NEW YORK (CNNfn) - There's a reason financial disagreement is the number one cause of divorce in the United States, so if you want to save your marriage, and a little cash to boot, start planning your budget now.
Getting together on finances is a difficult challenge for most families, especially since our budget opinions are long-held. Experts estimate people have their core attitudes about money formed by the time they're 12.
Further complicating the situation are the somewhat inexact workings of human emotions, said Vicki Jacobson, director of education for the Consumer Credit Counseling Service in St. Louis, Mo.
"Usually, financial opposites attract," she said, with one spouse a spendthrift and the other merely thrifty.
Because of this, planning household finances should begin before a couple is a household. Communicating truthfully how you envision handling your combined expenses is the first step in structuring your finances.
Flexible budgets
Budgets tend to make a lot of people nervous. The idea of locking themselves into a "down to the last penny" type of financial plan can be daunting.
New attitudes about what budgets should be may take some of the fear out of them, said associate professor Flora Williams of Purdue University's School of Consumer and Family Sciences.
"The word 'budget' is negative. I like to use 'spending plans,'" she said, emphasizing you need to keep it simple, so you can understand and stick with it.
Getting your finances in order is a process. Williams advised developing a series of budgets, each of which will clarify your finances and gradually take you toward your final, simplified spending plan.
First, take an ordinary notebook, put dates on the pages and put the monthly bills you have in the appropriate pages. "(The couple) can visually see what they owe," said Williams.
This is important since many people have inexact ideas about how much they make and how much they are spending. It will also help you keep on top of your due dates. Many people spend hundreds of dollars on late fees and credit card interest. Anything you can do to cut down on that is extra money right away.
Next, create a separate budget splitting your monthly spending into necessities and luxuries. Once they do this, many families find they have much larger miscellaneous expenses than they thought.
A third budget should delineate your daily, weekly, monthly and yearly expenses. Note that none of these sub-budgets actually channels your spending. Instead, they are helping you to get a clearer picture of what's coming in and what's going out.
When this winnowing process is completed you should have the following information to bring your finances under control:
Your total assets: These include liquid assets such as your weekly net income, checking and savings accounts and accumulated cash value of any life insurance.
Along with those you'll have marketable investments (at current market value) including stocks, bonds, mutual funds, collections and other investments.
Additionally, you'll have a total of your personal assets, including real estate, household goods and vehicles. While these will not actually factor into your monthly budget, they will clarify your financial situation.
Your expenses: These include all debts, such as car payments, home mortgages, other loans, educational costs and utility and grocery bills.
Budget battles
Even the best-written budgets can run into trouble once it's time to implement them, said Amie Cushman, a financial counselor at Consumer Financial Counseling in Norfolk, Va.
The rise of the two-income couple has challenged the typical "the breadwinner should handle the money" assumptions.
Some couples have tried to run the household finances as if they were roommates, with each one kicking in half the mortgage, grocery bill and electric bill.
This approach often fails, said Cushman, who advocates pooling your combined salaries with some room for mad money.
"The best thing is to allocate money for each individual to blow on whatever they want," she said.
Cushman explained this can head off differences about whether a spouse who makes more than the other should get more pocket money or any other disparities.
A short-term tight financial situation should also not straitjacket you for future plans, such as saving for a house, new car or college education.
Budget any leftover money to go into a savings account or other place that will let you get at it somewhat quickly should an emergency arise. (This assumes you have taken care of your retirement savings as part of your expenses.)
If you get a raise, that doesn't necessarily mean you get to expand your budget by the same amount. Cushman recommends taking 50 percent of the increase and putting it towards savings with the other half being folded into your normal budget mix.
Creating your budget isn't just a job for the adults in the family. Experts say parents are largely responsible for the financial attitudes their children have. So it helps to include your kids when paying the bills.
"Be as open with them as you can," said Cushman. "Have them there when you pay the mortgage or rent because $1,000 will sound like a huge amount to a child."
Involving children has a added benefit. If kids begin to understand the budget process and everything around them costs money, it will hopefully be easier to explain to them when you deny them a new purchase.
-- by staff writer Randall J. Schultz
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