Saving Tips on Budgets

It is often said that money troubles are a leading cause of marital tension and divorce. Since opposites attract, it is common for someone who spends lavishly to be married to someone who is frugal. Before long, mortgages, the costs of raising children, and other financial strains can spark conflict.
While having similar spending styles may eliminate one of marriage’s hot-button issues, it is not necessary for couples to yield to the habits of the other partner. What is more critical is that you set up your household to deal with the differences. In order to work together, it is important that you understand the source of the conflict and employ strategies that work for your household.
The Source of the Conflict
Money is an emotionally charged subject, and the taboos that continue to discourage us from discussing personal finance – especially while courting – do not help couples set themselves up for financial success. Thankfully, more and more engaged couples are encouraged to enroll in “marriage classes,” which discuss topics of common marital strain, including money management.
The cause of conflict in relationships is often rooted in the fact that money means different things to different people. Participants in my money management seminars describe money as a source of everything from pride to shame, status to failure, fear to security. When asked to describe money management (a.k.a. budgeting), they describe it as a measure of everything from power to weakness to freedom to control. With so many connotations, no wonder couples have trouble managing their different money management styles!
Without understanding your feelings about money – and those of your partner – it will be difficult for you to manage your finances together during good times, and it will be exceedingly difficult to do during bad times such as a job loss, prolonged illness, or other significant financial interruption. So take some time to talk about your money management "baggage” and what you want to achieve going forward. Taking this important first step will allow you to move forward together.
Ways to Cover Shared Costs
Couples use different techniques to cover shared expenses and personal spending. Some choose to use joint accounts while others prefer to keep things very separate.
If you have read any of my previous columns, you will have heard this before: you must have a household budget that includes all of your family’s needs and money left over with which to establish an emergency fund and plan for the future. With this established, you can then use excess funds for discretionary spending or “fun money” – the expenditures that define and enhance your quality of life. The level of discretionary spending will be dictated by what your budget can accommodate. But heed my advice: failure to allocate funds for personal discretionary spending will result in a financial power struggle between partners.
Here are a few strategies to help you to accommodate your budget and your discretionary spending. Choose the method that works best for you and your partner.
Joint Account Strategies
Deposit all sources of income into a joint chequing account to cover household expenses, savings, and personal allowances. The personal allowances represent money that each partner can spend freely each month without rationalization or the need for approval from the other partner. The spending limit should be based on what your household can reasonably afford without encroaching on savings or carrying credit balances. This method works optimally for those who want to feel in control of their money and are willing to acknowledge the need to limit spending for common needs and goals.
Another option: Deposit all sources of income into a joint chequing account to cover household expenses and savings and establish a pre-set amount (ex. $100) that can be spent by each partner on any single discretionary purchase as desired. For example, discretionary purchases can include clothing, grooming, entertainment, restaurants, or gifts. This method works optimally for couples who do not want to feel constrained or controlled by their partner. When using this method, it is important to watch the frequency of these purchases to make sure that they do not jeopardize the family’s budget and savings commitments.
Separate Account Strategies
Deposit all sources of income into a joint chequing account to cover household expenses and savings and divert a pre-set amount into a personal savings account for each partner to be spent as desired. The amounts can be equal or can reflect the actual costs of what you enjoy spending your money on. Avoid dividing funds in accordance with the earnings of each partner because it is difficult to quantify non-monetary contributions to the household – which in turn often dictate the type of income you can earn. This method works optimally when one partner wants to save for a larger purchase.
Deposit all sources of income into separate chequing accounts. Divert a pre-set amount into a joint chequing account used to cover household needs. Divert a second pre-set amount into a joint savings account to plan for the future. Each monthly transfer should be dictated by your budget. The balances left in each spouse’s account can be spent freely. This works optimally for couples who prefer to keep their earnings separate while encouraging them to see household expenses and savings goals as a couple.