Married Life
Everything You Need to Know About Budgeting as a Couple – Part 3
So, you’ve successfully held a couples money and budgeting meeting together, as outlined in Part 1 and Part 2 of this series. Now what? Guest Poster Timothy Ng fills us in on how to ensure smooth ongoing handling of finances.
Successfully Managing the Budget as a Couple
With an understanding of your partner’s attitude to money, their financial goals and the tricky questions of joint and individual expenses clarified, you can implement what you have learned into a successful budget.
Now that you know how much your joint expenses are, you need to work out how you will pay for them. Each person will need to contribute from their wages, but how much? If you and your partner earn around the same amount, you can easily split the expenses 50-50 and deduct half of the costs from your wages and half from your partner’s.
Unfortunately things aren’t always that simple as couples tend to have differing salaries and if this is the case you’ll need to do some calculations.
If for example your combined expenses are $2,000 a month, your monthly income was $2,000 a month and your partner’s monthly income was $3,000 a month, take the lowest monthly income and multiply it by your monthly expenses.
Take the result – $4,000 – and divide it by your combined incomes and you get $800 so your contribution is $800. Then subtract your contribution from the combined monthly expenses and you have $1,200 which is your partner’s contribution.
Then set up a joint checking account and an automatic debit of this amount from each of your individual accounts. You will then both have online, phone and branch access to the account and the money, as well as an ATM and EFTPOS card each. You can pay the bills together or nominate one person to be responsible for that.
Separating a Couple’s Finances
Even though you are part of a couple you don’t want to lose your individuality, or your individual financial security. Therefore, think about keeping some of your finances separate, for example:
- Personal cheque and savings accounts. Keeping your own funds will allow you to manage your personal finances in your own way and if you spend all of your money on clothes for the week, you only have yourself to blame, and your partner can’t bother you about it. Plus, you’ll be able to cover your own emergency expenses and avoid blurring the lines of the relationship too soon if you need to ‘borrow’ money.
- At least one individual credit card. This means keeping only your name on the account, and not having your partner as an additional card holder. This allows you to maintain your own credit history and not allow their bad spending habits to bring down your name.
While one person may be responsible for the bill paying, both people should understand the household finances as this ensures an equal and honest relationship where money is concerned, and where it’s not.
Was this series helpful? We’d love your feedback below. Leave a comment!
Timothy Ng is a personal finance writer, and has a real passion for encouraging people to compare credit cards to ensure they get the best deal. Check out his comprehensive guide to best credit cards where he provides an in-depth overview and analysis, to help you find a better deal.
Related Posts
Everything You Need to Know About Budgeting As a Couple – Part 2
mX Column: Money Matters
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Writer, dating columnist, wife, coffee addict, foodie, fashionista... Melburnian through and through. Muser, dancer, blogger, tweeter. Likes to get her head on telly now and again. Sleeper, dreamer, a sucker for romance. And of course... a cheap date.
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Great series you two! I am actually having a money and marriage week over at my blog the week of the 23rd. With some contest giveaways from DaveRamsey.com (He was so gracious enough to give us some great prizes)
I like this point about “Separating a Couple’s Finances” i bet most young couples won’t agree to this point in the beginning but after a while will find reason to keep a little secret on their individual finances.
@David – Thank you! Thought it was a worthwhile series to post because so many couples stumble when it comes to money,
@Richard – There are plenty of good reasons to keep a little secret! Everyone has their vices, and no one deserves to have their spending habits nitpicked over. As long as agreed amounts of money are getting to the right accounts, you should be allowed to splurge on yourself out of your play money. Plus, it’s easier to surprise your partner with special gifts that way too!
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