To budget as a couple can be a difficult process. It's not an easy thing to move from caring only for your own financial needs to balancing the needs and wants of your partner. What can you do to get off to a good start?
Reaching an agreement with your partner may take some work, but not taking the time to talk about money can lead to stressful situations regarding finances down the road. Budgeting as a couple is the key to long-term success, so read on to learn ways to help you get off to a good start.
Talking about your financial habits, goals, and desires is the best way to start the process of planning a budget together. Understanding and respecting that different styles aren't "good' or "bad” is the first step in the right direction. This stage is really about getting to know the other person.
Establish your Household Needs
Once you know each other's financial styles, it's time to figure out the household needs that can include expenses such as car payments, debt payments, rent or mortgage payments, utility bills, and groceries.
When you first start budgeting together, you might need to adjust expectations so that you are both on the same page. As a couple, your needs should be a priority over your wants and you must be clear about what should come first. Also, if one (or both) of you has a debt, you need to figure out how to handle it.
Choosing Long-Term Goals.
Working towards determined goals each month can help to strike a budget as a couple and not overspend and this is why it's important to set goals to work on as a couple as a part of your financial plan. This plan can help you define when you can buy a house or when to start a family. It can also help you plan for retirement or a dream trip.
Taking into account Individual Needs
Once you have established your household needs, start talking about your needs and wants as an individual. These can include things like haircuts, clothing, or singing lessons and it's important to understand your needs and wants are surely different and respect this.
You should each have money to spend on things that you like and are important to you, so you may want to set up an allowance to spend on your wants without having to explain to the other person.
Should You Join Your Finances?
An important question to address as a couple when discussing budgeting is whether to combine finances. This is a personal choice and it can be approached in three ways.
Joint Finances: Almost everything you both earn goes into a big pot to share expenses. The couple might have small accounts for their personal spending, but, almost all is shared.
Separate Finances: Here, each person has their individual account. Expenses are divided and assigned to each partner. Bills might be divvied up based on a 50/50 approach, or they might be divided according to each person's income.
Hybrid: Some couples find a hybrid approach makes more sense. There may be a joint account for household expenses and other shared goals to which each partner contributes, but the rest of their accounts are separate. Again, the amount each one provides may change according to income.
The important thing is that both of you feel the approach is equitable and that you're both adequately protected in the event of a breakup.
Plan Meetings to Trace Your Spending
When you start, you may need to go over this daily, but eventually, you can do it weekly, or even on a monthly basis, and that is the moment to discuss how near you are to shared and individual goals. It can help if you use good financial software that you can sync on your phones. There are many apps available that are designed for couples to coordinate their finances.