Managing your money is tricky, but it gets even more challenging when you have a family budget. People are different, and their financial abilities are different too. Because of that, money can often become a stumbling block in a marriage. Discussing your budget before the wedding is essential – but even if you haven’t done so, don’t worry. We’re here to help.
It’s important to keep in mind that despite the stress that comes with managing a budget, you need to stay positive and productive when it comes to money. It’s not easy. But with open and continued conversation about the matter, it is definitely achievable.
What Is a Family Budget?
The family budget is a plan of all your income and expenses that you and your partner agree on. A family budget allows you to allocate a certain amount of money for a certain expense, which helps you stick to the budget and understand where your money is going.
It doesn’t matter if it’s the first or the tenth time you’re creating a family budget. You can make it better every time, and you will notice the difference in how you handle money. The best thing about a family budget is that it will help you organize your finances, which will, in turn, help you save and spend wisely. It’s a bit like a business plan, but for your personal finances.
Set Out on the Right Foot
You will most likely need to borrow money down the road, either for a business opportunity or to buy a house. To get the best rates possible on a loan or mortgage, you will need to have a decent credit score. You can find out your credit score by using this free online tool – my credit score.
How to Create a Family Budget
Did you know that according to one study, 70% of married people don’t even have a joint bank account? That’s why creating a family budget is essential – especially if you’re getting married soon. Here’s what you need to do:
Step 1: Set up separate accounts before marriage. Make sure you have enough money in your account to cover expenses for at least six months. This way, when you set up your joint account after marriage, you won’t feel the pressure to make ends meet.
Step 2: After marriage, continue to keep your own separate accounts. This will allow you to have some privacy – it will let you have a “just me” account – which is great for the important feeling of security and independence.
Step 3: Choose a time and place where both of you will be comfortable sitting down together and talking about your finances. You can start by talking about your financial goals – saving for retirement, buying a house, taking trips etc. Once you get some clarity on the overall picture, you can start planning how much money you should put towards each goal – and what to do with the rest of the money.
Step 4: Write down everything. Every single penny counts. If one person makes $600 more than another, he or she may think that they should contribute more to the family budget. But that can make the other person feel bad or frustrated – so avoid it by writing down every expense and income separately and discuss them separately too.
Step 5: Discuss what to do with savings . Do you want to use some of your savings for fun things, like going out to restaurants or traveling? Or do you want to use some of it as an investment?
Be honest with each other about how much you want to save for retirement or for future children’s education – because if you don’t talk about it now, it may cause a fight later on (especially when one person wants to save more while another wants to spend all their money).
Step 6: If your goals are different from each other, agree on who pays what . For example, if one person wants to go out all the time, while the other wants to stay home and invest in their future, decide who will pay for what (or split the bill) based on who has more cash flow available. This will help both parties get what they want out of the family budget.
The Takeaway
When it comes to money, there is no right or wrong answer. You have to decide what percentage of your income you’re willing to spend on family expenses. The only rule is that it should be reasonable for both partners.
Even if there is a wide disparity in earnings between you and your partner, it is important that each person contribute. Otherwise, this could lead to festering feelings of inadequacy or resentment.
