Let’s talk about money as a couple: how to create and manage a family budget
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Creating and planning a family budget is not an easy task. For this, partners should talk a lot about their income, financial habits and goals.
Such conversations are not comfortable for all couples, but they are important. Why do you need a family budget, how to talk about it and how to plan joint funds, “UP.Zhyttia” talks with financier Lyubomir Ostapivy and psychologist Natalia Gaevska.
What is a family budget and why is it needed?
The family budget is the money you spend on joint property, leisure, children (if any) and joint goals.
Money often does not play a key role in a relationship, but it is important. Their presence gives financial independence, confidence in the future and the opportunity to realize your dreams.
First of all, the ability to plan a family budget is necessary in order to competently distribute funds in a couple and, if desired, to be independent in their expenses.
According to the psychologist, the ability to negotiate plays a key role in planning family funds. How people budget and negotiate has a direct impact on relationships.
“Family budget – it’s always about relationships in miniature. Sometimes, working on the problem of budget formation, you can solve some problems as a couple”– says the psychologist, based on her own observations.
| The most important thing in the process of forming a family budget is the ability to negotiate. Bakhtiarzein/Depositphotos |
Views on budget formation may differ at the beginning of a relationship – and this is a normal practice.
According to the expert, it is important to understand: if the family budget was arranged in one way in the parent’s family, this does not mean that you need to transfer it to your family and convince your partner to do the same.
“We all come out of our family system. Of course, there are certain patterns. It is important not to adhere to your system 100% and force your partner to it, but to look for something in common that will suit both.
If there is a situation where two things were different, then you have to find something in the middle. Or agree to one model. In this case, you need to make sure that the partner who gives in to his vision does not feel betrayed or rejected“, the psychologist emphasizes.
First of all, it is worth learning to negotiate, emphasizes Gaevska.
“Family budget – this is an important thing in the family. If all the money is concentrated in only one of the partners, then the relationship can become codependent and uncomfortable for the other partner.
Family budget – it is also about power within the family. Sometimes it can be unconscious. Someone thinks that he knows better than his partner, can allocate funds better and does not consider it necessary to even negotiate with him.” – she adds.
How to talk about money as a couple
Not everyone is comfortable talking about money. For some, these conversations become a manifestation of “mercantilism”, for others – an intervention in something too personal.
But without these conversations, the family budget cannot be planned. It is also not easy to start talking about money, so Lyubomyr Ostapiv in the book “Love and Budget” advises to first discuss your financial habits and hypothetical situations that may happen. Ask your partner:
- What are your three favorite things to spend money on?
- If a situation arises when you need to cut costs hard, what will be the hardest thing for you to give up?
- What would you do with 10 million hryvnias?
- If you didn’t have to work, what would you do all day?
- How would you plan the budget for such big purchases: car, wedding, next vacation, housing?
- What is your personal attitude to loans?
- Would you like to retire now? What kind of capital do you think is needed to make such a decision comfortable?
If conversations about money become habitual for you, then forming a family budget will be much easier.
However, it will not be possible to completely avoid conflicts on the background of funds. Each person has his own vision of how to save and spend money.
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| Disputes over money are almost impossible to avoid, but they can be minimized. Alex Shadyuk/Depositphotos |
The psychologist offers several approaches that can be used as a couple when forming a family budget:
- Practice of common goals.
Spouses are encouraged to set joint financial goals. This makes it possible to unite the couple not only financially, but also morally.
- Write down financial values.
It is necessary to write down the values of each separately and compare them. Then find common values and focus on them. This will help partners understand why they make certain financial decisions and better explain it to each other.
- Set priorities – together.
If you plan to buy a house and save for it together, and your partner buys an expensive thing for himself from the joint budget, without consulting, this can be a reason for conflict. In addition, it breaks the trust in the couple.
Planning to buy something – consult with your partner and talk about your plans.
- Create a conflict resolution system.
Sooner or later they will still occur. And before these conflicts arise, it is necessary to find out how to solve them. The couple must determine whether to involve a third party, whether to turn to a financial assistant or a relative, or to decide everything on their own.
- Share financial responsibilities.
It seems like a trivial thing, but it is often forgotten. It is necessary to determine who is responsible for what in a couple. For example, who is responsible for bills and who is responsible for investments or expenses for daily needs.
- Set personal goals in parallel with common ones.
Do not forget about yourself in a couple. Set personal goals that you can achieve on your own, without the help or coordination of a partner. It will help to have personal space in the relationship.
- Develop an emergency spending plan.
Set aside part of the funds in case of an unplanned situation. Agree with a partner who will act and how to spend money. This will significantly reduce anxiety, advises Nataliya Gaevska.
Talking about money should not be a burden for a couple, but a motivation. The financier advises to make them systematic, to agree on a day and time, to connect the meeting with something pleasant (for example, cooking dinner). In addition to expenses, it is worth talking about investments, future plans and ideas.
Ways of planning the family budget
There are several variations of the family budget: joint, separate, separate-joint and, the most common, chaotic. We advise you not to follow the last one, but we will talk about the other three in more detail.
