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savers and spenders: budgeting for couples

You love to save. Your spouse loves to spend. Tired of arguing over money? Although it's impossible for couples to agree on everything – especially money matters – it is possible to learn to peacefully coexist. Here are some tips:

Take Time to Discuss Having different approaches to handling money can be a problem. Not talking about it can make that problem worse. Many divorced couples say the biggest problems in their marriage were the ones they never addressed.

Spend some time discussing your different money-management styles. Then plan on having regular discussions. If things begin to get heated, take a break and regroup when you're calmer. You'll reap big gains in understanding each other's different attitudes toward money. In addition, you'll have opened another communication channel – always a plus.

Spending habits are commonly formed in childhood. Knowing more about each other's experience can help both of you to negotiate a workable approach to money management.

Consider Separate Accounts Most financial experts agree that partners with different money-management styles should keep their assets separated – at least partially. Keep a joint account for common expenses and two separate personal expense accounts.

Spouses who love to shop 'til they drop can tap into their personal account when on a spree. And their thriftier partners won't confront an unpleasant surprise when balancing the checkbook. For this solution to work, both partners must agree to use the joint account only for household bills.

Set Your Goals – Long- and Short-Term Make a list of everything you each intend to purchase over both the short and long term. A written list will help the two of you decide what really matters to you – individually and as a couple.

Maintain Individual Credit Even couples who share the same approach to spending should maintain separate credit cards. Each of you needs to have a good individual credit rating. And if your spendthrift spouse gets into credit difficulties, you will have more options if you have a separate credit history.

Create a Budget This may not sound like a lot of fun, but it can be the key to stress-free spending. Simply deduct the dollar amounts of your fixed monthly obligations (such as car expenses, groceries, savings or investments, mortgage payment, loans, and utilities) from the amount of your regular monthly household income.

Once you've accounted for all the necessities, determine how much money is left over. That's the amount you have to spend on discretionary purchases, such as entertainment, gifts, home furnishings, and toys.

Determine how much you want to spend each month within each category. If you stay within those amounts, you are living within your means and you have a good idea where your money is going. If your spouse overspends in a particular category, try to discuss it and determine the cause. Perhaps simply budgeting more in one category and less in another will solve the problem.

More Information You'll find more information at the following Web sites:
  • The “Budgets & Finances” page includes worksheets and other tools to help you plan at www.ourfamilyplace.com.
  • Ivillage.com includes a section on love and money issues at www.ivillage.com/money.
  • You'll find a wealth of information on financial topics and tools to help you plan at www.vanguard.com.