The foundation of a couple being successful with their finances requires a clearly defined method of budgeting, and frequent, open, and honest communication between the two people involved.
Do you have this foundation?
Vonnie and I didn’t for the first thirteen years of our marriage. Our budget, and I use that term extremely loosely, consisted of a piece of paper that listed about half of our monthly bills that I folded up and stored in the back of my checkbook folder. Our communication about our finances was non-existent, so it was no wonder that our finances failed miserably.
Building a successful budgeting system that includes the needed level of communication is something that we have worked very hard at over the last four and a half years. Over that time, through trial and error, we have developed our method of handling our finances, which I would like to share with you.
Bi-Monthly Budget Cycle:
My income as a software engineer represents 80% of our total income, therefore our budget cycles are built around my bi-monthly paychecks. The first cycle runs from the 1st of the month to the 14th, and the second cycle runs from the 15th to the end of the month. The night before the beginning of a new budget cycle we discuss the following:
- Expected Income
- Bills due
- Any events occurring
- Discretionary funds left over
Building Our Financial Information Two Ways:
Vonnie and I visualize information differently. I prefer to see two lists, one of bills and one of income added up so I can see the total of both. Then I can subtract the bills from the income and get the amount of money left over for discretionary spending. My wife prefers to pull out a giant calendar that she gets from her employer, and enter bills on the day they are due in red, and income on the day they are received in black.
During our budget cycle meeting we each build the information in parallel using our preferred method. Once this is complete, we can easily discuss our finances by looking at the information in a form that makes sense to each of us.
Bi-Weekly Budget Discussions :
We have formal budget discussions twice a week:
- Thursday/Friday : Before the weekend begins we discuss what we have available for funds, and what spending we plan to do. I then go to the ATM and withdraw cash for Gas, Groceries, Allowance for the kids, as well as our discretionary spending. Admittedly sometimes the withdrawing cash thing gets skipped. Although through experience it’s obvious that we are much more likely to stick to our spending plan if we do make that trip to the ATM and spend only cash.
- Sunday: We discuss how we did with our spending over the weekend, and make any adjustments necessary. We also discuss any spending needed during the work week.
Daily Checking Account Discussion:
We don’t do this every day, but it certainly wouldn’t hurt. During breakfast, Vonnie signs into our online banking portal, and we review any transactions that posted over night. We reconcile the checkbook and discuss any transactions that haven’t posted yet.
Couples have to find a budgeting system that works for them. What works for one couple would be a disaster for another. We’re always looking for ways to tweak and improve the system, but thus far it’s working very well for us. I’m sharing it just as an example for those that may be struggling with their finances to help percolate some ideas to get you started. It may also spark ides for successful couples to take their system to a new level.
What does your budget system look like? Do you have suggestions for people struggling to get started with a budget?