Two heads are better than one. It’s not just you making budget decisions. Your significant other should, too. What your special someone spends money on will affect you and vice versa.
If you’re married, you don’t want money to be the reason why your marriage will fall apart. Money mismanagement is one of the primary reasons why most marriages fail.
Here are some tips on how to budget efficiently as a couple.
Money is an awkward subject for most couples. As a touchy subject, some couples do not discuss it at all.
However, couples should keep in mind that an effective budget is one way to prevent arguments and failed marriages. And with open communication, most couples become successful at it in no time.
A budget is a list of income and expenses at a specific time. To reach your budget goal, this list should be communicated with your partner and checked regularly.
The goal is simply the desired result. A goal can take the form of spending a certain amount of money for expenses or setting aside the desired amount for savings.
As a couple, your budget should reflect your goal. You want to look into the bigger picture now and then. Setting a long-term goal for your budget is key to planning your retirement or dream vacation. It can also be valuable when you start a family, buy a house, or raise children.
If you don’t work on a budget, it’s easier to justify overspending. When you’re in debt and spend more than your means, your finances become messier.
Also, like with all goal planning, evaluation is equally important. Make sure to track your expenses regularly and jointly. This way, you’d be able to notice that you may be spending more than you think on a particular service or item.
Grounding yourself to reality is the first step in creating a budget. For example, you want to budget 50% of your income for savings, but is this possible? Is this realistic? If bills take up more than half of your budget, you’ve got to tell yourselves that right now, you can’t afford to save this certain amount.
List your take-home pay or net income and budget whenever you get paid. Be aware of each others’ income and when each would receive it. This can help you to stick to a helpful habit of spending just with what you earn.
List all your expenses as well. If you’re unsure, you and your significant other should have a rough idea of the amount you spend on some things like food or leisure. Take note not to forget expenses like loan payments (e.g., credit card, mortgage, or car payments), gasoline, utilities, rent, food, and parking. Determining what is a need or want goes a long way too in improving your budget.
A need or necessity is something that you have to live. In a budget, this most often includes food, water, shelter, or clothing.
On the other hand, a want is something that we would like to have, like games, toys, and that indulgent velvety chocolate ice cream.
If you have a limited budget, be extra careful with your money. Classifying expenses will help you track where all your income went. This strategy will go a long way into controlling your budget and doing away with what you can’t live without.
One method to classify budget for expenses includes the envelope budgeting system. It lets you separate money in an envelope (or a virtual one) to prevent encroaching on an allocation for something else. Another method that some couples use is the 50/30/20 framework where:
Other couples who aren’t married just set up a household budget (e.g., housing payments and insurance, shared food and water, utilities). They don’t combine finances at all. Bills may be divided at an equal half or whatever is agreed upon. Some couples feel that this approach is financially sound if the couple breaks up.
You and your special someone do have individual needs. Take note that you are unique individuals and, as such, have different needs from each other.
For example, you may feel that your partner is exceedingly spending on his cats and dogs. At the same time, your partner feels that you’re spending way too much money on your hair.
Sometimes, compromise is the way to feel not resentful of each other. Set an amount for spending without being accountable to the other person. This approach means that the person may spend the money however he or she sees fit. If each person in the relationship stays within that amount, there’s no need to feel displeased.
Again, budgeting efficiently is setting goals, classifying expenses as a need or want, and setting aside an amount for compromise. Learning from our mistakes in budgeting allows us to adjust and consistently keep track of where our plans can improve.
You can consistently work the nuances of budgeting with your loved one. And with these budgeting tips, both you and your significant other will only get better at it.