There is no doubt about it; money helps you enjoy life. That is not to say that the more money you have, the happier you are, or that if you only have a small amount of money you will not be able to enjoy life as much. It definitely does not mean accumulating money is better than spending it. Money is meant to be spent, but there are choices to make about:
- whether you spend your money now or later
- what you spend your money on
Making the right choices about these things will help you get the most enjoyment from the money you have and the wealth you create.
If you have a partner, I strongly recommend that you work through this course together. A good relationship is one where both partners have shared goals and where resources are combined towards achieving those shared goals. That is not to say that each partner doesn’t have their own individual goals. Relationships vary in terms of the balance between shared and individual goals. The most important thing is that this balance is acknowledge and agreed and that there is agreement on how financial resources within the relationship are directed towards achieving those goals.
There is a continuum of possibilities for managing money in a relationship, ranging from complete separation of all financial affairs to sharing of income and expenses but not assets or investments, to complete integration where everything is owned and managed jointly. The way in which money is managed within a relationship reflects how committed the relationship is and how the two people concerned have dealt with their individual differences in their relationship with money.
Your relationship with money is a reflection of who you are as a person and how you interact with the world. If you are by nature a cautious person, you will probably be very careful with your money. Likewise, if you are a go-getting risk taker in life, chances are you will take risks with your money. Differences between partners in terms of their relationship with money have an impact on the way in which money is managed.
The factors which are most likely to lead to partners managing money separately are:
- There is a lack of commitment or trust in the relationship
- Significant assets have been accumulated prior to the relationship
- One partner earns significantly more than the other
- Bad experiences with former partners
- Strong desire for financial independence
Some people have a very strong desire for financial independence. This is typically seen in people who have entered into a relationship late in life, or people who have had to struggle for financial survival over a long period of time, for example as a single parent on a low income. It is hard for financially independent people to share decision-making and trust another person with access to their bank accounts. Typically, when financial affairs are kept separate, each partner contributes an agreed amount into a joint account for basic living costs. Assets are owned separately and the family home may be owned by one partner or as tenants in common.
While it is understandable that money is managed separately in the early stages of a relationship, as time goes by and the level of trust and commitment increases, the way in which money is managed should ideally change. Money can be used much more effectively when it is treated as a combined resource. Financial planning is all about setting goals and using money to achieve them. In a healthy relationship, there are agreed goals – some combined, and some individual – and both partners support each other in achieving these goals. The higher the level of agreement on goals and integration of money, the easier this process is.
Relationships don’t always work out in the long term and it is wise to agree how finances would be separated along with the relationship. This can be done with a legally binding agreement. It is particularly important to do this if significant assets have been accumulated prior to the relationship. Having a written agreement can also help build trust where one partner has had a previous bad experience or a desire to retain financial independence. The longer the relationship lasts, the less important this issue becomes and it is important to regularly review any agreements made to ensure they remain appropriate.
There is no right and wrong way to deal with financial resources in a relationship. There are, however, some basic principles.
- Each partner should have access to an agreed amount of money which they can use without reference to the other
- Resources should be shared fairly, and should not be used to wield power in the relationship
- Priorities for saving towards common goals should be agreed and adhered to
- There should be agreement on which financial decisions need to be made jointly and which can be made individually
- Each partner should respect the other’s views and acknowledge that different attitudes towards money are not right or wrong
Following these principles should help reduce conflict over financial matters, and ensure the best use of assets and income towards achieving goals.
Are you Passive or Active?
You can choose to manage your money passively or actively. Passive money managers make choices about money based on their immediate needs and wants. Passive money managers usually live from payday to payday, often spending more than they earn by going into debt and seldom achieving longer term goals. Their inability to save means money is more inclined to be spent on many things of little lasting value rather than saved for spending on items of higher and more lasting value.
Active money managers plan ahead and set priorities for how they wish to use their money. This enables them to achieve a balance between immediate needs and longer term goals. Because active money managers spend less than they earn, they suffer less financial stress, and are able to spend without feeling guilty in the knowledge their longer term goals are being taken care of.
Whether you choose to manage your money passively or actively is entirely up to you and how you want to live your life. In the following lessons I will show you how to easily and effortlessly set up a system to actively manage your money. It is so easy that your money will almost manage itself. This system has helped hundreds of people achieve their financial goals and change their lives for the better. You can change your life too by using this simple system.
What Does Money Mean to You?
Money has no intrinsic value. It is only has value when it is spent, and we get the maximum value from money when we spend it on things that are important to us. Money means different things to different people. For some it represents security. For others it represents the ability to have interesting experiences, such as travel, adventures or education. Money can also represent independence or freedom. Money can be an enabler – helping people to achieve great things for themselves or their communities. Before you begin this course, think about what money means to you.