“All you need is love” as a popular song would have you believe. While the thought seems valid, level-headed couples should know that to be untrue. Love is just one of the many factors surrounding a happy marriage – a safe home, healthy and well educated children, a chance to enjoy a vacation every once in a while – such things made possible by money. Unfortunately, it’s often something that tends to get lost in the romantic glow.
Studies conducted by a reputable insurance company in the Philippines indicate that OFWs and their families have developed troubling habits which keep them from getting ahead in life and being successful in the long term. One of these is having no financial goals. “This is one of the biggest reasons why families often make decisions that lead to bad financial positions, ending up mired in debt to support unrealistic lifestyles.”
Back in 2015, any family of 5 with a monthly income of P9,064 or below was considered poor. This poverty line may seem a ridiculously small amount to live on. But believe it or not, a depressingly large number of Filipinos still live on this amount or less: a total of 3.75 million families (16.5% of all families) and 21.9 million individuals (21.6% of all Filipinos) as of 2015. (Family Income and Expenditure Survey, PSA)
To face today’s economic challenges, a married couple who works together to control their spending and savings will have better control of their finances, a stronger relationship and a secure future. So to live up to the “for richer or for poorer” part of your wedding vows, here are 7 tips from Philippine Business School on how to become a financially smarter couple:
- Communication is key
The first step to becoming a financially savvy couple: communicate! Always keep the channel open and make sure that you are comfortable talking about money. Make sure you have a clear understanding of each other’s financial standing and cash flow like huge debts or bills. Not just because you need to know but also to help each other when one could not make it. Nothing beats an open communication between you and your partner. It is a good way to build trust when it comes to money matters.
- Set goals as a team
Remember, you’re a team working together to achieve your goals. If one of you is set on paying down your debt, and the other is focused on fully funding your retirement savings, you may have to pick and choose which goals get prioritized. Understand where you’re starting from. Will you maintain separate accounts, have one joint account, or perhaps each contribute to a household account? Look at your budget and line up your financial goals. Explore and examine your plans as detailed as possible, it will be helpful in your present and future financial state.
- Keep good records
Couples who are financially savvy understand the importance of staying organized. When you keep records and documents of all aspects of your finances, you create a detailed source of information. When you have questions or aren’t sure about the right decision to make, you can refer to your files to solve problems, answer questions, and realize what money moves make the most sense for you in the present.
- Always track your finances and measure your progress
Make sure you always stay within your budget. Adjust your spending based on this budget. Financially smart couples track income and spending so they can evaluate whether or not they’re putting their hard earned cash to the best use. Each month, measure how much your savings has grown. See if your income is growing or staying stable. When you track and measure, you understand what’s going on and you can see your progress over time — that can be a huge motivating factor to help you keep going.
- Support each other’s financial ups and downs
Money is essential but do not put it in the center of your relationship. Decide as one and win and lose as one. There will always come a time that you will experience your own ups and downs but dealing with money should be a way for you to grow as a couple.
- Discuss your saving and investing strategy
The amount you choose to save is completely up to you and your partner, but we suggest setting aside 10% of your net income, and eventually aim to hit a 30% savings as the discipline becomes a habit. Then find an investment product that can beat inflation and provide you with a return on your investment that is higher than the inflation rate.
- Keep learning together
Communicating and constantly adding to your financial knowledge as a couple goes a long way. If you don’t know anything about finances or investing, recognize that you need to increase your financial literacy. Ask for help from a professional, start reading up on personal finance books, and look into educational courses on money and investments that you can take together. You don’t need to be financial experts before you start investing, but you do need to understand the fundamentals so you aren’t throwing your money around blindly.
Financial literacy is about your basic understanding and having the right mindset towards money-related decisions as well as the products and services of financial institutions and how you can optimize their benefits. PBS is keen to see you and more Filipino couples know how to manage personal finances — including savings, budgeting, making investments, business ventures and retirement planning to become a ‘Financially Smarter Couple’! We are inviting you and your spouse in our Financially Smarter Couple – A Special Financial Mastery Session for Couples. This special session presents a comprehensive overview of financial knowledge, with best practices and tips for individuals on how to save, budget, invest, and borrow funds effectively. Being financially educated is the first important step towards becoming financially independent and secure. So start your journey with us today!
Follow us again next week in this 4-part series on financial mastery for couples. We appreciate your comments on this article, visit our website at http://phbusinessschool.com/newsletter. Connect with our office at Ibis One Central Building with telephone nos: +971 45232488. You can also find us on Facebook, Instagram and LinkedIn. For more information visit our website at www.PhBusinessSchool.com