Beyond flowers and romantic dinners, there’s a smart and meaningful way to strengthen your relationship as you build a future full of possibilities together: couple’s finances. By planning as a team, you can turn dreams like an unforgettable trip, a home filled with love or a peaceful retirement into real accomplishments. This approach not only boosts your financial stability, but also strengthens mutual trust and commitment. Discover how to start building together the foundation for a life of financial success and harmony.
Is it important to create a joint fund?
In previous articles, we have discussed the importance of creating an individual fund and its benefits for achieving personal goals. However, when we talk about shared funds as a couple, the picture changes significantly. This type of fund not only unites efforts, but also strengthens the relationship by working together towards common goals, such as travel, family projects or the long-desired financial stability. In addition, through this, you will be able to:
- Materialize your shared dreams: Like a trip, the perfect wedding or a family project that benefits you both.
- Ensure financial stability: Is the tire on the family car flat? Do you have to pay medical bills? With a mutual fund you can be prepared for emergencies or unexpected events.
- Encourage transparency: It also helps build trust through constant communication about your finances.
Step 1: Define your dreams and priorities
The first step in creating a solid joint fund is to be absolutely clear about what you both want to achieve as a couple. This involves sitting down for an open and honest conversation about your individual and collective goals, making sure to align them with your long-term values and expectations.
How to detail it?
- Brainstorm ideas: Write down separately the financial and personal goals you each consider important. Then, share your lists and look for similar points. This process not only fosters communication, but also helps identify dreams you may not have previously considered.
- Classify your goals into three time horizons:
- Short-term (less than 1 year): These goals often include saving for a vacation, buying home furnishings or building an emergency fund.
- Medium term (1 to 5 years): This can include goals such as a down payment on a house, starting a business together or buying a car.
- Long term (more than 5 years): Plans such as retirement, your children’s studies or investing in real estate fall into this category.
- Prioritize according to importance and urgency: Not all goals will have the same relevance. Use a priority matrix (e.g., urgent vs. important) to decide what to focus on first.
- Assess the feasibility of the goals: Analyze your current income and expenses to determine how much you can allocate to the joint fund without compromising your basic needs and personal well-being.
Step 2: Establish a joint budget that includes the fund and investments.
Once you have defined your goals as a couple, the next step is to translate those aspirations into concrete numbers through a joint budget. This budget will not only allow you to organize yourselves financially, but will also help you allocate resources efficiently toward your shared fund and investments.
How to create a joint budget?
- Calculate your total income as a couple: Add up all sources of income, including salaries, commissions, bonuses or any additional income you have. This will give you a clear picture of how much money you have available to cover expenses and reach your goals.
- Example: If one of you earns $30,000 pesos per month and the other earns $20,000 pesos per month, your total income would be $50,000 pesos per month.
- Keep track of your current expenses: Divide your expenses into three main categories.
- Fixed expenses: Such as rent, utilities, transportation, tuition or debts.
- Variable expenses: Such as food, entertainment, personal purchases or outings.
- Occasional expenses: Vacations, gifts or special events.
- Tools such as a spreadsheet can be useful for monitoring these expenses.
- Define how much you can save and invest together: Analyze how much money is available after covering your basic needs. As an option you can follow the following rule:
- 50% of your income: To cover basic needs.
- 30% of your income: For short and medium term goals, such as an emergency fund or specific savings.
- 20% of your income: For investments that support your long-term goals.
- Establish joint accounts for the fund and investments: Opening joint bank or investment accounts will allow you to manage your money in a more organized and transparent way. For example:
- A highly liquid savings account for your emergency fund.
- An investment account in diversified instruments for medium and long term goals.
Platforms such as Algo Global may be ideal for managing these types of accounts, depending on your objectives and risk tolerance.
- Include a contingency fund: In addition to allocating resources to savings and investment, it is crucial to have a small fund for unexpected expenses, such as car repairs, medical emergencies or any unforeseen events that may arise.
- Set up a monthly meeting to review your budget: Spending time together to review your financial progress will allow you to adjust expenses, save more or increase your investments as needed. Constant communication is key to avoid problems or misunderstandings.
Step 3: Open an account for your pooled fund
Once they have defined their goals and established a clear budget, the next step is to create a financial system that allows them to manage and monitor their shared savings and investments. To achieve this, opening an account dedicated exclusively to your joint fund is essential.
Why open an account exclusively for your fund?
Having a specific account for their joint fund allows them to:
- Keep order: Separate personal and shared finances to avoid confusion.
- Encourage discipline: By having an account dedicated solely to your goals, it will be less tempting to use those resources for other purposes.
- Monitor your progress: You will be able to track the growth of your fund in a clearer and more structured way.
Step 4: Diversify your fund with investments
Once your joint fund has taken shape, it is time to grow it strategically. Diversifying your fund through investments will not only increase your savings, but also help you protect your money against inflation and economic changes.
Benefits of diversifying your fund
Investing does not mean risking everything, but learning to distribute your resources in different instruments that fit your goals and risk tolerance. Diversification allows:
- Minimize risks: If one financial instrument does not perform as expected, others can compensate for the losses.
- Maximize returns: Investing in different sectors or instruments increases the possibility of obtaining better returns.
- Maintain steady growth: Over the long term, a good investment strategy outperforms traditional savings accounts.
Step 5: Establish clear rules
A joint fund requires agreements to avoid conflicts. Some key questions to answer are:
- How much will each contribute monthly?
- What percentage of the fund will be earmarked for emergencies?
- How will they make investment decisions?
In addition, you can avoid common mistakes when creating a joint background, such as:
- Failure to communicate objectives clearly: This generates misunderstandings.
Solution: Hold monthly meetings to review progress. - Failure to diversify investments: Relying on a single financial product is risky.
Solution: Take advice from experts to diversify. - Not including an emergency fund: Putting everything into illiquid investments can be a problem.
Solution: Keep at least 3 months of expenses in an easily accessible account.
Work with a financial advisor
On this path, having an advisor can make all the difference. Companies like Algo Global can guide you:
- Create a balanced portfolio tailored to your goals.
- Analyze investment risks and opportunities.
- Maximize your returns through customized strategies.
Economy as a couple
Couple’s finances are not just a financial tool, but a pillar for building a stronger, more purposeful relationship. By defining clear goals, planning a joint budget and committing to smart investments, you’ll be taking firm steps toward a future full of shared stability and achievement. Remember, when love and financial planning work hand in hand, any dream is achievable – start transforming your future together today!
