Saving money is hard enough when you’re single. When you’re trying to compromise with a partner about how to create a budget, saving money can be twice as tough.
Every little expense — from groceries to clothing to the thermostat — can be a source of debate, or worse, can trigger an all-out fight.
On the other hand, goals might sometimes be twice as easy to accomplish when two people are working hand in hand towards the same goal.
How can you and your spouse or partner reach your joint financial goals? More importantly, how can you create joint goals together?
Here are a few tips:
Both of you should create a list of the “why’s” behind your money management. What are you saving for? What’s important to you?
Are you saving for your children’s education? Do you want to make sure you’re contributing at least 10% of your income towards your retirement? Or are you saving for a life experience that you value such as a two week trip to South America?
Regardless of what your goal is, make sure that you’re in agreement about the reason that you want to become better at managing your money. If you don’t have the same shared why’s, then you’ll be moving in two different directions.
Take a look at your current spending to find out how you’re discretionary money is currently being used. Are you aware of where your money is going? Do you realize that you spend $200 a month dining at restaurants, or $500 every season on new clothes?
If you take a look at your discretionary expenses and make a conscious choice that yes, you support where this money is going, then good for you. It’s something else entirely, however, to be unaware of how your money disappears.
Review all of your discretionary spending so that you are conscious of where every dollar is going at the moment.
You’ve already identified what’s most important, such as a vacation, college, retirement or some other goals. Now it’s time to do the opposite. Slash whatever expenses are least important.
Now that you know where your discretionary spending is going, you can take a look at that list and cut out the expenses that don’t mean as much to either of you. Cancel that magazine subscription, start eating more meals at home, or be content with wearing older clothing.
There are two ways that you and your partner can both come to a consensus on this:
Ideally, you will cut an item that you think is unimportant and that your partner feels neutral about. Likewise, your partner will cut an item that he or she feels is unimportant and that you yourself feel neutral about.
It’s essential that neither of you try to cut expenses that the other partner thinks is important. If one partner, for example, thinks that buying books or music is important, the other partner should respect that.
Tally the amount that you’re now saving by chopping the expenses that you don’t care about. Automatically transfer this money into a savings account that’s earmarked specifically for your shared goal.
It’s not enough to simply cut your expenses; you have to actually move that money into savings, otherwise you’re likely to spend it on something else.
If you go through all of this, and you and your partner still are not coming into agreement about how your discretionary money is spent, then try awarding each partner an “allowance”, so to speak. You could also think of this as a “your money” and “my money” fund.
For example, each of you might have $200 a month that you can spend however you’d like, and the other person has no say in how that money gets spent. One person can spend it on haircuts, while another can spend it on music and books. Everything else, however, comes from your joint finances — including your rent, groceries, electricity and other bills.
This way each of you has some freedom and flexibility over your own money, while you still maintain a healthy overall budget.
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