Couples and Money: Where is this budget going?
Eileen St. Pierre, The Everyday Financial Planner
Love is in the air. Valentine’s Day is fast approaching – a time when many couples re-examine their relationship. It’s also a good time for couples to sit down and examine financial goals and plans for the upcoming year together. Here are 5 questions for you to discuss:
1. Has your income changed?
With the economy stuck in neutral, many are finding their work hours reduced and overtime severely cut back or eliminated. Many are happy just to have a job, which makes not getting a raise this year easier to accept. You both need to understand the big picture and adjust your expectations.
2. Have you prepared a spending plan?
Did you use credit cards for your Christmas shopping? If so, these bills are now due. Your health insurance premiums may have gone up. You still need to make car and mortgage payments. It’s time to create a spending plan and prioritize how you will spend your income.
3. What expectations do you have for large cash outlays this year?
Do you need to make any major home improvements this year? Is this the year you replace your vehicle or do you keep that 1990 pickup truck one more year? Perhaps a discussion of whether there is room in the budget for that new stainless steel refrigerator you’ve been wanting is warranted. Family vacation plans need to be organized.
4. Are there ways you can trim everyday expenses?
It’s hard to reduce large, fixed expenses like a car or rent payment. But there are ways to trim everyday expenses. Take leftovers to work for lunch. Make a shopping list and stick to it. Combine all your errands into one car trip per week to save on gas. Shut off all the lights when you are not in the room. Do you really need all those cable channels or the top-of-the-line cell phone plan? Get the whole family involved by asking each member to come up with a few ways to lower expenses.
5. What are your savings plans?
After you create your spending plan, you will be able to see how much money you can put into savings. If you do not have an emergency savings fund, now is a good time to start one (use your income tax refund). This fund should have at least 3 to 6 months of living expenses. Discuss how much you plan to contribute to retirement accounts and college savings plans this year. If there is a certain goal you would like to save for, say a family summer vacation in the mountains, you can set up an account just for this purpose.