During our career as personal finance and investment educators, we have had the opportunity to help hundreds of Latin American couples in the task of aligning your personal finances.
We have had the privilege of collaborating in numerous cases where couples manage to materialize their dreams, objectives and goals, thanks to orderly and intelligent management of their personal finances.
Couples who are not winning at the money game often have a history of uninformed decisions in managing the family income.
Why is managing money as a couple so difficult?
When we work with couples in our Personalized Sessions Action Plan Master Kit financial education program , we see a very recurring problem in managing money as a couple: each member of the couple acts according to the attitudes and beliefs that they used when they did not live together. In other words, each party brings to the relationship the attitudes about money management that they learned in their family environment. That makes the challenge doubly complicated, first because our family environments in Latin America are usually full of limiting beliefs in relation to money. As a second reason, if each person's set of beliefs are not very compatible, it makes the relationship even more complicated, when it comes to money.
Some typical patterns that we notice in our Latin American homes in relation to money management
- Money as a resource to establish power and mandate.
- Money as an instrument of independence and egocentrism.
- When money was missing, as a symbol of scarcity and stress.
- When money was always very abundant, as an unimportant issue.
We can imagine what happens in a relationship when money comes into the conversation, and each person begins to manifest the learned pattern of behavior… we typically have the collision of two worlds.
In the Masterkit program, we teach how to recognize money personalities, how to recognize limiting beliefs and replace them with enabling beliefs. This usually changes the way we make about 95% of our decisions each day.
The Solomonic method – the most common and the most toxic
In addition to the factor previously revealed, the famous Solomonic method is often used as a unit of measurement in couple coexistence.
In the Solomonic method, the squash is cut in half :). Each party contributes half to the expenses: 50% – 50% and this is generally a mistake.
It is understandable that so many couples fall into this mistake, since initially it feels “fair.” The problem begins when everyone's income is different. As we can imagine, couples' incomes are almost never identical. Then it usually happens that one of the parties (the one who earns more) lives in a very comfortable situation, while the other party cannot afford it.
To the above, we add that the money personalities of each individual are also usually different. The person with the lowest salary or with the most committed salary, also tends to be the most condescending or least confrontational of the two, the one who accepts long-term commitments, which he cannot later fulfill, such as cars, houses, parallel education for children, vacations, etc
3 methods for managing money as a couple
We normally recommend the following three methods for healthy money management as a couple:
For all of the above and recognizing that based on our experience, we developed 3 different ways to manage family income if both work.
Method 1: Single account
It consists of having a single account where all the income of both parties enters and is used for all the goals, objectives and dreams that the couple has. Broadly speaking, investment, savings and expenses.
In this way both parties are partners and not only share expenses.
It has been studied that couples who manage to reach the lifestyle of the top 4% of the population used this method for several decades.
Method 2: Contribution proportional to income
The second method consists of distributing expenses and savings proportionally to the income of each member of the couple. It doesn't matter if it is 60% – 40% or 85% – 15%. The remainder is handled individually.
This system eliminates the pressure on those who have less income and does not dent their worth since they also contribute, enjoy and feel deserving of what they have and are achieving together.
Method 3. 80/20%
The last method is called 80% – 20%. As a first step, both salaries are combined and 80% of the amount is used for common goals, objectives and dreams. The remaining 20% portion, in other words 10% of each, can be used at your complete discretion. This is the budget that each party has to take advantage of their interests: studying, donating, tastes or savings for medium-term purchases.
If you are serious about designing the life of your dreams with your partner, retiring young and living on passive income, we invite you to Masterkit , the online education program focused on achieving financial freedom. The application call is free.
Article taken from the Liberfinancultura cracks website: https://liberfinancultura.com/3-formas-de-manejar-los-ingresos-en-pareja/