Disagreements about money and stress over financial concerns is a major — and common — problem in relationships. In fact, it’s often cited as the leading cause of divorce.
But it doesn’t have to be that way. Making your shared finances a priority helps build a solid foundation. Check out these tips for talking about money and maintaining your budget as a team:
Let’s Talk Finances:
- Be honest & supportive.
- Make it a habit. We all know that communication is key, when it comes to relationships. That’s why a lot of couples find it beneficial to schedule “money dates” to regularly check in on their budget, goals and to game plan solutions for any problems that might have cropped up.
- Get on the same page. You and your partner may have different ideas of whether certain expenses are wants versus needs, which is why it’s important to take some time to understand each other’s perspectives.
- Plan ahead with SMART Goals. Dreams are great, but achieving them is better. Experts recommend making SMART goals, which are specific, measurable, achievable, realistic and time-based. By considering these five components, you’re not just setting a goal, you’re setting a plan for how to get there.
- Ask an expert. If you’re not sure where to start or are wondering if you’re on track, ask an expert. SESLOC members have access to free financial counseling through GreenPath Financial Counseling. Plus, we offer free webinars on a variety of topics and invite you to ask your money questions.
Starting Your Budget:
A budget is essential for taking control of your finances. Simply put, your budget is a record of income and expenses, which helps you plan for the future. Here’s how to get started:
1. Use a budget tool (SESLOC makes it easy to track income and expenses with Financial Tools).
2. Calculate your net monthly income, which is what’s on your paycheck after taxes are deducted.
3. List your monthly expenses.
- Fixed: Payments are the same month to month, so it’s easy to predict what you need to set aside.
- Variable: Expenses vary depending on circumstances, like how much gas you need or what groceries you buy. Look at your transaction history or statement from the last month or so to calculate an average so you can estimate what you should allocate.
- Periodic: These expenses occur irregularly, like your annual vehicle registration or an oil change. Calculate the annual cost and divide by 12 to give yourself a monthly “payment” that you can make to your savings so you’ll be prepared when the bill arrives.
4. Identify Needs and Wants. Categorize your expenses as needs and wants. Needs are essential expenses, like food, clothing and shelter. Your wants are things that are nice to have, but you can live without.
5. List your savings goals. A habit of saving is one of the biggest predictors of financial wellness, so treat your savings like it’s a bill you need to pay each month. SESLOC launched the Save to Win 12-Month Share Certificate to help members develop that habit in a fun, unique way. Every time you make a deposit of just $25 (up to 100 entries per month), you’ll be automatically entered in a monthly and quarterly prize drawing for a chance to win up to $5,000 (terms, conditions, eligibility and restrictions apply).
6. Do the math. Subtract your monthly expenses and savings from your income to see what’s leftover.
7. Track your expenses and make adjustments as needed. If you’re spending more than your income, or if you want to hit a savings goal or pay down debt faster, review your wants to see where you can make cuts.
15 Common Household Expense Categories To Get You Planning:
- Emergency Savings — Pay yourself first. Experts recommend putting aside enough at least three months’ worth of expenses in case of job loss, accidents, illness or other major unexpected expenses.
- Savings Goals — Mortgage down payment, new vehicle, new television, vacation, household renovations, etc.
- Home — Rent or mortgage (including property taxes), utility bills, maintenance and repair costs.
- Food — Grocery, coffee runs, take out and restaurant trips.
- Household supplies — Appliances, appliance maintenance and repair, furniture, decor and cleaning supplies.
- Transportation — Gas, registration, driver’s license renewal, oil changes, maintenance and repair, bus passes and taxi fares or rideshares.
- Personal Care — Clothes, barber/salon services, massages, gym memberships and toiletries
- Child Care — Daycare, school supplies, extracurricular activities, clothes, savings account, college fund and toys.
- Pet Care — Food, toys, bedding, grooming, pet insurance, regular veterinary expenses, emergency veterinary expenses, medication and prescriptions and boarding.
- Medical/Health — Payroll deductions for employer-sponsored insurance (medical, dental, and/or vision), Health Savings Account deductions, deductibles and copays for regular appointments/services, prescriptions and over-the-counter medications.
- Insurance — Premiums for insurance policies including: vehicle, term life, long-term disability, homeowners or renters, flood/earthquake coverage and valuables.
- Entertainment/Fun — Streaming subscriptions, book/movie purchases or rentals, event tickets, hobby expenses, date nights, day trips and vacations.
- Debt Obligations Repayment — Car payments, credit cards, personal loans, Home Equity Loans/Lines of Credit, student loans, child support and alimony payments.
- Miscellaneous — Expenses that don’t fit into the other categories.
- Personal spending — Whether you’re fully combining your accounts or keeping things separate, don’t forget to bookmark funds for discretionary income.
