How to Budget, Handle Money
And Build Your Relationship
Stop fighting! There are better ways to handle money. Whether you are a newly married couple, or have been together for a long time, not knowing how to budget and handle money can often be a major stressor and the source of many disagreements. However, there are some smart money tips that have been passed down in our family and that can help both of you learn how to come up with a budget, manage your income, save money and reduce the conflict in your relationship. My husband and I have been married 40 years, and handled money using this system. Our grown daughters also use similar systems in their marriages. Once you have a method for handling your finances, you will be amazed at how much simpler life can be!
Saving Money for the Future
One of the first steps every couple should take is to meet with your banker, stock broker or financial planner and set up retirement accounts. You both will need separate retirement accounts ... either a 401K at work, a traditional IRA, or a Roth IRA. You want to set up these accounts early, even if you start by only adding $25 - $30 a month into each account. Gradually, this money will grow and can be used to help your family with retirement expenses and educational expenses in the future. Many financial planners tell people that the first bill you should pay each month is to yourself. Having a retirement account is one way to accomplish this.
In addition, the two of you should have a joint savings account where you deposit a small amount of money each month. This account will be a lifesaver when you have an emergency.
For more help, you may also want to buy a book with more detailed info. Use this Quick Amazon.com Link to Money and Budgeting Books.
How to Handle Money as a Couple
The next step in handling money is to have a clear idea about where your money is going. Write down everything that costs you money during the course of a month. Don't leave out any expense, no matter how small. Once you know exactly how much you are spending, it will be a lot easier to divide your income fairly and come up with a budget so that you are sure you can cover all your necessary expenses.
An easy way to organize your family finances is by having several different bank accounts. You should have two joint checking accounts that are linked, as well as your joint savings account. Although all the accounts will have both your names on them, in case of an emergency, only one of you will use each of the checking accounts. It's an easy way for each of you to keep track of the portion of the family money that you are handling.
Once the accounts are set up, you need to decide together which of you will pay what bills. You can split the bills up however you think is best. One of you can pay most of the regular bills (such as mortgage, insurance and utilities) and the other can be responsible for groceries and the cleaning. Or, one of you can pay all the household bills, and the other can be responsible just for their own credit cards, lunch money, and personal expenses. Whatever you decide, just be certain that, from your combined incomes, enough money is deposited into each of your accounts to cover all of the essential expenses. Each of you should also have a credit card that you pay for yourself, so that you both keep track of your own credit card expenditures.
Now that you have decided who is paying which bills, the family income has to be divided between the two of you. In addition to the basic bills, you need to allow each person enough money to cover what is deemed to be reasonable credit card charges, for items like gas, lunch money, basic clothing, etc. The two of you will need to decide what you feel is a reasonable amount for you to spend for these items, based on your income.
Be Sure Your Budget is Realistic
Do the two of you have expensive hobbies, like to travel, or enjoy eating out frequently? Any extras have to come out of the amount of surplus income you have left over after the bills and basic expenses are covered. If you do not have any surplus income, you need to decide together where you can cut back on your bills. Do you need to move somewhere less expensive, get rid of one of your cars, or eliminate a club membership? Are you willing to give up some of those expensive hobbies? Work together until you have a reasonably balanced budget that includes some excess income for savings and fun.
Once you have set up your retirement and bank accounts, and split up the income so that all your bills and some extras are covered, hopefully you have managed to come up with a balanced budget. If not, you need to look more closely at the amount you are spending on your bills. Are those estimated amounts inflated, or are they realistic? Are you living within your means? Where can you cut back? In order to have a conflict free relationship, it is essential that you are living on a budget that is reasonable for your income. No relationship can last for long, if it isn't financially successful. As a result, it is very important that you do whatever is necessary to balance your income and your expenses, so that both of you can pay your normal and reasonable bills, put money into your retirement accounts, and have some money left over at the end of each month to put into savings.
Be Sure You Have Some Fun Money
Now that your finances are organized, and your budget is balanced, it is important that each of you has some purely "fun" money. Even if you can't afford those really expensive hobbies, each of you should be able to have some discretionary money. Depending on your income and budget, it can be any amount from $25 to $250 a month. This fun money is an important part of keeping each of you happy and feeling relaxed about your family finances. Each of you can decide to spend your fun money each month as you get it, or one of you may want to save it towards a really large purchase. That is completely up to you. The important thing is that you each have some money to spend however you want, so that you are not fighting over the CD he bought, or the new sweater she bought. There is no longer a need to lie about, or hide your purchases. What a relief! As long as you both know your bills will still be paid on time, and there is ample money for groceries and gas, there is no reason for either of you to get upset when your partner spends money just for the fun of it! Don't we all want a relationship in which we can both have some "mad money," completely guilt-free? With these simple steps, you're now both in a situation where you can have a new relationship with your money...and with each other!
For other ideas about handling your family's money, you may also want to read some of these articles:
A Handy Reference Book to Help Every Couple
Get the Answers to the Money Questions You Have
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A Great Book to Help You Really Save Money
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