Wednesday, March 3, 2010

Money matters, budgeting within a marriage

It is a known fact that the world revolves around money, and the most common source of conflict within marriage is money. I thought I would take some time to talk about what works for our family. Now that said every family is different and what works for one may not work for another. But I hope perhaps I inspire some of you to look at things in a different light, and at the same time I would love to hear about what works for you, perhaps its something that would benefit our family as well.

Now every family has various financial situations, from single family incomes to both spouses working. In our family for that past two years we have relied solely on one income, that of my husband. This was a act of circumstance. As many of you know I moved to Europe, had to complete a government mandated 9 month language course. And overall it takes time to adjust into a new culture and society. Unless one has planned for years and is fluent in the language and well set within a career or transfered via a company it is a very difficult process.

Our journey has been by no means an easy one. Living on one income in a two income world is touch to say the least. We have faced everything from loss of employment, having to move across the country for a new position, to our fair share of unexpected bills. Through the hard times and the good we have found ways to cope together and through it all we have learned so much.

First and foremost I want to talk about or family philosophy regarding money. Yes my husband is the sole provider, I provide no income and in terms of technicality he earns all and all money is his. But we have always approached money as a family decision. That is not to say that he has to call me and ask if he can buy himself a soda or brotchen for lunch, but we make decisions that affect the family together.

Now that said a general overview of how we handle or plan our monthly expenses. I think it is very dangerous when one person is solely in charge of finances. No one is failure proof, we are all prone to impulse purchases and I think it just leaves way to much opportunity for conflict. So we work together. Every month I create a rough budget. This includes all set bills, and any bills predetermined to be paid that month. We are then able to clearly look at how much money remains after all bills are paid and from there gauge how much we intend to spend on various other costs- everything from food, to gas. Now we do not plan down to a T. We like to leave some flexibility as new opportunities come forward.

So this is how our typical moth works:
1. Establish the budget to include all bills or expenses that must be paid within the given month. Be it a reoccurring bill such as rent or a one time bill such as car taxes. The best approach is to try to work this out roughly for a few months so that you can gauge any major things coming up in the near future that can put a real dent in your normal monthly plan.

2. Plan out your monthly distribution of money as a family. Be prepared to discuss things, it only prevents a later dispute. Sure hubby could live alone on 25 euro a week groceries. But now a days it is a family and fresh home cooked meals daily so costs are going to rise. And maybe you don't understand why hubby wants a new video game, give him the chance to explain his wishes as well. Even if you disagree give him the chance to establish his point of view.

3. We begin with rough outlines in terms of goals pertaining to money left after the bills are paid. That is we aim to spend x euro a week on groceries, or x for gas, but it doesn't always work out the exact way you plan so it is crucial to leave room for flexibility. Now in our family this works two fold, first we do not budget down to the last euro. We make sure we leave ourselves some flex room every month that we can dictate where it needs to go as the month progresses. YOu also have the opportunity to set money aside for that big bill you know is coming a few months down the line. That will make it less detrimental to your budget that month. I am also a strong believer of savings. Now we are by no means the people who can set aside 50% of our income every month, but we do what we can, and as long as we add to the kitty monthly, even if the kitty is not such a big kitty, it is always there when something unexpected comes along.

4. We do not have a strict rule of each spouse has x euros for themselves each month. Naturally every week something new comes on sale and maybe its an item you really need. So we talk to one another. I would not say that we require each other to ask, but for example if I see something I really want I will ask him hey I saw some pants on sale for 25 bucks you think we could afford to spare that? Now this gives us an opportunity to discuss if it fits within our budget and also if it is worth it, perhaps he will come back and say oh well i saw x store had pants for 5 bucks, something I didn't know. Or maybe he will remind me that we have an extra expense next month and would be better to set it aside. Now that may not work for every family, I know many who set aside a set amount each month. I prefer to have goals. I have a small list- a book, a craft item, a household item, and a personal item I try to get myself monthly. It doesn't always happen, but you make do the best you can and any time you get something extra for yourself it is nice. I think it is important to strive to let each spouse have something just for themselves each month even if it is only 10 bucks in value.

5. I try to never shop full price. Many of you know I am a list girl. I have a book with my wish lists. Things I really want to get. I track the best prices I find in the book, and I watch for sales for the items. If I am in need of something that probably wont come on sale any time soon, I search out the best price. From discount realtors to online there are many ways to g about finding a way better deal then what you would find at a department store.

In the end knowing what your monthly income and expenses are crucial to making it through the month. In a world where most live month to month we need to be able to look at our choices and strive to make corrections or improvements as needed. But I strongly believe this is best done as a family. :)

So what works for you?

P.s. I work out all my budgets on paper by hand in pencil. I cannot stand to have to look on my computer every time I need to make a decision. But many people swear by these new financial programs. Everyone has a unique system and the key is to fining on that works for you and that you are 100% comfortable with.

Best of luck



Sonya said...

Living on one income in a two income world is tough..we are doing it here in the netherlands and it's hard. I compair the netherlands to living in california or new york..everything is so crazy expensive.

We talk about everything with money. My husband is the one who goes out and earns it and Im the one who makes it go as far as possible. I do alot of from scratch cooking,I've cut out prepackaged items,learned to make smaller amounts of meat go further, learned to decide between a need and a want, given ourselves treats to stay focused and not feel deprived all the time!

I set a goal for myself to spend X amount of moeny each week and then see how far I can extend it. We are taking a week vacation this summer and by really cracking down we will have it paid off in 4 months wich frees up a bunch of money later on to use for other purchases. It can get hard sometimes..espically when you live in a country where everyone works and doesnt have to budget so although everything is expensive here, there are always two incomes to use.

It sounds like you are doing good aswell:)

Pussyfoots said...

Managing money is probably the most stressful part of family living. No matter what you do or how you plan something can always happen to mess it all up.

So, Serena and Toni, keep up the good work. It sounds like you have a good start on your life together. Diane


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