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Four Scary Words: Budgeting With Your Spouse

Setting a budget is putting together a spending plan for expenses that week, month, and year. And yes, you have permission to spend! Coming up with a game plan is easy enough to do when you are single. But when married or in a relationship with shared finances, budgeting can become challenging. The majority of arguments in a marriage are about money. It’s important to communicate and be in agreement about the household budget. Let’s look at three key ways to set a budget with your partner.

Lay All Your Cards on the Table The top tip when it comes to talking about money: be honest. I know it sounds basic but open communication with your partner is crucial. If you haven’t been transparent about money with them before, this may be uncomfortable at first. But there are some ways to ease into communicating, including:

  • Set a time to talk. It’s difficult to devote your full attention to money matters while trying to get dressed for work, cooking dinner, or on your way out the door. Pick a time when both of you are relaxed and have ample time to have a discussion.

  • Identify: spender or saver. Recognize which one of you is the spender and which is the saver in the relationship. There is no good or bad here, but there are patterns in how you interact with money and it’s important to be aware of that. Your upbringing, beliefs, and peer group can all play into your feelings about money.

  • Don’t hide money or purchases. If you are in a committed relationship, you are faithful to your partner in all areas, including finances. Hiding a bank account, credit card, or assets from your partner is deceitful and leads to mistrust. Clear the air and be open about all your finances.

  • Recognize you are on the same team. Budgeting is a team effort, regardless of who makes a higher income, who works part-time, or who stays home with the kids. Both parties have a say in what gets spent as you work towards a common goal.

Budget for What’s Important Now Decide with your partner what is important to include in the budget. Aside from meeting monthly expenses, think about the things you want to do together. It might be going on a vacation, purchasing a home, or paying off debt. Find what is important to both of you and include that in your game plan. Coming up with a budget can be done many ways. Whether it’s pen and paper, Excel spreadsheet, or a budgeting app, you will need to make a list of all the money coming in and all the money going out. Your budget will consist of:

  1. Total income (salary after tax, commissions, any benefits, side hustle earnings)

  2. Total expenses (food, transportation, housing, utilities, insurance, savings, retirement accounts, personal care, entertainment, giving)

  3. Subtract expenses from income

Your expenses should not exceed your income! If it does, adjustments to expenses need to be made. The best way to keep track of where your money is going is by tracking. Some expense tracking options include:

  • Envelope System. Each expense category gets its own envelope with a certain amount of cash in it. It is easy to know when to cut back on particular expenseswhen you see the money in that envelope dwindling down. This is an old school way to do it, but certain apps can help you do this virtually instead of with cash.

  • Spreadsheet. We all know (or are) an Excel spreadsheet nerd. Inputting data into the templates and having the math done for you can be very satisfying. This option requires regular data entry to track expenses in real-time.

  • Apps. This is a great option for those who like instant and easy access to tracking expenses on their phone. Most budgeting apps link to your bank account, making it easy to record expenses right away.

Plan for Retirement An important part of your expense budget is a retirement account. Your retirement years can be about one-third of your adult life. Planning for that time is important, and taking steps now is key to ensure you have the money you will need. Think about how you want to live in retirement. Are you staying in your home or moving? Do you want to travel or enjoy hobbies? Your goals for retirement will determine how much you need to save now. Things that you and your partner should communicate about and budget for include:

  • 401(k). This retirement account is worth including as part of your monthly expense. These accounts are usually offered by your employer. Contributions come directly out of your paycheck pre-tax (for Roth 401(k) it comes out after-tax) and amounts can be customized. Many employers have a contribution match, which is free money for you (please take advantage of the free money)! This bucket of money will create a nice future income stream for you and your partner in your golden years.

  • Traditional or Roth IRA. Another account that is a source of income in your retirement and worthy as a monthly expense now. Depending on which one you choose, you either get a tax advantage now or later.

  • Health Savings Account (HSA). An HSA is a way to save for future health care costs. Some employers offer HSAs, but you can open one on your own if they don’t. If opened through an employer, your contribution to the HSA is pre-tax. If opened on your own, contributions are tax-deductible. When the funds get withdrawn for eligible expenses, that money is tax-free.

Final Thoughts Budgeting doesn’t have to be awkward, rigid, or frustrating. Being open and honest with your partner can help you discover what is financially important to each of you. By deciding what is important now and for retirement, you can work together to achieve that goal.

Written by Matthew Delaney


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