Establishing Your Family Financial Budget
One of your first priorities as a new couple in the U.S. should be to establish and understand your new family financial budget. Make sure that you take a few days to rest and acclimate to your new surroundings before doing this.
Money can be a major source of divisiveness and tension in a relationship. The best way to relieve this tension is for a couple to both work together to understand your finances and budget. By understanding your finances and budget together, you will be working as a team.
The two partners should work together to understand your money scenario, listen to each others ideas and develop a plan together. Remember, money does not buy you happiness.
Firstly, develop a budget by listing all of your incomes and debts/bills to understand what you can and can’t do. What are your priorities? How much can or can’t you spend on clothing, eating out, and other extra things. How much can you save for your future? If you work together, it may significantly lessen any money divisiveness or tension.
Develop a Budget
Developing a budget does not have to be complicated. It doesn’t have to cost any money at all to establish to establish a budget and financial plan.
To illustrate, it can be as simple as establishing your budget on a handwritten piece of paper, using a spreadsheet, or using a budgeting program. There are many free budgeting programs out there. Just search for them on the web using your Google or Inboxdollars search engine. On the contrary, you can also use a costly software program, but I thing that is overkill.
We use an excel spreadsheet for our budget.
We get paid from our employers every other week, so we do a budget for two paychecks per month. Set up your budget weekly, bi-monthly like us or monthly. Whichever works for your situation the best.
For the two months per year that there are three paycheck per month, we use that money for vacations, Christmas, pay down bills or other priorities.
Firstly, list all of your income sources and amounts. For example, you should include your paycheck amount if you have a job. We use our after tax income amounts for our budget. In the same manner, list any other sources of income like social security, rental income, part-time jobs or any other income that you may have.
Secondly, list all of your bills and other debt sources and amounts, including, but not limited to:
- House mortgage or apartment rent
- Automobile payment
- Cable TV
- Water/Sewer bill, if any
- Insurances (house, auto, life, health)
- Credit Card Debt, if any. If you have credit card debt consider consolidating it to a lower interest personal loan with a company like Sofi.
- Student Loans, if any. If you have student loans or parent plus loans, consider consolidating them to a lower interest loan with a company like Sofi.
- Personal loans, if any
- Auto gasoline
- Day care, after school care, if any
- Personal care (haircuts ect..)
- Other costs that you may have
After you have listed and added up your income and expenses, subtract the expenses from your income to determine your extra money. If you are in the negative, then you have a problem and need either increase your income or cut back on your expenses. If you are in the positive, this is the money that you and your partner need to discuss and agree on what to do with.
Develop a Plan
Now that you understand your budget including income, bills, other debts and remaining amount, you and your partner can work together to develop a joint money strategy that incorporates both of your individual ideals. Even if 1 partner is responsible for paying bills or keeping up with the budget, both partners need to be involved in understanding the budget, creating a joint plan, and sticking to the plan.
When you come together and develop common ground and new goals as a couple, it will help avoid the #1 cause of marital conflict
Schedule Money Discussions
Regularly, set aside a time to discuss your finances as a couple. For instance, set a regular day every two weeks on the day before you get your paycheck is a great idea. This way you are planning for your income and bills.
Discuss your short and long-range goals. Incorporate these goals into your budget. Always be prepared for major purchases and bumps in the road.
Additionally, it is also important to share the tasks of the family finances. Take turns or work together to upkeep the budgeting, paying bills and handling finances. Otherwise, the person who handles everything could become resentful while the one who doesn’t could be left without knowledge of the family’s finances or accounts if his or her partner becomes ill, dies or leaves the relationship.
Set Realistic and Attainable Goals
Once you have your budget completed, you can work together to set your financial goals. Don’t just live month to month, making money and paying bills. Set financial goals and reaching them together. The goals should be realistic and attainable. For example, saving for a down payment on a house loan instead of buying a house outright.
The Budget is Always Changing
Finally, keep on top of your budget because it is always changing. You may get a raise at work. Inflation may increase your bills or debts. You might pay off some debts. Changes in family life like additions to the family, moving out of diapers for kids, day care, ect.. can change your budget over time.