El Comercio, the #1 and most influential newspaper in all of Peru, interviewed the President of the Institute of Family and Money Matters (IFAYDI), Elaine King. She was asked to share how couples can manage financial stress. In the interview, King provides three key tips that can help couples handle their wealth management and prevent separation.
King says the first thing couples must do it identify each person’s financial profile. Who in the relationship is the spender and who is the saver. It is common for individuals in a relationship to be financial opposites. This is why it is crucial to start the process by identifying the spending habits of each person. Knowing these will help each partner understand the way they and their companion value money.
The next step is to formulate a budget together. Every couple should consider their total revenue, fixed costs, and variable costs when planning a budget. Each individual’s contribution to the total budget funds can be based on hours worked or wages earned. King notes that there is no perfect formula and to test different options to see what works best for the relationship.
The final tip King offers, is for couple to establish a contingency plan. “It is not a legal document but a commitment,” King explains. A contingency plan is a safety net should one person lose her/his job or incur an injury. King suggests establishing a list of assets and find ways to protect them, like insurance.
King concludes by adding that, “70% of marriages that end up in divorce is attributable to finances and 60% of fights are due to finances while married. Divorces over finances can be avoided if you have a plan with your partner first.”
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These practices come from King’s upcoming book on finance for couples. Keep an eye out for her new book or start reading her other books by clicking here.