It is a regrettable truth that, as long as we're living in a capitalist society and are trying to make out with other people, budgeting as a couple will have to be a thing. (No, we don't have to like it.) But you can do it without sacrificing your inherent connection as a twosome, and hopefully without any murder, either. That's not to say you won't make mistakes, have to live on ramen for a week, and/or get annoyed with each other; but tips for budgeting together don't have to be excessively painful, and are definitely worth it if you're going to be together long-term.
There are numerous models for combining your finances as a couple: you can go "all in," sharing everything out of the same account; work from two separate budgets; or share a common budget for joint expenses, while maintaining individual accounts for personal transactions. Each of these approaches has pluses and minuses (I go for the last one), but regardless of your choice, what happens after you make the decision is crucial: how you two manage your money. And that means more than deciding whose turn it is to pay the electricity bill this month. Are you saving for anything? Where's the money going? Who pays for what and why? And how much income do you actually have?
Here are seven tips for beginning to budget as a couple. This stuff applies whether you're wallowing in debt, both working low-paying jobs, or flying high; no matter how much money you have, you need to work together on how you manage it.
1. Learn How To Talk About Money
Broaching the subject of finances, assets, savings, and credit ratings can seem like the most unromantic thing. Unfortunately, if you're in it for the long haul, it's also necessary. Financial trainer Avraham Byers characterizes the attitude of many couples as "disconnected" when it comes to finances, largely because of "our inability to truly be honest with one another about our financial selves". Money can be shameful, private, blame-filled and upsetting, which is why it needs to be on the table if you're sharing your life with somebody.
Knowing that is one thing; figuring out how to do it, however, is another. One of the key things about budgetary communication, according to experts, is to approach one another with love and a lack of judgement about fiscal mistakes; The Simple Dollar's Trent Hamm advises compassion and understanding when it comes to hashing this stuff out, from revealing your debts to hearing your spouse's goals for your financial future.
2. Keep Track Of Daily Transactions For A Month
"Where does all the money go?" is a common worry in unbudgeted households. Figuring that out is a good place to start. Financial guru Suze Orman has an excellent suggestion: if you're beginning to understand your joint financial situation, both of you should try to keep a financial "diary" for a week or month into which every transaction, no matter how small (feeding the parking meter, giving money to a homeless person), is logged. Seeing where you actually spend your money can be eye-opening, as can the resultant math; two $3 coffees a day may seem like less of an affordable indulgence, for instance, when you see how they mount up over the course of a longer time period.
3. Make Budgetary Categories
If you've never made a budget before as a couple, it might be wise to start with a simple spreadsheet model to track what you're actually spending and what you'd like to spend every month. Money Crashers describes this budget design, in which you allocate categories for expenses like food, travel, and entertainment, as a good way to see where money's actually going, and an effective way to start looking at your joint financial futures. The categories need to reflect your life accurately and be clearly defined, though; does your cat go in "household expenses" or "lifestyle"? Spreadsheets like this can also be flexible, so you can adjust what portion of your incomes should be spent on what as you learn more about spending habits and necessary expenses.
One of the main reasons couples fight, according to a survey by SmartMoney magazine, is spending, in particular impulse buys. Having this kind of budgetary layout will make it easier to see what's actually available and whether an impulse buy is actually a break-the-bank moment.
4. Know What Major Goals You're Budgeting For
What are you actually saving for? Just "having money in the bank" may seem like a sufficient goal when you're trying to get by, but beyond that, there are bigger financial possibilities at stake, and it's important to know what kind of financial future both of you want, and to plan towards it. Do you want to buy a house together? Build an investment portfolio? Save for your children's education? Financial planner Charles Schwab told Business Insider that "taking the long-road gives you more time to think about the savings approach you'll need to adopt," so never think you're discussing things "too early" in your partnership.
5. Make Sure You Both Know What's Going On
It can be exceedingly tempting to let one partner, the money-savvy one, take complete control of the finances. They're good at it, the other person isn't so interested; what's the harm? Well, plenty. Even if one person has the bulk of financial responsibility, major decisions, the state of the checkbook and the financial health of your partnership should always be above-board for everybody. It's not just a matter of trust (I'm sure your partner is awesome and not secretly buying rare Hello Kitty memorabilia on the Internet); the Money Advice Service points out that it's crucial that everybody knows what's going on in case something happens to one of you. Dark, but true.
6. Educate Yourself About What You Need & Want
Let's look at money in gendered terms for a minute. The US News & World Report makes the very salient point that women are often expected to be less financially literate than men, and to have less active roles in the overall financial management of their partnerships with men. From that perspective, it's important that you give yourself the chance to develop opinions. What do you want out of an investment portfolio? What kind of mortgage suits you? Many of us are savvy as hell when it comes to finances, but if you're not, it's worth doing some research and being open about your goals and ideas for the future, from home ownership to travel and investment plans.
7. Celebrate The Victories
This isn't a budgetary tip you hear very often, but it comes from a very human perspective: financial planner Tim Maurer, writing for Forbes about marital strength and budgeting, explains that it's one of the things that made his marriage work long-term. Both partners being part of the budget means, essentially, that it's a mutual project, and it's necessary for you to celebrate the stuff that goes well alongside fixing what's going badly. "For each mistake," Maurer writes, "there are several successes in each budget cycle. The long-term success of our marriage is often built on a series of small victories, and we should never withhold an affirmation for completing a project under budget or enjoying the security of a buffer when an emergency arises." Come in under-budget? Got an awesome deal? High-five one another.
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