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How to Spend Your Money

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One of the biggest decisions couples have to make is how to spend their money. This usually becomes an issue as the couple is marrying because they often maintain separate accounts until the wedding bells ring. Paying for the wedding itself sometimes is the the couple's first encounter with jointly allocating funds. For others, it is the money gifts they receive that bring on these questions. Regardless of the first time couples decide how to spend (or save) their money, they need to develop a system for doing it that works for both of them. Here is one approach that couples can use to decide how to spend their money:

1. Determine how much money you have.

The first order of business when deciding how to spend your money is to determine how much money you have to spend without arguing. This is more complicated than simply spitting back the amount of weekly earnings you receive. You need to know how much money is necessary to pay the bills - mortgage or rent, electricity, cable, groceries, phone, etc. You also need to have an idea of your savings goals. You must be honest about where you're each spending your money. You and your spouse will have to come up with a plan for saving for rainy days and retirement and other wants - a vacation, a new house, a car, and the like. To start this conversation, determine how much money you already have coming in and in savings. Lay your cards on the table to jump start the big talk on money.

2. Come up with a monthly budget.

This is when the conversation you began in Step 1 becomes more granular. Once you know how much money you're both bringing in or already have, you can start allocating funds. To do that, you should set a budget. For starters, come up with a list of your monthly bills, how much each usually costs, and ways to bring them down. Then, set a realistic budget. That means, even though you want to come up with ways to bring down costs, you should realize that bills cost a certain amount and you need to have enough money to pay them. Tracking all your spending is a good way to both budget and come up with strategies for bringing down costs and limiting your spending.

3. Pay off debts.

Many couples come into a marriage with lots of debt. They might still be paying off student loans or they incurred large credit card bills. Perhaps, they have picked up a hefty mortgage. Before you can start spending money, you have to pay off what you've already bought. If you owe money, especially if you owe lots of it, you should set aside incoming cash to pay off the debts. Once you get the debt under control, then you can start thinking about saving up and spending on other things. You will probably rest easier as well.

4. Set best practices.

In a way, your marriage is like a corporation. Just like a corporation, you and your spouse have to employ team work to accomplish your goals, keep to a budget, and establish strategies for achieving continued success. Corporations also set best practices. This is something that more married couples should be doing about all aspects of their marriage but especially money. Decide on spending limits, rules that you all can live with, and procedures for making big purchases together. The point is to set up a system so that you are not tempted to hide purchases from each other or commit money mistakes. Also, this will give you discipline about where to put money and how to deal with it in your marriage. Best practices can also help keep you and your spouse from getting into debt again and it can help you break bad money habits.

5. Communicate your goals.

Ultimately, you both have to be on the same page about how you'd like to spend any significant amount of money before you can make decisions on how to spend it. Enhance your communication skills and then share with one another. Tell each other your hopes and dreams. You might be looking to buy a house or aiming for a new car or computer. Whatever it is, start planning ahead. Make sure you are both on the same page. Of course, make sure you have enough money for the basics - food, shelter, and medical care - before you start ringing up bills for big screen TVs or luxurious vacations.
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