This is a guest post by Financial Wolves, a blog about making money with side hustles to help you achieve financial freedom.
Do you remember those “for richer or poorer” and “for better for worse” phrases? Actually, they are promises that couples give to each other when love is at its peak. But do these apply in finances?
Well, finance is one of the most crucial areas in marriage, and that faces a high degree of challenges. Most newlyweds, as well as older couples, find this area in marriage life a tricky one.
The main reason for this is the independence mindset of spouses when it comes to money matters.
Since each spouse had been used to planning and budgeting for their money individually, in most cases, it can be difficult to start budgeting as a team.
However,don’t let that stop you. And, although budgeting as a couple isn’t an easy process, it is the best course of action for those who are married.
Married couples should start considering themselves as a team and not act independently when it comes to financial matters or building a personal financial plan. And, while I understand that every marriage is unique, here are some vital tips on how to create a budget as a couple.
Make Your Finances an Open Book
One of the most difficult—yet essential—aspects of budgeting as a couple is being open with each other about money. If you want to budget together, then it’s only prudent that you lay your financial status open for both parties. This way, every decision that comes later will be generated based on the current financial status of both parties.
By being open, I mean that you let your partner know everything, including your loans, debts, money goals, credit history, and more. This helps to form a good foundation for trust among couples, as well as eliminate any aspect of surprise along the way.
In most cases, both of you likely have different money goals and different ways of handling money. Therefore, it’s also very important that your partner knows how you like your money handled to avoid friction.
Establish the Household Needs as a Couple
Secondly, after you are well conversant with each other’s financials, you can now determine what your household needs and expenses are. Take your time to establish how exactly how much you spend in a month, and let this act as a budgeting guide. You should establish how much will be going into rent/mortgage, groceries, utility bills, debt payments, among other expenses.
This should be done by both of you together. This way, you will not come into conflict later about what money goes where. Marriage is always like a 50/50 joint venture, and no single party should have more power in managing the family’s money at the expense of the other.
Before making any financial decisions, you should discuss and agree together. For example, since some obligations like loan payments, car payments, and others come before things like a holiday, know how to prioritize together. This will help avoid one spouse spending on luxury things before meeting the basic obligations.
I know this might not be as easy as it sounds, but it’s very doable. And, it’s also essential to minimize conflicts.
Sharing of Financial Responsibilities
This might seem like a minor thing, but it’s also very crucial. As a couple, you ought to sit down and discuss who is to handle which expense and why. For example, you should decide who is to pay rent, which of you is to manage the car loan, how you will share utility payments, and more.
This way, each spouse knows what is expected of them, and they also know that if they fail on their part, they fail the whole family. To be able to share the financial responsibilities fairly, you must first establish all your expenses, as well as your income, to ensure that each party is comfortable.
When you share financial responsibilities, it helps prevent late payments, which may sometimes bring about penalties. Also, you will minimize surprise expenses. And most importantly, it helps to avoid fights amongst couples.
Generate Long-Term Financial Goals Together
Now that you are a couple, your long term goals ought to be conjoined. You don’t want to create separate goals that will bring conflicts in your home.
It is essential that couples come up with long term goals together after they have discussed and agreed. This is mainly because these goals will affect your finances as a couple. Also, the success of these goals will undoubtedly require input from both parties.
Therefore, by planning together, you can easily determine which long-term goal must be accomplished before the other. For example, you can determine when and where you want to buy a house when to have kids, how to plan for your retirement, and long-term investment plans, among other life aspects.
Proper planning will help you know what should be done at what time, even vacation. The best thing about planning is that it will help you to always stick to your budget.
This is because you are aware of the reason you are saving or minimizing your expenditure.
- Some of the most important long-term goals you can think of as a couple may include:
- Clearing outstanding debts (come up with a clear plan of how to do this)
- Saving for your dream home
- Making additional money online
- Long-term Investment plans (getting a stable, passive source of income)
- Saving for your retirement
Create a Joint Budget
A joint budget will really help to help ensure that you remain in the confines of your long-term goals and aspirations. You should create a budget that handles your expenses as a couple. A budget of even the most basic things we do on a daily basis will help us avoid overspending.
For example, the budget should include; the maximum amount of money each party should spend daily. This includes expenditure for things like meals, transport, entertainment, and more. The budget not only helps you to keep track of your spending but also tracks your savings.
All these can be so easy if couples could agree to have honest and continuous discussions about both their incomes and expenses. Let your partner understand your finances as you also understand theirs.
However, don’t let be budgeting be the source of dull relationships that only thinks about money. Let it be something fun and includes things that will ensure your marriage life is not a financial partnership only. Save time by using an app like Personal Capital to budget for free and track your net worth.
Address your Personal Needs
Although we have said that you should handle your finances as a couple, it’s also good to know that we also have individual needs. In as much as we are a couple, there are personal needs for each spouse that need to be handled in any healthy marriage.
Therefore, couples should also discuss in length, their individual needs to ensure they don’t collide with their joint needs. For example, although we will go on vacations together, handle mortgages and other loans together, we still have private needs.
Things like clothing expenses, gym memberships, salon expenses, and more are all individual needs that may need different spending.
Therefore, you should be considerate and know what your spouse considers personal to avoid restraining them from doing so. It is also important to recognize the uniqueness of some of each spouse’s needs and know how to address them. You cannot prevent your spouse from spending a little on some personal items while you overspend on your personal needs.
Therefore, it’s wise that you both set an allowance for such spending to avoid financial conflicts. Also, ensure that you listen to your spouse and understand what they consider personal needs.
Keep it Fun
Sometimes, we may be so overwhelmed in trying to make everything work according to plan, that we squeeze all fun out of it. The budgeting process for couples should remain fun. This will help to motivate us to continue and not feel as if we are being forced to sacrifice too much.
If we keep the process fun, we will always feel the need to stick to the budget as we know there will be a reward after it all. Therefore, as much as we want to be cost-effective in everything, we also need to have some occasions that don’t restrict us too much.
For example, we can minimize some activities like regular coffee dates, and use that money without guilt, to travel. Also, we can reduce the number of times we dine out and cook good meals at home. This way, when we go out once in a while, we also don’t feel guilty of overspending.
If you know you are skipping some activities to have even better times later, it motivates you and helps to keep it fun. Also, if couples want to make the budgeting fun, they can decide to have incentives or rewards at the end of the month, whenever they meet their budget goals.
Conclusion on How to Create a Budget as a Couple
Creating a budget as an individual is one thing while creating one as a couple is another. Therefore, it is prudent to approach this issue with caution to ensure that both parties feel part of it and comfortable. I hope that this budgeting 101 guide offers you what you seek to make the couple budgeting bliss.
Author Bio: Financial Wolves is a blog focused on helping you make more money to achieve financial freedom. After repaying student loans, I’ve shifted my focus to make more money from side hustles, real estate, freelancing, and the online economy. Follow us on Twitter and Facebook.