By Luis Aureliano
Succeeding as a trader is an uphill task on its own because you have to contend with a number of factors beyond your control. However, it can become excruciatingly harder to succeed as a trader if you don’t have the support of your family, spouse, or significant other. Interestingly, your family may not want to support your trading career if it seems that you are losing more money in the markets. Your family might also be hesitant to support you if the money you are making is small in relation to the countless hours you spend glued to the computer screen.
However, the support of your family is essential for the success of trading career especially if you have combined finances with your partner. You also need their support if you expect them to make some sacrifices for you to raise trading capital or get quiet trading times without distractions. This piece provides insight into four family finance rules that can make it easier for you to succeed as trader.
1. Create financial plans and goals together
The first rule in family finances is to create the financial plans and goals of the family together. You need to agree on buying a car, a home, paying off your mortgage, getting out of debt, saving for college, or planning for retirement. More importantly, you’ll need to agree on the percentage of your income that goes towards your trading activities so that your partner doesn’t feel that you are wasting precious resources chasing the bull on Wall Street. Nothing could be worse for your trading psyche than a partner that mistakes your trading activities for gambling.
2. Be completely honest about your trading
You’ll need to be completely honest about your trading performance if you want your partner to support your trading journey. It is easy to fall to the lure of exaggerating your wins and downplaying your losses in the markets, especially if your partner doesn’t really understands how the market work. However, giving your partner false or misleading reports about your trading performance will erode their trust when the chicken finally comes home to roost – believe me, they’ll eventually suspect or know that something is fishy.
3. Dual income households should find a balance
Most families will have a chief financial officer who handles the payment of bills, taxes, and other stuff. However, you and your partner should have a consensus on you run your family finances. You’ll need to agree on combining your income in a single account pool for the family. Some other families might choose to keep separate accounts where each partner pays different set of bills relative to their income. You may want to consider a hybrid solution in which you combine accounts for shared expenses such as mortgage while you maintain individual accounts for personal expenses.
4. Maintain at least one credit card in each partner’s name
Most couples tend to apply jointly for credit cards – it has both its pros and cons. However, for the sake of the financial security of your family (and spouse) each partner should own at least one credit card that they run in their name. Having an individual credit card will help each of you to create a strong credit history that might come in handy when there’s a market downturn and the credit of the family trader is messed up. The other partner can easily use their strong credit history to access credit facilities that might tide the family over during dark periods. In addition, if you happen to get a divorce, you’ll find it much easier to rebuild your credit from your individual credit history than from a negative joint credit history.
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