Marriage and Budgets

It has been said that one of the main causes of divorce is money matters. So in order to avoid that, it is important that a married couple have the same values regarding money and also have a clear picture of their financial position thus the need for budgeting. Ever since Kenny and I planned our wedding, we were already keen on making budgets, in loose papers, notebooks and excel files. I kept those files from way back because I have the habit of starting a new excel file for our budget per year. I am blessed that my husband and I share similar values regarding budgeting in the family. Anyway, I have been asked multiple times by friends how our budgets work and I don't mind sharing with others how we do it as a couple. Even before I discovered how this method of budgeting is called, we were already doing it, minus the technical jargon. Now, from reading other personal finance blogs and articles, I discovered that this method is called the zero based method of budgeting. It means that you account every dollar or peso or yen that comes in and what you spend it for. There will be multiple rows for every imaginable expenditure for that period. If something new comes up, it will add one more row to the excel file, so in the end, the balance is zero or almost zero. Now, what are the rows made up of? I usually put all the savings/ investments at the top of the file. I just update the amount every time we add something to it. Then the next row would be money coming in, one row per income source. For example, if you have one person working for the family, then that is one row. If you have a 2 income household then you'll have two rows. Also add a row for every source of passive income that you have, for example, rental income. Then have a total for all the active income sources (I don't include the savings and investments part to the total because that money is not used for operational expenses). The next rows would then be your expenses. This may include, your tithe that you give to church, your fixed savings, your rent, groceries, gasoline money etc with the corresponding amount for each. Detail every expense as much as possible so everything would be accounted for. We also include our allowance in the expenses part. We both get the same amount of allowance per cycle which we can use however we please. This money can be used without being audited by the other person. But for everything else, the other person must be involved in the decision making. So, after everything have been listed, compute a total for the expenses. The last part would be the difference between the total of the income and the total of the expenses. If you get a negative number here, you have to make adjustments to your expenses until you get a difference of zero or a positive number. Then, after the budget has been set up, make it a point to stick to your budget and just spend the allocated amount for each expense type. Because you now have a clear picture of your finances, it will free you of anxiety of thinking if you'll overdraw your account this month or not. It also enables you be creative in how you can tweak your budget to suit your financial goals. For example, if you wish to save more money this month, and you see that your dining expense is particularly big, then you can opt on cooking your own food more to save that money. Simple things like that. This method is not fool-proof though because sometimes there will really be expenses that creep up after we are done with the budgeting. We usually delay that expense for awhile until the next cycle comes, if that is possible, if not we try to swap it with other non-essential expenses that we have put aside money for and we'll just recoup it on the next cycle. I hope this helps out someone who needs budgeting tips!