Budgeting as a Couple
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This post is part of Women's Money Week 2012.
I believe that for married women to feel empowered and confident with their finances they need to know to communicate with their spouse on the family's finances.
Everyone has their own specific style; however there are a few principles that can help couples with their budget.
Creating a budget for the family has never been boring for us. We've worked hard to make sure that our family's budget works for both of us.
Different Takes on Budgets
I think many couples agree that even if the two of you are perfect for each other, it does not mean that you always on the same wavelength.
Each couple has their own rhythm and many times the tricky part is getting the two of you to sync up on the important matters.
My husband is a meticulous planner that enjoys savings. Before making a purchase he spends a ton of time researching what's out there and will weigh the pros and cons for months before buying.
He's great with shopping around for the big purchases because he will sit down and look at everything before spending his money.
Unfortunately it can also mean that our money isn't being optimized; instead of using it to pay down debt or invested, it can stay at a low interest account until a decision is being made.
I'm a spender, not in the sense that I buy a lot of things (most purchases we make are joint), it means I want to direct that money to a goal as quickly as possible.
If we get a small windfall, like a bonus or a tax refund, I want to immediately use it to pay down debt or use it for some other goal.
That can sometimes mean I have almost no buffer in checking because it's been transferred or sent as a payment. Irregular bills are not my friends.
While we have changed a bit in the 5 years we have been married (learning from one another), we're pretty much the same with our overall money styles. That means we have to create family budgets that work for both of us.
Working With Our Money Styles
We feel that the family's budget should be a reflection of the two of us.
For my husband, we have a buffer included with the checking account. He feels much better and irregular bills don't derail our financial goals.
For me, we create an overall plan for the year and when windfalls and extra income come in, I can immediately direct them towards goals we both agreed to.
Our money is more efficiently and effectively used by incorporating both of our styles and we're both less stressed about the budget.
Tracking Our Budget
Sometimes budgets are derailed because we don't always look at the objective numbers.
We have assumptions about our spouse's spending and our own and sometimes they're not true.
Before we created 2012's budget, we went through our actual spending for 2011.
I used Quicken to upload our joint accounts’ information and after sorting through the transactions and categorizing the data we had our numbers.
We were both surprised at a few things about our expenses. For one thing, we needed to do a better job of including irregular expenses like life insurance premiums.
We have a buffer with checking and it covers it, but once in a awhile the timing of bills means we go below our buffer (which makes my husband uncomfortable).
The baby expenses at that point had been less than what we expected. That meant we could reallocate that money towards other goals, like getting the next family car.
Keeping Each Other in the Loop with Finances
For us the budget is adaptable and does change as our circumstances change.
To reflect this and to make it easy to keep each other in the loop, we’ve been using a Google Docs spreadsheet that we share with one another.
If one of us adjusts the numbers on expenses the other can see it next time they log in.
We also have monthly money dates, which gives us a chance to look over the numbers and update our net worth for our reviews here.
The purpose of the net worth reviews is to give us a regular system to look at our accounts, see what’s changed, and analyze what went well and what we need to work on.
Is our system perfectly optimized? No, but it works for us and we've managed to reach our goals and build our relationship as a team.
Thoughts on Family Budget
I think sharing with one another our budgeting methods can make all of us wiser with our finances. How do you create a family budget?
What has worked really well for you? What hasn't? Have you looked at your budget recently?
I think this is one important aspect of marriage. It eliminates stress from the relationship, builds bonds and can sometimes be fun, even for people who dont like to budget. I also have a different style of financial management than my fiancee, but we are working well together so far.
It certainly makes for lively debates when the two of us disagree – got to love couples and money 🙂
Thanks for the tips!
I love how your budgeting reflects each others’ money personality. My wife is definitely the comparison shopper, who’s good with the research on our big purchases. However, I’m pretty much the planner and executor. I like working with the numbers and coming up with strategies to reach goals. My wife generally goes with the flow. We’re not quite as integrated as I like, but we are getting there.
Glad you guys have a system that works for both of you.