Perhaps you've sensed that money is a touchy subject in your marriage. It's true, money conversations are often far from romantic and can lead to undesirable outcomes.
Yet, among all your significant decisions in life, managing finances is a key topic that requires effective and open discussion with your partner. It's crucial to ensure that both of you are on the same page when it comes to money, whether you choose to split your personal finances as a couple, or put everything together into joint accounts. It is not uncommon to see couples that fail to do this falling into financial strain or even conflicts.
This is precisely why budgeting as a couple is so important. By openly discussing money issues with your partner, you can align your savings goals, investment and spending decisions, and improve your financial well-being in the long run.
In this blog, we will share a few tips that can help you start a constructive dialogue with your partner on budgeting. Read on and explore the method works best for you!
1. Determine Your Shared Goals
Similar as creating your own budget, deciding your shared financial goals is the first step for creating a budget as a couple.
Star by considering your interests, personal goals or aspirations that you would like to achieve within a certain timeframe. Discuss plans such as buying a house or having a baby. If you still feel clueless, goals like setting up an emergency fund and paying off debts can be a good start point.
A popular method for creating practical and achievable goals is the SMART method, which you may already be familiar with if you have experience with career appraisals in a large organization. In the context of financial goals, the SMART acronym stands for specific, measurable, achievable, realistic and time-based. Using this method to map out well-defined short-term, mid-term and long-term goals.
2. List All of Your Combined Income Sources and Amounts
Now that you have established your financial goals, it's time to comb through all forms of income you and your partner can bring home. This includes your wages, investment/rent income, tax credits, subsidies and any other forms of income.
During this stage, it's necessary to review the goals you've set and consider the feasibility of achieving them based on your combined income. Some goals may need to be adjusted and removed given your financial resources.
3. List All of Your Expenses
Next, begin by listing all of your living expenses. This includes individual expenses and shared expenses, such as groceries, electric bills, credit card debt, car payments, mortgage, and fees for internet and phone service.
It can be challenging to cover all expenses at one go. And this is precisely why creating a budget is so important. It provides you a better idea of where your money goes each month. Take your time and dedicate one or two months to track your expenses and complete the list.
By tracking your expenses, you will gain valuable insights into your spending habits. Such information can help you make necessary adjustments in your life to achieve your savings goals and improve your financial situation.
4. Controlling Your Spending as a Team
Once you have a better understanding of your income and spending habits, calculate your monthly net income (or "net loss" if you are spending more than you earn), review your expenses and group them into different spending categories with your partner, such as debt payments, fixed expenses and discretionary spending.
If you have a net income each month, congratulations! You can now move on the next stage: create a financial plan to grow your savings faster through investments. However, if you have no money left each month, it's important to face it as a team and figure out how to save more money.
The good news is that the process of cutting costs does not have to be overwhelming. You can start by saving money on discretionary items, such as date nights or a new car.
Discuss openly with your partner and decide if there are certain items/services you both would like to spend less on, or either of you would prefer to cover individually. This is also a good time to discuss whether you need to create a joint savings account, contribution amounts from both parties and the specific categories of expenses should be covered by it.
If you don't want kill the fun in life, an alternative worth considering is to set up discretionary funds. As the name suggests, discretionary funds are pools of specifically allocated money for hobbies, entertainments or other discretionary spending. These funds allow you to enjoy your life without breaking monthly limits.
If cutting back on discretionary spending is still not enough, don't feel distressed. There may be ways to pay less for essential items as well, such as groceries and internet services. For example, you may qualify for the Supplemental Nutrition Assistance Program (SNAP) if you meet specific requirements including household income and citizenship. This federal program provides financial support for needy families and individuals to buy basic food.
Similarly, you may be eligible for a FREE smartphone, and cheaper internet and mobile phone services if you meet specific requirements of the Affordable Connectivity Program (ACP) and Lifeline Program. These two programs aim to provide affordable and high-qualify communications services for low income families and individuals.
Qualified participants of the ACP can receive a monthly discount of up to $30 on broadband service (up to $75 if you live on qualifying tribal lands). While the Lifeline provides a monthly discount of up to $9.25 on phone services (up to $34.25 for those live on qualifying tribal lands).
If you qualify for the ACP or Lifeline and apply directly with service providers like EASY Wireless, you will receive more benefits! Residents in certain states can score an EASY Wireless Unlimited Plan which include:
- FREE Unlimited Data
- FREE Unlimited Talk
- FREE Unlimited Text
- FREE SIM Card Kit and Activation
- Choose to Keep Your Number or Get a New One
Drop by one of the EASY Wireless's retail stores, or simply click the below button to apply with EASY Wireless:
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5. Choose a Suitable Budget Method
There are many various budgeting apps using different approaches that you can choose from, for example:
Goodbudget uses the envelope method. The free version allows you to divide monthly income into several virtual “envelopes” for each spending category. While the paid version comes with unlimited envelopes and bank accounts on up to five devices and email support.
You Need A Budget (YNAB)
YNAB uses the zero-based budgeting method which has a fresh start for all expenses in each new period. This method requires every penny to be spent with a good justification. YNAB can connect to your bank account but does not track investments.
Honeydue is a free budgeting app specifically designed for couples, allowing you and your partner to view your finances in one app. It can sync bank accounts, categorize expenses automatically, set monthly limits and remind you of upcoming expenses.
6. Track your Progress and Manage your Budget
No matter which budgeting approach or budgeting app you and your partner decide to adopt, good communication is key to create a successful budget.
You will need to regularly discuss with your partner the challenges and concerns, as well as necessary adjustments to effectively manage your budget and keep it up to date and realistic. More importantly, your goals or the economic environment could change along the way, requiring more or less savings and revisions to your existing budget.