Be your own financial soulmate

Amrita Jayakumar of NerdWallet

February 14: a day to celebrate your partner or a day to celebrate yourself. And while it may not sound romantic, this time of year is also an opportunity to show your finances some love.

Whether you’re single or in a relationship, build toward your future by defining your goals, budgeting for splurges and getting started with investing.

KNOW YOUR GOALS

Setting a goal is the first step in any kind of money decision. After all, money is just the means to live the life you want.

If you’re single

How you manage investments depends on your equation as a couple and both your incomes. You could invest together equally or in proportion to your income. One of you might also be more inclined to organise money matters

This is the fun part: Write down goals, whether it’s going on a dream vacation, buying a new car or maybe pursuing the business idea you’ve been chewing on forever. Don’t second-guess your ideas — having them all in front of you will help you prioritise the goals you truly value.

If you’re paired up

Turn this into a date night and work on shared goals together, said Certified Financial Planner Angela Moore at Modern Money Advisor in Miami.

Moore suggests asking each other basic money questions over dinner. To prevent a fight, stay open to hearing your partner’s way of doing things, she said.

She recommends open-ended questions like:

— “What do you feel you’re really good at with money?”

— “What do you think you can work on?”

— “What are your dreams for the future?”

Once you have a list of goals, estimate how much it will cost to achieve them and how long each will take. Print out the list and pin it up to track your progress.

MAKE A BUDGET

Prioritising your goals in the first step allows you to create a budget that matches your spending to your values. “Focus on the things that bring you great joy,” Moore said.

The 50/30/20 budget is a good way to divvy up your money: 50 per cent goes to needs like housing and utilities, 30 per cent goes to wants like your coffee habit or eating out, and 20 per cent goes to savings and debt repayment.

If you’re single

Knowing what you value means you can cut spending in other areas. At the same time, the “wants” category lets you stick to a realistic budget so you don’t feel like you have to give up on splurges.

If you’re paired up

You’re probably aware of whether you and your partner have different spending and saving styles. Use your strengths and weaknesses to hold each other accountable to the budget, Moore said. Spenders and savers can draw inspiration from each other, for example.

Whether you have separate or combined accounts, you can agree to each have some money to spend as you wish (like on a treat for your partner). The key is to have an open dialogue about it, Moore said.

INVEST IN YOUR GOALS

Once you know your goals and what it will take to achieve them, figure out your “investment strategy”. This just means how quickly you want your money to grow for your goals.

A quick heads-up: Investing for goals isn’t the same as saving for retirement. Make sure you have retirement savings in place first; check whether your workplace offers a retirement account and company match.

“The most important thing is to just get started. Time is one of the most important factors when it comes to compounding your initial contributions into significant wealth,” said Certified Financial Planner Eric Roberge at Beyond Your Hammock in Boston.

If you’re single

Investing doesn’t have to be scary or mysterious. Robo-advisers have made it easy to get started even with small amounts of money. You can answer a few questions to set your risk tolerance and invest your money accordingly.

“When you’re just getting started, keep it simple. Stick to things you can understand and are relatively safe and reliable rather than trying to shoot for the moon,” Roberge said. Low-cost index funds and exchange-traded funds are two good options for millennials in particular, Moore said.

If you’re paired up

How you manage investments depends on your equation as a couple and both your incomes. You could invest together equally or in proportion to your income. One of you might also be more inclined to organise money matters.

“Even if one person takes the lead, the other should check in along the way to see how the money’s grown,” said Matrimonial Attorney and Partner Rebecca Provder at Moses & Singer in New York City.