Your idea of cutting the household budget is to reduce the number of nights eating take-out, while your partner's budget-cutting methods eliminate cable television, yearly vacations and the idea of ever buying a new car. Budget negotiations demand an understanding of the overall financial plan by everybody spending household money. Developing a family budget also helps you avoid the feeling of panic when an unexpected crisis decimates your monthly paycheck.
The earlier the better for sitting down to set up financial foundations for your household. "Money Magazine" found more than 10 percent of couples fought each month about money and finances. With all the things available to fight about, setting down a foundation for money management eliminates one of the basic flash points. Budget foundations include promises by everyone to avoid clandestine shopping trips, the practice of hiding purchases and opening secret charge accounts. The foundation talk also determines how money is kept -- joint, separate or a combination of both types of accounts. If you have debt amassed before you became a couple, come clean during the foundation discussion. Start budgeting from an informed base. Waiting to announce financial secrets undermines the basic trust in a relationship.
Sit down as a couple to establish reasonable budget priorities, including both long- and short-term goals and major and minor expenses. Couples typically list buying a family or vacation home and new cars as major priorities. Short-term goals depend on the couple, but yearly vacations often make the priority list. Your goals might not match with your significant other, and one way to negotiate through conflicts is to first make up separate lists. Set aside private, uninterrupted time to talk about important items and negotiate with each other to narrow the two into one central list.
Your ideal budget might not include monthly fees for a gym membership or a fund for several pairs of new running shoes a month, however, the required give-and-take of budgeting means understanding important expenses and arbitrary mad money. Incorporate two separate mad money accounts as part of the joint budget. The money spent from the accounts needs no explanation or justification. Couples can spend the money immediately or save it for one large spurge a year -- with no questions asked by other family members. Complete the budget necessities, including savings and retirement accounts, and then add a small amount of cash to the mad money accounts.
Developing your budget using interactive accounting allows both people to input purchases as money goes out and comes in. This keeps your budget on track throughout the month without renegotiations. No need to buy expensive hardware or interactive technology, a simple piece of paper attached to the refrigerator door has the same features, except the math is done old-school style. If you do have the money to go high tech, input daily expenses as you spend using interactive software. If you're a low-tech couple, simply list the daily purchases on a joint paper divided with budget categories to keep a running total of the money earned and the expenses for each month.
- Bank of America: How to Approach Savings as a Couple
- Wall Street Journal Market Watch: Couples Who Budget Together, Stay Together
- Forbes: Couples and Money Arguments
- Smart Money: The Six Financial Mistakes Couples Make
- Oklahoma Cooperative Extension Service: Couples and Money -- Let's Talk About It
- Redbook: Couples and Money -- Money Talks Every Couple Should Have
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