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It’s an exciting time, without a doubt, when you and your significant other decide to move in together. It’s a fresh start, the next chapter in your relationship. But like all big decisions in life, it takes planning – planning that goes beyond deciding which couch gets on the moving truck and who gets put on the sidewalk to wait for the garbage truck. And it starts with a difficult but necessary conversation about money.
Read: Dos and Don’ts of Combining Finances with Your Partner
In fact, long before you start looking for a new apartment to rent or a house to buy together, financial advisers urge partners to sit down and plan a budget. By sharing information about your monthly income, savings and retirement goals, student loan balances, credit card debt, car loans and insurance payments, and more, you can work together to craft a budget that will allow you both to live. Be sure to mention regular expenses for what would be considered essential for you but possibly non-essential – golf lessons, a facial, donations to favorite charities – to your partner. All of these need to be built into the budget and shouldn’t come as a surprise when you start paying the bills together.
“It’s no secret that one of the main reasons couples argue or argue is because of expenses or money in general,” said Jesse W. Acosta, Founder and Senior Mentor of TheDayTraderChatroom.com. âMost of the time, one is a spendthrift and the other a saver; opposites attract, right? The best way to avoid this is to put all the rules on the table and talk about budgeting like paying bills, normal expenses, and saving money.
See: 17 Biggest Budgeting Mistakes You Make
The budgeting process not only helps determine what you can afford in a new home, but it also gives partners the opportunity to discuss deeper financial priorities that you may not have focused on. when you’re dating, said Tanya Peterson, vice president of brand at Freedom Financial Network.
âThe key to success in budgeting is to start with a regular discussion of life goals. These then translate directly into financial priorities, will guide budgeting and make the process of budgeting and staying on budget much easier, âsaid Peterson. âFor example, if one person wants to create a work environment where they can train for a marathon every year while the other thinks they should focus exclusively on work to save money before starting a family, it can present a conflict. Develop the habit of talking about short-term and long-term goals, writing them down, and then budgeting around their common and individual goals.
The process also helps learn more about each other, she said.
Find out: Tips for keeping your finances in order without sacrificing what you want
âBy dealing with these things just as they are discussing life together, some couples find that they are out of sync. For example, one may want to live in a modern downtown loft, the other in a suburban single-family home. This decision comes with lifestyle preferences as well as monthly payment considerations. Start early to understand your partner, (his) goals and finances.
Once the budget is established, it is advisable to review it and re-equip it regularly.
âTalking about the budget once and never talking about it again is a recipe for disaster. Household costs can change with the seasons or over time, and it is important to adjust them as needed, âsaid Kyle Beckhusen, senior financial advisor at Wright Associates in Pittsburgh.
More: The 50/30/20 Rule: Is It The Best Way To Budget?
âA weekly or monthly budget meeting helps to avoid misunderstandings and to readjust the expectations of both partners. By talking openly and often about the budget, you will help avoid guesswork, misunderstandings, and arguments about your budget.
Beckhusen recommends starting the budget with a fixed expense, incorporating 15-20% savings, and then adding enough to cover fluctuating expenses, such as utilities and food. And on top of that, each person should have a âno questions asked expense fundâ for some of those little extras.
The bottom line in budget planning is that couples should be prepared to work together and stick to it. This will help develop good habits to achieve long term goals for their future.
Read: 25 Tips For Saving Money With Your Spouse
âThere is no one-size-fits-all approach to managing a couple’s finances. Some couples divide everything down the middle – including paying off the debt – while others split the expenses or debt based on their income or other factors, âsaid Lauren Anastasio, certified financial planner at SoFi. âThe key to these types of financial decisions is that they are made on purpose. Communicate with each other and work together to focus on one financial goal at a time, like buying a home. By focusing on one goal at a time, you will progress faster and progress will lead to persistence.
âYou also need to make sure you regularly check in on your progress once you’ve budgeted. After you’ve described your cash flow and defined your expense categories, set aside time to check your budget and track your progress. A budget is only good if it’s used – and when it comes to creating a habit, consistency is key.
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