Editor’s Note: This story originally appeared on The Penny Hoarder.
Managing finances in a relationship can be tricky.
You may think everything is going well, but your budget and savings account say otherwise.
Talking about money and budgets with your partner isn’t the most romantic way to spend time together, but it can actually strengthen your relationship.
Whether you use a budgeting appan Excel spreadsheet or a pen and notebook, it’s important to discuss where the money goes with your partner without it turning into icy silence or a screaming match.
Take some time at the beginning or end of each month to complete your budget as a couple. This is a time to think about common spending and saving, then consider whether you need to make any adjustments for the month ahead.
Here are some budgeting questions to get you started.
How to budget together
Before you begin, it helps to understand how to budget as a couple.
You’ll want to see where your money is going to get an idea of what it needs to do in the future.
Be sure to account for:
- Your income: How much do you two earn each month? Write down the combined total of your income from your jobs or businesses. If one person makes a lot more money than the other, talk honestly about how to handle the situation. Each couple must find what works for them.
- Your fixed costs: List bills and obligations that need to be paid each month and rarely change. This includes things like rent, car payments, student loans, utilities, life insurance, cell phone bills, internet bills, and pension contributions. These are the costs that you have already committed to paying each month, and they probably come with a contract.
- Your variable expenses: It’s anything that doesn’t have a monthly payment, but you still need to buy: groceries, gas for the car, pet supplies, clothing, and household items like shampoo and sandwich bags.
Once you have all the numbers in front of you, it’s time to ask some important questions.
Here are four budget questions to ask your partner to help strengthen your wallet and your relationship.
1. What do we think of our expenses?
This is the most obvious question you and your partner should consider when you both think about spending the past month.
It is useful to compare the correspondence between your actual expenses and your planned budget. Look at each expense category, such as food, entertainment, and transportation.
Where have you overspent? Where did you spend less than expected? Where do you want to spend more or less?
If you spent more money than expected, analyze the factors that contributed to the overspending. Discuss among yourselves what you can do differently next month.
You should also adjust your spending limits if you consistently go over or over budget in a particular category. It’s better to be practical than to stick with a number you don’t like.
For example, if you plan to spend $350 a month on groceries, but continue to earn around $450 despite efforts to reduce food costs, consider adjusting to a more realistic level.
The reverse is also true. If you budget $100 a month for car maintenance and only spend $25, what do you want to do with the extra $75? Would you like to reallocate that money or defer it to save for more expensive maintenance?
2. What do we think of our savings goals?
Paying your bills on time and having enough money to cover daily necessities is fine, but don’t neglect your big goals as a couple.
When there is money left over at the end of the month, do you both agree on where that money goes?
For example, you may want to save for a home down payment but he wants to save some extra money for a trip to Europe next summer. Or maybe you both have significant student debt that you want to eliminate over the next five years.
You may not have enough money to save for multiple goals, which is why you should align your financial priorities as a couple.
There may be smaller goals you want to save up for as a couple, such as buying furniture and decor after moving into a new apartment.
You can create a sinking fund by depositing a specific amount of money into a separate account each week or each month. A sinking fund is a pool of money that you regularly contribute to in order to spread the cost of an upcoming expense over time.
When you have clearly defined financial goals that you and your partner are working towards each month, sticking to a budget can be easier.
3. How should we manage personal spending and savings goals?
Both of you will have personal things you want to spend money on or individual savings goals. You can spend $80 on your hair each month, for example, while your partner spends $80 on video games.
One way to avoid conflicts is to create a “no questions asked” allocation for each of you.
Whether you can afford $10 each per month or $300 each per month, everyone needs a little money to spend, save, or invest as they see fit without having to be accountable to the other person. . Just make sure you both agree on the personal allowance amount in your budget.
Or if you’re not comfortable combining your finances, you can take a more hybrid approach.
You can create a joint account for household expenses and other common purposes (like a vacation or a wedding). Each partner contributes to the joint account but keeps the rest of their accounts separate.
4. Do we need to adjust our budget to achieve our goals?
After sitting down and creating a budget as a couple, start identifying ways to save money each month and potentially even earn money.
This is especially important if you’re saving for an important goal and your budget numbers make it unrealistic to reach that goal in the time allotted.
You’ll have more wiggle room in your budget if you can eliminate unnecessary expenses, like subscriptions you no longer use.
Don’t just focus on your discretionary spending either. Look at your essential expenses and identify a way to cut costs.
For example, you can call your ISP and ask for a better rate, or ask if it would match a competitor’s quote. Or you can try to lower your utility bills by reducing your water and electricity usage.
If the two of you are already very frugal, it might be time to discuss ways to generate additional income.
You can increase your income in several ways. At work, you might ask to take more hours, work overtime, or negotiate a raise.
You can supplement your regular job with a side business or passive income stream. You can also increase your cash flow by sell items you have around your house.
It is important not to point fingers or highlight income inequality in these discussions. You may be living in a single-earner household because one partner takes time off from work to care for the kids – and that’s okay.
It never hurts to think of ways to generate income, even if it’s just an extra $200-$500 a month.
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