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Tuesday, December 31, 2013

6 pointers for communicating with your partner when setting the household budget

By Brian Flax

Setting up a household budget on your own can be a process. It can become even more complicated when you bring your significant other into the picture. Whether you're married or in a long-term relationship, setting up a household budget is a necessity whenever finances and living expenses are shared.

To keep everyone on the same page, follow these tips for communicating with your partner when setting up your household budget.

Financial communication benefits from a mature approach
Pick a time you and your significant other can commit to discussing your finances and household budget.

Communication is key

The first step in setting up a household budget with your partner is to communicate. If only one person is responsible for setting up and tracking income and expenses, it can cause frustration and anger when things don't go as planned. To ensure everyone is on the same page, pick a time to sit down together when you can focus all your attention on the task at hand. Don't talk about finances when there are distractions, like making dinner or doing household chores.

Pick a time you can both commit to on a regular basis. Creating a household budget isn't a one-time process; you may need to revise or reevaluate your budget at some point, so set a time each week when you can have a distraction-free discussion.

Be prepared

After you have agreed to a time when you can both sit down and discuss the household budget, start preparing for it. If you have any individual expenses, have the account information, due dates, and minimum payment due with you during the discussion. Ensure you're prepared with all of the information you'll need that's relevant to the budget. Don't leave anything out that could cause problems in the future; be as transparent as possible.

Discuss your goals

You should discuss both long- and short-term goals together as a couple. Doing so will keep you on the same page and make it easier to decide how much you'll be putting into savings with each paycheck. If you have any major purchases or expenses in mind, now is the time to discuss them. Be prepared to compromise if you have different ideas in mind on how your savings should be spent.

Even if you only have one income, it's still important to include both people when setting up the household budget.
Improve budgeting with financial tools
Pick budgeting software that offers a mobile app to keep track of spending on the go.

Determine what you need

When you start to create the household budget, determine how much you need to get by every month. Consider your rent or mortgage payment, utility bills, groceries, car payments, and any recurring debt payments first. Figure out how much you need for these expenses every month before determining how much you can spend on entertainment, and what you can afford to put away into your savings.

When you and your partner know exactly how much you can spend every month, it'll help keep everyone accountable for their spending habits.

Take advantage of technology

There are several free tools available online that will keep track of your account balances, payments, and due dates. If you decide to use one of these programs, ensure you both have access with a username and password. Online financial planners can take some of the frustration out of the process by automatically keeping track of your income and expenses. This means you can focus less of your time on finances by knowing exactly where you stand at any point in time.

Track your spending

To keep everyone accountable for their spending, ensure you keep receipts whenever you spend money on unnecessary expenses. If you use a program to track your spending, keeping receipts makes it easier to enter the data during your weekly or monthly meetings. It may help to set up an individual allowance for you and your partner so you know exactly what you're able to spend. Pick financial software with mobile apps so you can track your spending and stay on budget while you're on the go or not together for a period of time.

When you and your significant other are on the same page about your finances, you'll spend less time worrying about money and more time working toward both your short- and long-term goals. Use online budgeting software to help get you started, and make sure you both have access to the same data.

About the author: Brian Flax is a freelance writer based out of the Washington, D.C., area. He is experienced in a variety of topics, including education, technology, and finance. Brian holds a master's in education technology and a bachelor's in entertainment business.