Creating a budget is an effective way of keep track of your finances — especially if you had to undergo a change in income, job loss, or intend on saving money. Though creating a personal budget is important, if you live with your significant other, it may be time for you to create a budget together. Below, you’ll find all the information you need when it comes to budgeting for two.
To make a budget as a couple, you have to be on the same page.
1. Discuss what you’re budgeting for
We all have different reasons for creating a budget. The most important thing is that you and your partner should be on the same page when it comes to the reason as to why you are budgeting together in the first place. Do you want to save enough money for a new car? Retirement? School for your kids? It’s crucial that you both know what you’re setting money aside for, and what the ultimate goal of your budgeting is.
2. Tallying your combined net income
When creating a budget, it’s important to note that you should be calculating your net income as opposed to your gross income. Doing so will allow you to calculate how much money you both have for all of your expenses as well as for the amount you would like to set aside. Net income can come from your job, side gigs, tax refunds, and bonuses. If you find yourself in a situation in which you or your partner’s job isn’t stable, consider revisiting the income section of your budget whenever necessary.
3. Make a list of your household expenses
Once you’ve calculated your net revenue, make a list of all of your anticipated expenditures. Some expenditures remain constant from month to month. Rent or mortgage-loan payments, cellphone bills, internet, and electricity, for example, are recurring costs that must be accounted for. Creating a list of all of your expenses will allow you to see where the bulk of your money is being spent while still keeping your budget organised. Keep in mind that the sum of all of your expenses should always be smaller than the sum of your combined net income.
4. Calculate
If the sum of all of your expenses is higher than your combined net income, try to think of ways in which you can reduce your monthly expenses. For example, if both of you are making monthly payments on cars, see if it would be possible to get by on just one car. After doing so, subtract your household expenses from your combined net income. With the amount that’s left, calculate how much you would like to set aside in order to reach your financial goals.
Tool: Use our free online budget calculator
5. Review and Communicate
It’s crucial to review and adjust as needed. Discuss your expenses and go through your bank statements with each other. Keep track of all of your expenses on a regular basis. This is the only way you’ll be able to chart your progress and see how well you’re doing. Keep each other aware of your purchases. You should try to include any unforeseen expenses you and your partner can expect.
If you’ve attempted to draft a budget, but still find yourself unable to make ends meet after cutting back on expenses, don’t hesitate to contact a Licensed Insolvency Trustee. After a free and confidential consultation, a Licensed Insolvency Trustee will review your financial situation and determine the best course of action for you and your partner.
