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Stretching Dollars - One Budget Strategy for Married Couples: Budgeting, Spending, Savings, and Date Night Ideas
More from the Stretching Dollars series...
If you're a normal couple, much like me and my wife, then you've had a fight about money. Whose money is it? How do we spend it? What do we spend it on? How much do we save? All of these questions, and more, can lead to disagreements that leaves YOU on the couch. Or worse.
This Hub will detail a strategy that lets my wife and me get by with very few fights on money. There is still the occasional disagreement here and there, which can be expected. But the big, screaming, blow-up fights have stopped. Some of the advice given in this Hub is from personal finance experts. Other pieces are from friends and family. The strategy itself is custom tailored to our situation. I do not guarantee that this strategy will meet your needs, but it may give you some ideas to implement into your own budget.
Money Fights Poll
How often do you and your partner fight about money?
The Bill Schedule
Ah, the mutual checking account. This is the cause of so many arguments. My wife and I found ourselves going through the checking account statement line by line, trying to figure out who spent all our money. This blame game did nothing to help our situation. It didn't do much for our relationship either.
First, it's time to make the bill schedule. Every monthly commitment that you and your spouse have to pay should go on this list. Every payday should also be on this list. My wife and I did ours on a spreadsheet calendar. My mother and her husband do theirs on a desk calendar. All payments and deposits should be compared to all monthly commitments. Make sure that you are earning enough to cover these expenses! If your monthly bills are higher than than your income, you will have to cut something out or find a way to bring your income up. The choice is yours on which side you want to attack it from, but the result should be an income larger than the monthly expenses.
The monthly expenses need to include items such as rent/mortgage, groceries, gasoline, car payments, car insurance, utilities, credit cards, etc. Some items are fixed, such as the monthly rent/mortgage. Others need to be estimated, such as gasoline. You may use more or less in a given month, and the price of gas fluctuates.
If you've done the bill schedule, then you should have a good overview of how much money is coming in, when it's coming in, how much money is going out, and when it's going out! It's good practice to sit down at the beginning of each month and make a schedule specific to that month. This helps keep communication up between the two of you and will strengthen your relationship.
Terms of the Budget
The bill schedule has been drafted, and all items that are necessary to live are included on it. If all went well, you didn't fight about it because we were only putting down the facts. Now comes the hard part, which is figuring out what terms each of you want from this budget.
The bill schedule is completed, which shows both of you what your cashflow situation looks like. This will help you and your spouse decide quickly if your expectations from the budget are reasonable. You and your spouse must both sit down together and agree on a plan. It may not be this exact plan, and it may not even look anything like this plan. It's ok, as long as it's workable, meaning you don't have to borrow money every month to make ends meet, and as long as you both truly agree on it. This is the hardest part, and it helps to make individual plans first before having the discussion together. This way, both you and your spouse can outline what you want to get out of this budget in an organized way. Once you both have your terms on the table, then it's time to start hammering out the agreement! If you and your spouse cannot discuss money without fighting or cannot establish terms together, this may be a sign that a mediator, such a marriage counselor, is needed before any constructive communication can take place.
Once you have the terms, from both you and your spouse, write them down. Sign it if you feel that it is necessary. This is the agreement by which you and your spouse will be spending all of the money that comes into the household! Again, make sure that you both agree on every item on this list before moving forward.
The terms that my wife and I came up with look like this. I won't reveal who requested which item because we made these terms as a single unit.
- All bills must be paid on time every month.
- Enough money must be alotted for groceries and gasoline.
- Each person needs to have spending money that is their own.
- Enough money must be alotted to go on a date night at least once per month.
- A savings needs to be established and contributed to every month.
As you can see, the terms don't include specific amounts, just general principles that we both will agree to. We built our plan around these principles.
The Bank Accounts and Envelopes
After the bill schedule is established and the terms of the budget are agreed on, now it's time to look at the bank accounts and make sure that everything fits. In our case, we had to make some changes .
As part of our plan, my wife and I decided that we were single unit. All decisions were made together, all purchases were made together, and all income was treated as the household's, not the individual's. This may sting a bit, especially if one of you grossly out-earns the other. Marriage is a partnership and should treated as if both you have the same equity in it. My wife and I set all direct deposits from our jobs to go into one central checking account. We don't keep track by name, just by pay-date. The entire income is ours. Doing this strengthened our relationship and forced us to communicate. We no longer made large purchase decisions on our own with this money.
We agreed to keep $3,000 in this main checking account at all times. $3,000 is about twice as month as our monthly expenses. This way, we know we can pay the monthly bills without fear of overdrafting the account. We have an additional month's cushion if an unexpected emergency expense comes up, such as getting a flat tire on the road and needing a tow. All monthly commitments that could be set up with autopay were tied to this account. That ones that can't be set up on autopay, such as groceries and gasoline, we use the debit cards for. Anything that was not included on the bill schedule and does not qualify as an emergency expense does not come out of this account as a purchase.
So far, so good! So, what happens when that main checking account goes over $3,000? We had two items that needed to be satisfied on the terms that took care of this. Savings, individual spending money, and date night money. In our plan, these items are taken care of on specified dates. In our case, we agreed upon the first of each month. On the first, we take a look at the balance of the checking account. If it's under $3,000, we don't do anything except another bill schedule to make sure we covered every expense we know about. On the bill schedule, since our income is more than our expenses, we should have a balance greater than $3,000. Whatever the problem is, we find it and work it into the budget. If the balance is greater than $3,000, then we're on track.
We now take the money that's over the $3,000 minimum balance and divide it 4 equal ways. 25% of this money goes into the savings account. 25% goes into an envelope in our kitchen that is used for date nights. 25% goes into my wallet, and the final 25% goes into my wife's purse. This satisfies many of the items we had established in our terms. A savings is established and contributed to. Nothing comes out of that account. It may be a standard savings, or an IRA, or any number of other things. We have money set aside for date night. How extravagant they are and how many we have depend on how full the envelope is. We also get a cut individually in cash. We are not accountable to each other for this money. This means if my wife wants to go out and get her hair done, and she has enough cash on hand, she can do it. If I want to go out with my buddies, and I have enough cash on hand to cover my tab, then I do it. We aren't accountable for this money because this is ours, and we've made sure that every other area has been satisfied first. Best of all, we can't bicker about how much money to allocate to each area since everything is distributed equally.
I love our system since most expenses are paid automatically and without worry, and I have a savings that is growing every month. My wife loves the plan since all income is treated as the household's and we both get a portion of the money to spend on anything we want. If I wanted to stack extra into savings, I can contribute my portion to it. Or I can just keep it and spend it. There's a little bit of freedom in there among all the organization!
I hope that this Hub has, at the very least, given yourself and your spouse a few ideas on how to approach your own struggles with money. If you don't have any struggles with money, then I envy you!
This strategy has allowed myself and my wife to cease fighting over petty money matters. We know that each dollar that comes into our household will be spent based on household needs, and that we will have a piece of what's left over to save, spend, and use for nights out. Some of you may want to add more categories to your plan, others may want to use less. Some of you will have higher bill schedules than others. No matter what, the keys to reach an agreement on money matters is to have a clear picture of your financial situation and to communicate with each other to find the right compromise.
© 2011 Theo20185