Newlywed Advice: Intro to budgeting as a couple

by Susan Paige
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Managing your money well as a couple is an important aspect of happy married life. Many may even venture to say that it is a necessary prerequisite to having a good life. Contrary to many opinions budgeting as a couple can be simpler, easier and more effective than budgeting separately, or not budgeting at all. With two people sharing the effort of both budgeting and executing things can move along smoothly. Budgeting is more effective when you think of it not as a one shot exercise but as a regularly used tool that helps you reach your goals.

  1. Honesty and trust

The success of your budget, as with most things in married life, depends a great deal on the candor and sincerity of your mutual communication. Ideally you and your partner would have a comprehensive understanding of each other’s financial situation before tying the knot. If not, start the discussion right after and don’t hold back information. Discuss difficult subjects early and fully. If there is a debt to be repaid or an upcoming monetary obligation to deal with, you must discuss it right away. Hiding something important from your spouse is a sure recipe for disaster. Your partner has a right to know about all your financial history, incomes, assets, investments, burdens and constraints.

  1. Consensus

Have a candid discussion with your partner about how you want to manage money. Reach a consensus on the amount of financial independence each of you will have. Discuss joint accounts. Set an upper limit to your joint spending and also to your independent spending. If you cannot avoid doing something foolish like gambling or making an uninformed investment, do it with the consent and participation of your partner. Let there be no surprises between the two of you.

  1. Joint goals – joint responsibilities

All household items on your budget become shared expenses after marriage. Monthly costs such as your house rent, utility bills, food, groceries, maintenance, and all else need to be in your combined budget. Interest on debt can eat away at your financial health and marital happiness. Debt repayment should be among your top priorities. You should also set long term budget goals together for things like vacations, mortgages, savings, rainy day funds, and so on. Set goals together and agree on them as a couple. This is also a good time to define responsibilities so that neither of you feels overburdened or overworked. Figure out who of you will pay the bills, shop for groceries, make investment decisions, etc. You could decide to have fixed responsibilities or take turns.

  1. Check progress

Budgeting itself is meaningless without some monitoring. You must know if you are spending more than you planned to, and by how much. A small deviation, if left unchecked, can have a magnified effect on your longer term financial well being. Set some time aside to regularly measure your financial progress and jointly review strategy. Having a discussion at least once a month is usually optimum. This can also be a time to reflect on the progress of your careers and review your family plans as a couple.

  1. Plan for emergencies

Emergencies can have a more profound effect on couples than on singles, especially if only one partner is employed. Illness, loss of job and other contingencies can strike out of the blue. An emergency can put a temporary dent in your household income or cause unexpected financial losses. With prudent planning you can offset the effects of such emergencies. Health insurance is one example. At the same time you must budget as a couple to set aside a fund to cushion you during unfavorable events. Agree to move money from your emergency account only in an emergency.

  1. Plan for a life together

Once you’ve paid off your debts and secured your family against calamities you can start budgeting for the important things in life. You may plan to expand your family in future, buy a home and have a car or two. Eventually you will retire and become dependent on your savings. The best time to budget for all of life’s big events is when you’re a newlywed. By budgeting early in life you widen your options and give yourself ample time to achieve your goals.

 

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