You laugh at the same jokes, you love the same pizza toppings, and you both agree that dogs are better than cats. Once you and your honey start sharing a roof, however, your respective views about managing a home budget may be light years apart. Budget management can be a source of fractious friction for even the most starry-eyed romantics, but it can also be a wellspring of interactive fun if you start it off right.
Create a net worth statement as a preliminary tool to evaluate your financial standing, suggests Judy Lawrence, author of "The Budget Kit: The Common Cents Money Management Workbook." To do this, calculate the combined amount of income and assets the two of you bring to your nest. On a second list, calculate how much outstanding debt you each have. Whether your respective salaries are comparable or there's a major disparity, it's critical to decide upfront whether to co-mingle your finances or keep your various checking, savings and credit card accounts separate. A practical compromise may be one in which you're each responsible for bills you accrue individually but contribute a fair percentage to your shared living expenses.
Identify which of your current expenses are fixed amounts over which you have no control and which ones are variable, recommends Cheryl Hosking, author of "Get to It! Budget Book." Examples of fixed expenditures are your monthly rent or mortgage, life insurance policies, car payments, and loans. Variable expenses include utilities, groceries, transportation costs and dry cleaning. Credit card bills are a mix because, although you're required to pay a minimum amount each month, the balance fluctuates.
Make a list of your dream goals along with an estimate of how much money it will take to achieve them, says Hosking. These might include finishing college, purchasing a house, buying a new car, starting your own business, taking a vacation or saving money to start a family. Pick a target date for your goal to become reality in order to determine how much money you need to save between now and then. Make your savings strategy fun. In addition to regularly contributing to an untouchable savings account at a bank or credit union, keep a piggy bank handy and use it to pay "fines" for forgetful behaviors or habits you're each trying to break.
Mark the due dates of each of your bills on a master calendar along with the initials of who is assigned to pay them. Where practical, set up online banking accounts so that the money is automatically deducted from your individual or joint household checking account without your having to physically write a check and mail it.
Hold monthly or quarterly staff meetings with your honey to review your progress in managing the household budget, increasing savings and reducing debt. Christy Pate and Kristin McKee, authors of "Be CentsAble: How to Cut Your Household Budget in Half," recommend paying particular attention to nonessential -- but often pricey -- items that it probably wouldn't hurt you to scale back. Examples of these include coffeehouse lattes, dining out, impulse spending, movies, magazine subscriptions and cable television.
Items you will need
- Spreadsheet software (such as Excel, Quicken, or My Budget Planner)
- Reward yourselves for keeping bills paid and paying off debts -- just don't go out and splurge if you can't afford it. A massage, a bubblebath for two, a candlelight dinner or watching a favorite video are low-cost ways to celebrate.
- Stay focused on what's important -- specifically, your relationship -- if your budget management hits some snags. When a saver hooks up with a spender, it's all too easy to start throwing blame instead of working together toward remedies.
- Each time a credit card or loan is paid off, roll whatever amount you were paying each month toward attacking a different bill. Try to pay off cards with the highest interest rates first.
- "Get to It! Budget Book: A Fresh Start to Personal Finances to Get Organized! Get Control! and Get on with Your Life"; Cheryl G. Hosking; 2007
- "Save Big: Cut Your Top 5 Costs and Save Thousands"; Elizabeth Leamy; 2009
- "Be CentsAble: How to Cut Your Household Budget in Half"; Christy Pate, Kristin McKee; 2010
- "The Budget Kit: The Common Cents Money Management Workbook"; Judy Lawrence; 2008
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