Dear daughter,
Today I want to talk to you about a crucial topic, budgeting for couples.
I consider it very important to share everything with your significant one.
First, I’ll tell you how I do my budget with my wife and after that, I’ll tell you why it is important for me.
As you know by now, there are several categories for your budget. After several years of budgeting, the amount that goes to each category is fixed for me. It is great to see how the budget is now simpler than when I started using it.
From the beginning, the first thing I did was to show my wife how much money I make. I had nothing to hide from her and still have nothing to hide.
After I did that, I started asking her how much money she was making and how she was expending it.
The reason I started with this process is that it was clear to me that she wasn’t managing her money well. As you know, I’m very good with numbers. And it was clear to me that she needed help. She just didn’t know at the time.
This process was painful at the beginning. Nothing was easy about this topic. It took some fights and money talks. She didn’t want to be transparent to me about this aspect of money. She thought I wanted to control her (and her money).
So, I told her, let’s do an experiment and later you can decide if this is for you or not.
After the experiment, she started feeling more control over her money, instead of me controlling her money. She realized she needed that help and was grateful to me for helping her. This is a long story, so I just will keep it short and sweet here to go straight to the point.
After she understood the power of budgeting and doing it between the two of us, she saw the befits and we started having a common budget.
Here is what we did, and what we are still doing.
First, we wrote down our earnings and our expenses. For the expenses, we track what we spent and why for a couple of months.
We separate the expenses into household expenses and family expenses. Yes, we both have regular expenses for our family.
After that, we decide who will cover what expense.
This is how we divide the expenses.
- Groceries for the first two weeks of the month: husband
- Groceries for the last two weeks of the month: wife
- Electricity, water, tax, and rates for the house: husband
- Mortgage payment: wife
- Family support: both
- Emergency fund: both
- The rest of the money from both salaries goes to investment.
Each of the previous points had a number associated with it. This was our first budget together.
Now that we know how much we earn and how much we spend, we can plan together. Some of our financial goals are to be debt-free and have enough money invested to cover our expenses. The last one is what is called to be financially free.
Each number we allocated to the budget, was decided together. And they don’t have to be the same for each one.
The numbers were different for us. For instance, the money my wife had to put aside to support her family (I’m also her family, I’m talking here about the family tree coming from her side) was bigger than mine. My savings for investing was bigger than hers.
But it does not matter who put more on what. What matters is that we decided together according to our current situation. We never talked about who is putting more money here or there. All we do is keep track of where our money goes, according to the budget we created.
With time, we completed an emergency fund for us, and we increased the money we invest. We also bought a new house, and now my expenses are more because of the new house and my wife’s contributions to investment are higher than mine.
How these changes happened, we made decisions together.
Every time we had to make a financial decision, we put all the numbers on the table. Once both of us see the numbers, we discuss the implications. Yes, budget implications. And then we make a decision.
Guess what happened because of this.
It might sound counterintuitive, but having a budget together, and deciding together on money matters, we got more freedom. Yes, by knowing more, we feel freer.
Also, we become stronger as a couple. I cannot tell you how great we felt after a couple of months of doing this.
Another nice outcome was that we had more money.
How?
We optimized our expenses by sharing them. At that time, we didn’t have to do everything anymore. We just do what we are expected to do. Now we have more money invested, fewer debts (actually only one), and always have the money we need to buy what we need to buy.
In the end, you just have to put the numbers together, both incomes. Then, follow the guide on how to make a budget. After that, you two decide, together, who will cover what expense. That’s it.
It is important that each one decides on his/her own numbers. So, they are not feelings of being controlled by the other one. With time, both of you will feel very secure and open enough to tell the other one, I think you can cut expenses there or what do you think if we cut expenses here.
The result will be awesome! Just take small steps each time and you will see how the miracle happens.
Why is this topic so important?
If you remember when I wrote to you the myths about money, I told you the most important thing that happened while learning the truth about money was to talk to my wife about money, so we can be on the same page. After that, we both saw a huge change in our financial lives.
This is a hard topic, my daughter. It won’t happen overnight, there will be fights, misunderstandings, etc. But is worth all the time and effort. It can literally change your life.
If after you try very hard to achieve this and try again, and again, and again, and again, you and your significant one cannot agree on this topic; and the reason is that you, or him, want to keep money matters privately, then you should think if this is the place you want to be for the rest of your life.
Love you, Dad.