There is no doubt that as a couple, you may stand a better chance of rapidly growing wealth. However, merging and handling your finances to achieve wealth within a romantic ring is one of the toughest tasks to carry out. In fact, in any given instance, couples are wont to fight and argue more over money and wealth than any other aspect of a relationship or marriage. Today, we look at doable steps on handling money for couples.
Talk and prioritize money: To begin with, you must make a deliberate effort to prioritize your finances. “If you don’t, your finances will never be a priority,” says David Bach, the author of Smart Couples Finish Rich. This means that money should be a regular topic between you. “Smart couples talk about money all the time. When you work together on your finances, you will be able to compound the results. When you don’t, the same will occur for the mistakes you will invariably make,” says Bach. Nonetheless, you will need to be as detailed as possible in order to get on the same financial pedal. For example, discuss and mutually agree on issues such as family and household bills, management of bank accounts and budgeting of family income.
Invest together: One of the most effective ways couples can grow wealth is through investments. For example, during the 2014 bullish run on the Nairobi Securities Exchange, Equity Bank CEO James Mwangi’s 6.5 per cent stake co-owned with his wife was estimated to be worth Sh.12.5 billion. This gave the couple an annual compounded rate of 50.4 per cent over an eight year period from year 2006. Once you have agreed on the right investment to place your money on, go for a similar longer term strategy in order for you to reap handsomely.
Salaries and budgets: According to James Njenga, a financial coach based in Nairobi, you must never live beyond your income. This is especially where you are both in the lower salary carders. “Establish joint saving and investment goals and cut off unnecessary expenditure from your budget to create more capital for investments,” he says. One of the easiest ways you can start saving for investments is by following the popular 52-Week saving challenge plan, through which you pool money for saving weekly, bi-weekly or monthly. “To avoid the effect of inflation, it is always better to save through money market funds which are safe, interest-accumulating forms of investments,” says Njenga. Additionally, according to Bach, you should get started immediately after establishing your money goals. “Take specific and immediate actions to make your goals more real. This is what will ultimately pump in the energy that the two of you will need in order to see your goals through to reality,” he says.
The home loan: Owning a home is most likely to make it in your top list of medium to long term goals. One of the home buying options that will have an impact on your finances is mortgage. If you go for a mortgage, ensure that you have a plan to pay off your home loan as quickly as possible. “The trick you need is to increase your repayments gradually such that you are able to slash down the period stipulated for repayment,” says Njenga. His sentiments are echoed by Bach who notes that while a longer repayment period will give you financially flexibility, under no circumstances should you repay a home loan the full repayment period. “The smarter decision is always to pay off earlier. You’ll also pay less than you would if you served the home loan for a full term,” he states.
