When two people start living together, it’s not just romantic and exciting; domestic matters come into play in every household. You begin to make joint purchases, plan, and inevitably come to the need to agree on an efficient family budget. Of course, you can act intuitively, but the Payday Depot team insists that when living together, you should prioritize discussing financial management. This will help you avoid many arguments, problems, and difficulties and also enable you to work together to achieve financial goals.
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Types of family budgets
Your family budget can be any if this option is accepted by each of the partners:
- Joint. All finances are pooled into a single account, and monthly or weekly expenditure categories are discussed and planned together.
- Separate. Each person pays for their expenses and buys what they consider necessary.
- Combined with Separate Elements. There is a joint fund for significant and serious purchases (utilities, appliances, a car, vacations), but the rest of the finances remain with each partner individually.
- Partnership. It looks something like this: “You pay for the car loan, and I pay for the rent. You buy tickets, and I cover the hotel.” Each person pays for specific expenditure categories, but the amounts are approximately equal.
- As Agreed. There may be situations where one of the partners has seasonal work, temporary income shortages, and so on. In such cases, it makes sense to agree that one partner becomes the family’s financial support, while the other takes on household responsibilities, for example.
These are just the most common options, but you can communicate, negotiate, and tailor solutions that best reflect your lifestyle, values, beliefs, financial and life goals.
How to agree on managing joint finances?
Speak openly and honestly, and be kind and assertive. Be prepared for flexible and adaptive solutions because this type of communication is best for discussing your financial goals, problems, and plans. Express your opinion, listen to your partner, and you will undoubtedly find the optimal way to manage your family finances.
Develop a joint financial plan and set goals
You need a financial plan to understand better how to properly structure expense categories and allocate funds in relation to these items. In it, specify your income and clearly outline short-term and long-term goals. Planning goals has another significant advantage: it makes it easier to maintain motivation and achieve more. It also helps maintain personal financial discipline.
What should be in the plan?
- Mandatory monthly expenses (housing, groceries, and utilities).
- An untouched amount to cover unforeseen expenses.
- Family savings and investments.
What to do if there are joint or personal debts?
Handling credit cards should be discussed during the financial planning stage. However, sometimes, a couple forms, and each person already has certain debts. Occasionally, these debts arise during cohabitation. If debts are unavoidable, work together to create a plan on how to overcome them because paying interest and making monthly mandatory payments is a significant financial burden that will affect both partners’ well-being.
Once you’ve dealt with the debts, establish rules for responsible borrowing and conditions under which credit funds are permissible. Together, adhere to these rules to prevent one person’s debts from becoming an ongoing shared problem.
How to deal with unforeseen expenses?
In practice, those who anticipated it could happen are most effective and easily deal with unforeseen expenses. Set aside a certain amount each month to create a financial cushion to navigate financially unstable periods successfully.
Importance of financial literacy in everyday life
When you’re just starting to live together, it may seem that love is enough for everything. However, every third couple in the world divorces precisely due to financial disagreements. Don’t let this happen. Improve your financial literacy, explore various financial tools, read literature, and seek advice from financial advisors when needed. Moreover, be honest and objective with each other and manage family finances together. It’s more important than you can imagine.
