Wednesday, November 22nd, 2017

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Making a Budget Can Help Your Relationship

I know what you’re thinking. Yeah, right, how can making a budget help my relationship? A budget can help you figure out who pays for what and when. You can use your budget to set aside money for dates and gifts. If you have an up-to-date budget you can figure out, in an instant, if you can afford to do something. And possibly the most important, a budget can help you avoid embarrassing money situations.

The number one problem in relationships is money. It’s not the money itself but a disparity in the way each person thinks about and values money, as well as a mismatch in financial planning. If you are a saver at heart and your partner is a spender this is a mismatch in the way you think about money. Dave and his girlfriend have been dating since they were sophomores in college. They are both graduating this year and money is suddenly becoming an issue.

“Neither of us really had any money while we were in school,” Dave said. “But now we both have part time jobs and we are planning for the future. We had planned to share an apartment after college but she can’t seem to save any money. I’m doing all of the saving and she is doing all of the spending.”

Different philosophies about money may not show themselves while you are in school. However, many couples discover the unhappy truth right after graduation. And while most college students claim they don’t care about money, or about their partner’s attitudes toward money, that too tends to change as soon as they enter the “real world.” Money is a leading cause of divorce and the most common reason for dishonesty in a relationship.

Of course monetary problems and budgetary needs differ depending on what kind of relationship you have and how long you’ve been involved.

Just Dating
So, you’ve just started dating someone. Obviously you are not going to have the same problems as a married couple. However, here are some problems you might have:

Who pays for what?
There are a few different ways to deal with this problem. Which solution you choose probably depends on how old you are. If you’re in college it’s easy enough to say, “Hey, can we split this?” Or, “I’ll get the bill this time and you get it next time.”

If you’re older you have to worry more about being seen as cheap. So, you can hope that the other person offers to pay once in a while. Or, you have a straightforward conversation. In fact, you can use your new budget as an excuse. Say something like, “I’m making a budget. I’ve budgeted two dinners a month. Maybe we can do something cheaper other days.” Hopefully, he or she will offer to chip in so you can continue to have fun.

Having enough money to pay for things
Have you ever been on a date and had a credit card denied? That’s embarrassing. You can use the “wow I must have given you the wrong card,” excuse but that only works once. Having a budget can ensure that this doesn’t happen to you! If you have your budget accessible from your phone you can check and make sure you have enough money with the touch of a button. (There are plenty of free programs, such as moneyStrands, available for your mobil phone or web browser.)

How honest should you be?
It depends. How much do you like this person and how comfortable do you feel? If you feel like you can really talk to him or her then tell them that you only have a certain amount budgeted for dating. Maybe the two of you can sit down and make a budget together. You can figure out how much you each can spend on things like dinner, movies, concerts and events.

How to impress someone special—on a budget
Easy, just decide how much you want to spend and when. For example: you want to take your girlfriend on a trip for her birthday. Her birthday is in 6 months and you’ll need $2000. You’ll need to save $333 a month. That’s $83.25 a week. Use your budget to see where you can find that money. Can you bring your lunch to work or school? Can you stop buying bottled water and coffee?

Living on a budget doesn’t have to mean boring
In fact, living on a budget can open up worlds of possibilities. Once you have your spending mapped out you should be able to see where you can cut back. You will also be able to make an accurate plan for saving up for something special, like taking your girlfriend home to meet your parents or on an exotic trip for your anniversary!

Living together but not married
Household expenses
You and your significant other/roommate should sit down with a list of all of your household expenses. You need to add them up and figure out how much you need each year. Next, you need to decide who pays for what? You should probably have half of the bills in your name and half in your partner’s name, just in case you break-up. Or, have everything in both of your names. If everything is in your name and you have a bad break-up and he or she stops paying you are responsible. If one of you can’t survive without cable and the other one thinks it’s a waste of money maybe you can compromise and get basic cable and a Netflix subscription. Setting a budget together is great practice for learning how to compromise.

How much should you share?
It is probably best to split everything down the middle, if possible. However, if you make $100,000 a year and your partner only earns $20,000 this may not be practical and may lead to some serious resentment. Sit down together with your list of expenses and see what you can do to make things fair. If you don’t want to pay more for things then you may have to make due with less (such as no cable).
If you are planning on spending the rest of your life with this person then helping him or her pay the bills is something you’re going to have to consider at some point in your relationship anyway. Working on a budget together can teach you a lot about yourself and your partner. You should be able to figure out each of your feelings about money and what is important to you. It is also a great way to learn how to compromise.

One of you loses a job
You each should have an emergency fund (at least three months worth of savings). Or, if you can’t do that you should have a joint emergency fund. You need to talk about this ahead of time. Otherwise one of you may be expecting to have that back-up money while your partner may want to save it for him or herself. It is a good idea to have this conversation when you start the emergency fund, not when you’re depleting it.

Making a joint budget
Tons of marriages end in divorce because of money problems. Sitting down and setting a budget together will help you learn how each of you feels about money. If you are a saver and your partner is a spender, you need to know this before you get married. After you budget your rent/mortgage, bills, and everything else you should each budget some money just for you. You can do whatever you want with your money and he or she can do the same. You may want to buy clothes while your girlfriend might want a motorcycle. However, whenever making a big purchase, like a motorcycle, it is important to consider the insurance and maintenance that goes with it. This allows you to each keep some control and autonomy over your own spending.

Only one of you works or you decide to have kids
If your wife is having a baby and you are working then you REALLY need to make a budget and talk about money. When only one person in the relationship is making money new issues appear. Who has control over the money, how much money are each of you “allowed” to spend, just because you are making all of the money does not automatically mean that you are the only one allowed to spend all of the money. Who is going to be in charge of paying the bills? When you throw kids into the equation things change again, being a mom (or stay-at-home dad) is a job, and just because you don’t get a paycheck that doesn’t mean it’s not important. You need to talk about this and not let your feelings and resentments simmer.

When making your first budget together honesty is usually the best policy. Talk about your differences. Explain why you feel a certain way, without putting the other person down. Here are a few tips:

1. Discuss your common goals. Make a budget together and be flexible. If you are saving for your first apartment after college make a commitment to save a certain amount each month while leaving room for some fun.
2. Talk honestly about your philosophy of money. If one of you is a spender and one of you is a saver then you need to sit down and talk about that. Try to respect each other and compromise. Remember that opposites often attract.
3. Take an honest look at yourself. If you still feel like the man should be the primary breadwinner—or should pay for everything—ask yourself why? Are these beliefs rooted in your upbringing? Try to explain where these feelings come from and assure your partner it is not a reflection on him or her.

Interested in trying moneyStrands, a free money management program?

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