How to Manage a Family Budget

Sooner or later, any couple faces questions: should we combine incomes and expenses, who will manage the budget, and how to do it? Only the couple themselves can answer the first two questions through discussion. As for ways to organize a joint budget, there are several tips.

Conditionally, three models of a joint budget can be distinguished: separate, shared, and mixed. The boundaries between them are rather blurred, but there are still fundamental differences. What are they and how to simplify “joint accounting”? We explain using typical situations — models of joint budgets.

Separate Budget

This type of budget assumes that the couple has no financial relationships. All expenses are individual, incomes are untouchable. No one in the couple claims the other’s earnings, and common expenses are either split evenly or perceived as a gift or part of courting. Usually, couples who do not live together yet or have recently moved in together and started managing a household choose this approach.

Pros: each person is financially responsible only for themselves, no one is financially dependent on the other.

Cons: the more shared living there is (almost inevitable as the relationship develops), the harder it is to remember all expenses and divide them evenly. Disagreements over shared expenses may arise. Usually, this model gradually evolves into a mixed budget. Also, this type of budget hardly suits a couple with a large income difference.

Useful tools: expenses that are planned to be shared are better made with a bank card, so that later it is easy to restore the purchase history using online banking or SMS notifications.

Mixed Budget

A mixed budget is always based on the agreement of partners. Couples who move to this model have both shared finances and personal finances. Shared money can only be spent on pre-agreed items, and personal funds are untouched by the other. Usually, couples with shared living and both partners having income adopt this principle. Often, one partner gets more involved in expense planning and income tracking — taking on the role of chief accountant.

Pros: with the right approach, predictable and transparent shared expenses. Each can spend personal money as they wish without reporting details to the partner. Both maintain financial independence.

Cons: this budget requires regular review of income and expenses — at least once every six months. Also, one partner should take responsibility for paying bills and planning the budget.

Useful tools: a joint bank account with two cards — a replacement for the “Soviet drawer”, allowing each partner to take money and monitor shared expenses and balance through online banking. There are apps that allow two people to track expenses simultaneously — both partners can install such apps on their phones for managing shared expenses.

Shared Budget

All earned money becomes family money. Moving to a shared budget means the couple no longer separates income and expenses into “mine” and “yours.” Now the pot is shared, and responsibility is joint. It does not matter who earns how much or who spends what. Usually, this budget suits families who have lived together for a long time, couples with children, or families where one partner earns significantly more than the other.

Pros: a shared budget often unites the family, as they save, spend, and optimize the budget together. In families where one partner earns significantly less or has no income, this budget equalizes rights — both have equal access to shared funds and the right to spend them.

Cons: spontaneous purchases can cause disagreements, so all expenses must be agreed upon — from large items to small things like cosmetics or a new game for a console. Difficulties may arise with gifts and surprises for each other.

Useful tools: a joint account, a financial plan, and protection against financial risks, including insurance — all simplify managing a shared budget and protect it.

How to Choose a Joint Budget Model?

A joint budget is based on mutual trust, agreements, convenience, and proper planning. Choose a scheme comfortable for you and discuss it with your partner. Use financial tools that may be helpful. For example, a joint account with two cards, apps for tracking income and expenses used by both partners, savings options — a shared “family bank” or two personal piggy banks for each. Experiment, try different approaches, but always remember: it is important to know your monthly obligations, track income and expenses, and update the list of mandatory expenses at least every six months.