Bradford and her husband decide what’s important to them. “I enjoy travelling. I take every member of my family on their own trip and then a trip together every year because I think that’s really helpful. Good one-on-one time,” she said.
Bradford said her two kids, an 18-year-old and a 22-year-old, have learned to track their money as well.
“It’s just knowing where your money is going is a daily habit,” she said. “I check all of my credit card activity on apps on my phone and look at it and try to pace out my spending on a monthly basis, really, a budget.”
Additional reporting by Lauren Lyons Cole.