How to craft a budget together with your partner
By James Yeo
It can be hard to adjust in the beginning when you start living with your partner for the first time. Everything will seem to pose a challenge, be it doing day-to-day chores or managing your budget, because your partner’s needs may not be the same as yours.
In this article, we share some simple pointers for creating a budget together.
1) Be honest about your income sources
Sit down with your significant other and list all the sources of your respective incomes. This should include any side income, rental income and dividends on top of your monthly paychecks.
At this point, it is quite likely that one of you makes more money than the other. The question is: Should the higher-earning person pay a bigger portion of the expenses? This issue must be cemented at the start to avoid any unfair distribution, leading to unnecessary arguments which then adversely affect your relationship.
On top of this, make sure both parties are honest and open with each other when it comes to money issues. The last thing you want is to be suspicious of each other’s earnings and want to pocket more of the wealth for yourself.
2) Start with long-term goals
Next, the best way to start setting up a budget is to think about your long-term goals.
As a couple, you would usually have many goals that both of you want to achieve together, such as travelling to Europe, buying a car, or paying off a long-term debt.
Whatever it is, ensure that your partner is aware and supportive of what you are pursuing in the long term. There can be disagreements as well, so communication helps a lot in reaching to a consensus.
In addition, if you are saving without any goal in mind, it is highly likely that you will end up spending more than you are supposed to. This is why having a goal is very important as it gives you a sense of direction and commitment to follow it.
3) Manage day-to-day expenses
The key to managing day-to-day expenses is to tackle non-negotiable expenses first. Create a budget for regular bills, including utility bills, credit card bills, grocery bills, Internet bill, etc.
After which, address your individual needs. Take for example, getting a haircut, buying clothes, paying for a gym membership, spending money on video games, etc, are some of the personal expenses you should take care of yourself to avoid disturbing the saving pattern set by you and your partner.
For example, just imagine your partner’s face when you dig into the joint account and spend a few thousand dollars on your favourite gaming collectibles (unless he/she supports it wholeheartedly of course)!
4) Set up a joint savings account
It is important to set up a joint savings account and contribute a fixed amount of money to it regularly. It helps in building a commitment towards the budget plan both of you are working towards.
Life is unpredictable and anything can happen. You may suddenly lose your job or come down with an unexpected illness. Having a rainy day fund will soften the financial blow that can otherwise affect your standard of living adversely.
5) Keep track of your spending
Last but not least, keeping track of your spending is a crucial step in following a proper budget.
There is no point in having a plan if you are unable to successfully monitor it after execution. Try to set aside some time (weekly/monthly) to talk with your partner and check on your progress.
Doing this helps to keep your spending habits in check and also allows you to make any adjustments if need be. You can also utilise a budgeting app (I recommend Seedly) to see all your finances in one place.
By keeping these important tips in mind, you will be able to handle the budget as a couple successfully. It also enables you to spend some money on a date night every now and then to reward yourself. The key is to be practical and follow this routine with a clear set of goals.
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