This year is our 20th wedding anniversary! I have to say, time goes by really fast. Twenty years seems like such a milestone, it has me feeling rather reflective. And since this is my personal finance blog, I thought I’d write on 20 money lessons learned in 20 years of marriage! Whether you’ve been married for a long while, you’re newlyweds, or you’re in a committed relationship, you’ll find some essential money tips on managing finances together.
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1. Talk about your current financial situation frequently
It’s so important to be on the same page with your finances. If you both know where you are, and what you (financially) want for the future, it makes it attainable. As women, we’re more likely to outlive our husbands, so we need to understand the family finances. Mr. Tea and I talk about our current finances about once a month, when I track our spending on the Quicken app.
2. Talk about long term financial goals regularly
Whether it’s investing for retirement, financing a dream trip, saving for the kids’ education fund, or buying a car. It’s imperative to talk about long term money needs, and how those plans change over time.
3. Have similar financial priorities and values; discussing any changes
After we had our first child, I went back to work full-time. Mr. Tea and I both found that a horrible schedule for us, with daycare drop-off, penalties if we were late due to traffic, baby sick all the time. We discussed our change in priorities for me to work part-time from home instead of full-time. It meant a decrease in income, but also no more daycare costs. And the lifestyle change was great for us.
4. Save for the children’s education and for retirement
We invest funds into our RRSP (retirement) fund each year, with an eye to how much we expect to need for retirement. We have also maximized the government grants for the children’s RESP (education) funds. The free grants amount to $7,200 per child, so well worth the sacrifice in other budget areas.
5. Invest for long term growth, even during the down markets
Mr. Tea and I are strong believers in index funds. Although we do have a small percentage invested in individual company stocks. This is balanced with bond funds and GICs for a buffer against volatility. And while it’s so hard to see the value of our investments fall in a down market, we know that the best thing to do is to do nothing. Keep our investments where they are, and the market always goes up again. Not that we’re always perfect about this, but we definitely wouldn’t be good at “timing the market”.
6. Joint bank accounts
I know this is perhaps more controversial, but right from the start Mr. Tea and I set up joint bank accounts. We both know how much each other makes, and we both have the ability to access funds. All bills and household expenses are paid with joint money.
If you prefer separate accounts, I would personally suggest all income goes into a joint account and then transfer a specific regular amount to a private account for each spouse. All bills and common spending can be paid out of the joint funds, but personal items and gifts for each other could come out of the single account.
7. Philosophically everything is “our” money
As well as joint bank accounts, we also have the philosophy that every penny is “our” money. When I was a full-time stay-at-home-parent with little income, there was never a sense that I was spending “Mr. Tea’s money” when I purchased items. I still had equal say in all the spending, saving, and investing decisions.
8. Track income, spending, and investments with an app
In 2011, I started using the Quicken desktop program to track our bank accounts and our investments. This has brought an incredible amount of clarity to our financial situation. We don’t write out a budget per se, but we have a clear idea of where we are, where we were, and where we’re going. We can see where spending has crept up, and address it quickly. And it’s pretty awesome to see our net worth go up year by year!
9. Discuss large purchases together
Before making any large purchases, we discuss our thoughts about what is the right thing. We research big purchases, and together make the decision that we agree on. When we needed a new washer last year, we researched the features we wanted, decided on a make and model, and looked for the best price. The store offered a big discount if we got the matching dryer. But our dryer, though old, is working fine. Mr. Tea and I discussed it, and decided against spending the extra.
10. Don’t micro-manage small spending
On the other hand, we don’t micro-manage each other’s small expenditures. We may talk about the philosophy that taking a lunch to work most days will save a lot of money over the long run. But on any given day we don’t get anxious over a single fast food lunch, pair of shoes, or any other small expense.
11. Never hide spending, debt, bank accounts, or credit cards
Because there is no micro-managing of small spends, neither Mr. Tea nor I have ever felt we had to hide spending from each other. Hiding spending, debt, bank accounts, or credit cards essentially means you’re putting those things ahead of your relationship with your partner. It will only drive a wedge between you when it finally comes out, which it always does sooner or later.
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12. Pay bills on time, and never carry credit card debt
Mr. Tea and I always pay our bills on time. It’s worth the time to be organized about money. The alternative is developing bad credit history that can take years to crawl out of. We also always pay off our credit card bill in full. The interest rate on credit cards, around 20%, would wipe out any benefit from the Airmiles we collect. In a rare situation where we have a high credit card bill – like during a renovation – we move any extra to the line of credit. The interest rate is under 5% – far less than the credit card. In that situation we work to pay it down quickly.
13. Re-evaluate bills to get lower prices
We periodically go over our bills to see where we can save money. Our Rogers bill for home phone, internet and cable had been creeping up steadily. Last year we cancelled our cable (we get over 25 channels with an antenna, and we all watch Netflix instead of cable TV) and our home phone. We switched to Ooma, where the deluxe plan is only $4/month! And we get free long distance across Canada, the U.S. and Mexico, which is important because of relatives in all three countries. We also talked with our home insurer, and found about $1,000/year savings there!
14. Don’t get a storage unit!
This is a lesson learned the hard way. When we have undergone extensive renovations, we have arranged for a storage unit. In part because we rent out our basement to tenants, so we don’t have storage there. But I tell ya, it’s a lot easier to get a storage unit than to bring all that stuff home again and sort through it. And it’s expensive, too – over $100/month for even a small unit. “Temporary” can easily end up being years, long after the renovation is done.
15. Support each other
Mr. Tea has been the main income earner since the children were born. I have worked part-time, then not at all for a while, now part-time again. We also have rental income. I support him in the role of being financially responsible for the family. Since we have less income than if I worked full-time, I can focus on reducing our household expenses. And because I am home, Mr. Tea has been able to travel for work which benefits his career.
16. Know where to access funds in an emergency
In the world of personal finance, having an “emergency fund” is a common topic. Mr. Tea and I do not have one. But we know where and how to access funds quickly if we ever needed to.
17. Know where to find each other’s financial information in case of emergency
While we have joint bank accounts, by regulation the registered account are individual. That is, RRSPs (retirement accounts) and TFSAs (tax-free savings accounts). In case of any emergency, we both know where all the account are located, as well as life and disability insurance details.
18. Life and disability insurance
When you are homeowners and/or parents, you have others relying on you. It’s imperative to have good life and disability insurance coverage. If something happened to Mr. Tea, as the higher income earner, we’d need financial support. If something happened to me, Mr. Tea would need someone to help with the kids, the house, and the cooking. Or he would have to scale back his work to manage those himself.
19. Automate but don’t forget about it
Set up your savings to be transferred automatically from your bank account each month or each payday. Pay yourself first is not just a meme, it’s wise advice. Make the first hour of every day an investment in yourself, while the rest goes to pay the mortgage, groceries, bills, and so on.
If you set your bills to automatically deduct from your bank account or credit card, you ensure that you never miss a payment or pay late fees. But it’s easy to miss when the bills start to creep up. So stay on top of your deductions!
20. Let your wife handle everything so it gets done
When I asked Mr. Tea if there were any other money tips for newlyweds I should include in the post, this was his answer! What a sweetie. As my mother-in-law told us when we got engaged, “every year of marriage just keeps getting better and better.”