Budgeting individually is difficult enough. You need to figure out how much you’re spending each month, how much you’re earning, and how much you can afford to cut back on. Add another person’s income and goals into the mix, and you’ve got even more challenges that you need to address.
Of course, when you get married or move in with someone, budgeting as a couple can help to make sure that your unit is working towards the same specific set of goals. Couple-based budgeting also cuts down the risk that you’ll end up arguing over money because someone spends too much in a certain area or fails to take the other persons’ needs into account.
Here are a few tips that will help you to manage your budget more successfully as a couple.
•1. Discuss Loans and Expenses Thoroughly Before Going into Them
The first step in setting up a successful budget as a couple is making sure that you both agree with the expenses that you’re getting into each month. For instance, if you’re living together, then it makes sense that you’d have to share expenses like a mortgage and the food bills. However, that doesn’t necessarily mean that you both feel happy taking out a personal loan to improve the house.
Make sure that you discuss each financial decision carefully before you do anything without your other half’s input. Doing this will help to keep arguments to a minimum, and it will also make sure that you take careful and calculated financial steps. For instance, one of you can remind the other to compare loan options and offers when choosing where to borrow from. This can reduce the cost of interest that you need to pay each month on your loan.
•2. Create Long-Term Goals
Once you understand your expenses, and you’re both as comfortable as you can be with them, it’s time to start thinking about why you want to budget in the first place. Although simply having more control over your finances is a good goal, it’s often helpful to have some long-term targets in place that you can work towards as a couple. For instance, you might want to save for a down payment on a bigger home, or you might want to save extra cash back for retirement.
Remember, you can also look at short-term goals that you want to accomplish too – like getting engaged or going on a vacation together. Having a clear path for where you want to go with your finances is a great way to keep your budgeting efforts on track.
•3. Address Individual Needs Carefully
Once you’ve figured out what you want to accomplish as a couple, you can begin to think about your individual needs and goals. For instance, your partner might want to make sure that they always have a haircut each month, while you might be more interested in sticking with your gym membership. Everyone has their own priorities, and it’s not fair for one person to ask the other to cut back, without making compromises themselves.
A good way to keep things fair is to set up on allowance that each person can spend on the things they “want” each month. Remember to listen to your partner carefully as you discuss these things, and don’t undermine what they consider to be important.
•4. Track Your Spending Over Time
Unfortunately, budgeting isn’t a set-it-and-forget-it strategy. If you want your financial plan to be successful, then you need to make sure that you’re constantly tracking your spending and looking into the areas why you might be having trouble.
If you’re budgeting as a couple, it can be helpful to book a day into your calendar each month where you get together and discuss how you’re doing with your goals. You can look at how much money you’ve saved so far and discuss anything that you might be having trouble with. If you notice any problems, you can consider looking for solutions. For instance, if you always spend too much at the grocery store, you can start taking a list, and a specific amount of cash to reduce your risk of overspending.
•5. Adjust with Time
Finally, remember that life changes and your budget will need to change with it. The things you and your partner prioritize now, might not be the things that matter most to you six months or a year from now. Make sure that you make plans to come and revisit your budget from time to time to make sure that it’s still working for you.
You should also look at your budget whenever you face a major change, like a lost job, a promotion at work, or the arrival of a new family member.