How Can I Reduce Debt with My Partner?May 09, 2017
Favourite movies, favourite memories, your dreams for the future — marriage means sharing a lot with your partner. With almost two-thirds of Canadians reporting that they will enter into marriage carrying some form of debt, it likely means sharing your debt as well, which could cause some potential issues. Dealing with debt as a newlywed couple can be easy, however, if you approach it together. Here are three tips for working with your spouse so you can reduce the debts you owe.
Make sure you are on the same page
First things first, it’s essential that you and your partner are on the same page financially. If you are a spender and your partner is a saver, you need to understand your different approaches to financial management. It’s also important to reach some type of compromise to develop an approach to managing your money and reducing your debt that you can both agree on.
Creating joint financial goals will help you develop this approach. In order to build these goals together, you and your partner will need to agree on the things that are important to both of you. It’s also important that you both have a clear understanding of your financial situation. If you both carry quite a bit of debt, it might be a good idea to put other financial goals, such as saving for a vacation or buying a new home, on hold until you have reduced the debts you owe.
Create a joint budget
A budget is the key to managing money, avoiding unnecessary debt and achieving your financial goals. However, in order to achieve your goals together, it’s important that you and your partner both follow the same budget.
If you don’t currently follow a budget, it’s quite an easy process to start. All you need is a pen, paper, a calculator and some time. Working with your partner, begin by listing all your sources of income, including employment income and any other income you may receive, such as rental income. Once you have an understanding of your combined income, you can then make a list of your fixed expenses. Fixed expenses are reoccurring costs that don’t typically change, such as your rent, mortgage or your car loan payments. After allocating money toward these fixed expenses, you can then plan for the rest of your income to be used toward other expenses, savings and reducing your debt.
Want to take the easy route in order to create a budget with your partner? The Financial Consumer Agency of Canada (FCAC) provides an online budget calculator that can help make this process even easier. Online and mobile apps like Mint and Wally can also help you and your partner budget together, as they provide an easy tool to track and monitor your spending that will help you stick to the budget you created.
Share your concerns
Finally, when working with your partner to figure out how to reduce your debt, it’s important to be open and honest. If you have any concerns about reducing your debt, ensure that you share them with your partner. You should also encourage your partner to do the same.
Do you find yourself wondering how you can reduce debt with your partner? Join the conversation and share your thoughts, tips and tricks with BDO Penticton using the hashtags #BDOdebtRelief and #LetsTalkDebt.