Sooner or later, any couple faces questions: is it worth combining income and expenses, who will manage the budget, and how does it work? The first two questions can only be answered by the couple based on its relationship model. But when it comes to ways of organizing a “joint” budget, here are a few tips.
Typically, there are three models of the family budget: separate, “joint,” and mixed. Their frames are rather blurred, but there are still some crucial differences. If you wonder what they are about and how to simplify “joint accounting,” let’s find out together.
Separate Budget Model
This type of budget assumes that the couple doesn’t have any financial relationship in common. All the expenses and income are individual. No one in the couple claims the income of the other, and the total expenses are either divided equally or proportionally to income. Basically, this is how financial relationships are built between couples who do not yet live together or have recently moved in.
“Joint” Budget Model
This model means that all the money earned by spouses is their mutual family budget. Thus, the couple no longer has a separate income and expenses. It doesn’t matter how much one of the partners earns and spends anymore. Typically such a model suits families who have lived together for a long time, as well as couples with children and families in which one partner earns significantly more than the other.
Mixed Budget Model
A mixed budget is always an agreement between partners. Couples who switch to this model have both shared and personal finances. The common funds can be spent only on the purposes and points agreed upon earlier, and no one claims each other’s personal funds. In most cases, this budget model is practiced by couples who live together, and both partners have a steady income.
Tips for Managing a Family Budget
- Pick the budget model that suits your couple’s situation. Talk about it with your partner and decide on the model that is easy to stick to for both of you.
- Select a method of budgeting. Find a tool that will help you list your income and expenses. It should have a convenient tracking system, be easy to access for both of you, and be simple to use.
- Plan your wants and needs. And yes, even if you have some money left after subtracting your income from your essential monthly expenses, this amount should be in your budget too. Plan your savings, entertainment and personal spending to manage your finances efficiently.
- Prioritize your expenses. Talk to your children to let them be involved in budgeting and discuss the priorities with them and your partner.
- Set your family money goals. Making money goals together allows you to identify a problem or your shared dream and be involved in solving or achieving it.