Joint family budget
“In Ukraine, people mostly have a joint budget. It is effective for them to have an app or a tablet where there is a general financial situation for the whole family: how much we earn, how much we spend and how much we save. Often, someone in the family keeps the records. At the same time, the second partner must see these records and, importantly, their results”– shares Lyubomyr Ostapiv.
The joint budget involves adding up all earned money in the family “up to a handful”. From there, each family member takes money for their personal expenses.
Separate and joint budget
It can be of two types. In one case, you manage your money independently, but allocate a certain percentage for joint expenses. Or vice versa. You put all the money in the family treasury and take from there for your own expenses.
“For example, each partner in a couple spends 30% of their income on themselves, and the rest goes to the joint budget, which covers mandatory expenses, children’s needs, travel, the future and time together“, the financier suggests.
In this scheme, you have joint funds for critical needs, and you can spend the rest at your own discretion and not report to your partner. The percentage you invest may vary depending on your income, but the important thing here is that you cover common expenses together and save money to achieve common goals.
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| The main types of family budget planning are joint, separate and joint-separate. Syda_Productions/Depositphotos |
“If the budget is separate and shared, then there are more variations in expenses, planning and savings. Someone pays for one, someone for another, or partners are discounted from their incomes. The couple must agree on who pays for what. Then everyone will manage the budget separately and it will be necessary to additionally plan joint funds and expenses.
It is better for the family that partners know about each other’s income and expenses and how much they manage to save. Because with the appearance of children, there are more and more joint expenses, and for other purposes you need to save together“, the financier summarizes.
Separate budget
Here, everyone in the couple has their own funds and disposes of them independently. Joint expenses can be divided by who pays for what. For example, one partner pays the apartment rent and utilities, while the other buys food and covers transportation costs.
However, in the long run, it is difficult to maintain a separate budget, because joint expenses increase. Also, a separate budget makes joint savings impossible.
The most optimal option is to look for ways that will satisfy both in a couple. The worst thing is when a couple’s thoughts are divided and it is difficult to come to an agreement, emphasizes psychologist Nataliya Gaevska.
How to distribute the family budget
How to allocate the budget is an individual matter. However, the financier advises to try the 50-30-20 scheme. It is not universal, but it is used quite often.
- 50% – mandatory expenses: utilities, health, clothes, medicine, transport;
- 30% – emotional expenses: travel, gifts, hobbies;
- 20% – savings.
If it is customary for you to save 10%, that is also good. After all, the main thing is to start. Maybe after you analyze your expenses, you will be able to save more.
If it is difficult to divide into percentages, you can try a simpler method. Write down 10-12 categories of expenses that are critical in your family. Here is an example given by Lubomyr Ostapiv:
- Life
- Products and home shopping
- Clothes and shoes
- Beauty and medicine
- Apartment and utilities
- Entertainment and gifts
- IT services
- Charity
- Transport
- Sports and a healthy lifestyle
- Emotional shopping
- Bank services
- Others
- Self-education;
- Parents and relatives – support;
- Vacation and travel;
- Equipment and furniture;
- Social projects (charity, donations).
Try to record your expenses at least weekly. In three weeks you will develop an elementary habit. You can also set a reminder on your phone, this will help you not to forget.
Lubomyr Ostapiv also advises to allocate funds for “emotional expenses”. Such as unplanned purchases, gifts or entertainment. This gives a certain freedom of action, and at the same time the emotional costs become just as controlled.
How to effectively allocate and save money in the family budget
To plan and, moreover, to accumulate funds, you need to know their account. Keeping track of your expenses daily or weekly can be tedious, but if you make a lot of emotional purchases, it will help you analyze where your money is going.
Ostapiv gives an example of coffee in a coffee shop. If you drink coffee at home or at work, and not spend several tens of hryvnias every morning in a coffee shop, then they can be postponed. For a day, this amount is not significant, but in a month it will be more noticeable.
How to control costs:
- Automate expenses
If expenses are chaotic and cannot be calculated at the end of the month: try to exclude your own participation in this process.
“I know people who try to spend everything with only one bank card. There is a good statement and you can clearly understand where the money went in a month”– adds Lubomyr Ostapiv.
- Choose a comfortable format
“You don’t need to keep detailed finances all your life. Budgeting is often about healthy financial habits and analytics. You can do it once a month and you don’t need detailed records.”says the financier.
- Enlist support
If it is difficult to discipline yourself, then Ostapiv advises working with a financial consultant.
“Consultants monitor how much a person has invested, saved and earned.
It’s like a gym: someone works independently, and someone needs a trainer who helps, guides and monitors. Some people need psychological support for a better result“, he concludes.
- Set goals
In order to procrastinate effectively, you should set goals. Then both in a pair will work for a common goal, which is easier even in the psychological aspect.
“For example, a family needs a reserve fund or, say, a financial cushion. For this, it is better to keep money in different forms: in cash or in bank accounts (Ukrainian and foreign).
These funds do not earn interest, but can provide insurance in critical situations. If such a pillow exists, then the rest of the funds should not be put under the mattress, but so that they work and bring interest“, Lyubomyr Ostapiv emphasizes.
You may also be interested in:
How to raise a financially literate child. Life hacks for parents
How to protect your rights if you live with a partner in a civil marriage
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