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How To Create A Budget For You And Your Spouse

by Invisor Last updated on February 24, 2016 Tags: How-Tos, Family Matters

While one of the most common stressors on a relationship is finances, budgeting as a couple doesn’t have to be complicated if you’re both on the same team. There’s no such thing as a “normal” budget; each couple’s budget is designed specifically for their family’s goals, income, and spending habits. Budgeting for couples requires open communication and the discipline to track your spending. We can help you identify your long and short term goals to find a plan that works for you, starting with these 7 tips on how to create a budget you and your spouse can follow.

Step 1: Encourage Open Communication

Financial responsibility can put a strain on couples. Budgeting as a couple will only work if there is an open line of communication and frequent conversations about whether you are both on track. It’s important that both spouses have input to share their goals and challenges, and trust each other to stay within the guidelines. If you have an overspending spouse, one of you has to take control, but both need to be open to a discussion about working together. Instead of saying something like “you spend unnecessary money,” define what is necessary into different categories so there is no miscommunication. Approach touchy subjects gently and work as a team. Spouses have to be considered equal, regardless of who earns more money. Managing family finances is a partnership.

Step 2: Track Your Spending

Before you sit down and make any plans, track the money coming in. Besides your wage, note any other sources of income such as rental properties, alimony, and pensions. In addition to your income, spend 3-6 months tracking your spending to shed light on patterns and help you budget for the future. Go through credit card statements and note all of your expenses and flexible spending to get an average or estimate. This will help you understand the scope and scale of your spending and take the guesswork out of budgeting to avoid any potential disagreements.

Step 3: Analyze Your Situation 

After you have determined your spending habits, analyze your current financial situation by asking some simple but important questions.

  • Are you spending more than you are making? Are your funds insufficient? If so, is there another source of income you can add, or an expense you can eliminate?
  • Do you have enough income to cover your expenses but not enough spending money? If so, how much flexibility do you have with your recreational spending?
  • Is your income exceeding your expenses? Do you have sufficient funds for recreational spending? If so, great! Should you be investing more or putting it into savings? What are your financial goals?

Step 4: Create Guidelines

There are no strict guidelines for budgeting for couples. The basic rule: Make sure you’re not spending more than you’re making. Take your income and subtract your expenses to see what’s left over. Here are some general guidelines on how to disperse your income:

  • The bulk of your spending (50%-60% of your income) should go towards fixed costs like rent/mortgage, debt, car payments, and groceries.
  • Budget approximately 10% for investments.
  • Budget approximately 5%-10% toward saving for something more short-term like a vacation, wedding, or other expense.
  • Budget 20% for spending money for activities like eating out and entertainment.

Step 5: Develop Categories

Once you have determined how your funds are being dispersed, divide them into categories such as car, home, food, recreation, and savings, and even more detailed categories within the larger ones like car payments, gas, insurance, and maintenance. You may also want to contribute to an emergency fund for any unexpected expenses that come your way. Determine a dollar amount you will spend on each category every month based on your previous tracking - and be sure to save a little bit for date night! Be realistic. This is where you may decide to cut down on certain areas.

Find a Method That Works for You

The envelope budgeting method works best for a lot of people because you can physically see the money coming in and out of the labelled envelopes each month. Instead of starting at zero, allot an amount to each envelope and place that amount inside at the beginning of the month. For example, if you have decided to budget $500 per month on food, place $500 cash inside the envelope at the beginning of the month. As you take cash out, you can mark details like the date and what it was for on the outside of the envelope, that way, you can review it together later. Anything left over, carry on to the next month or put it in another category like recreation (or investments). You can even use traditional pen and paper to map it out or create a spreadsheet that calculates your spending at the end of the month. There are also apps and websites that can help you develop your spending plan.

Follow It

The hardest part of budgeting for couples is actually following it. Keeping track of your spending on a day-to-day basis can take some getting used to, but once you get started, recording your purchases will become second nature. Remember to keep the lines of communication open and evaluate your plan along the way. You may need to make adjustments to your envelope allocation or spending habits.

Hopefully these tips will make budgeting as a couple a little bit easier. As time goes on and you stick with your plan, you’ll see your savings grow and have more money to invest in your future.

Learn more about how to manage your household finances and financial tips for couples.

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Invisor offers Canadian investors personalized investment management solutions at a fraction of the cost of traditional advisor models, without requiring any minimum investment amounts. Get started now to tell us a little about yourself and your goals, and we’ll find an investment solution just right for you.

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