Here we go, first post on that nitty gritty relationship-finance-independence topic. I’m going to start with five key to-do’s to help you get your grounding so that you can understand your household budget requirements and gain financial independence.
#1 Do know how much your monthly household expenses are. I hear women say all.the.time. – “I don’t even know how much our mortgage is.” Don’t be that person. You should know how much your mortgage or rent is. You don’t have to know the precise amount. If it’s $2,353.12 a month, you should at least know that it’s about $2,300.00 a month. You should also know that you have expenses each month to meet your basic needs. You might hear people call these “utilities” things like - electric, water, sewer, telephone, cable, internet, etc. Additional required expenses to get you through each month might include your car payment, gas, and insurance. Find these numbers out, add them up, remember the total amount you have to spend each month to get by.
#2 Do know how much your monthly household income is. If you do not contribute financially by earning income and you feel uncomfortable asking your spouse or significant other how much he/she makes each month, look at your taxes from last year. The first page of the federal return will tell you how much gross income your spouse made (assuming you filed jointly). Divide this amount by 12, presto - monthly income amount (from last year). There may be additional income listed elsewhere in the return, but generally it should all be listed right there, front and center on the first page.
#3 Do know where all the bank accounts are and how they are titled. Some of you may be asking yourself at this point, what the hell does she mean by “titled”? When I say titled, I mean you should know who legally owns the account. So, if you were to walk into the bank where the account is held - who will be permitted to withdraw money or make changes to the account? Often times, just because you have a card linked to the account does not technically mean that you are an “owner” of the account. If you don’t know where the bank accounts are and don’t feel comfortable interrogating your spouse about it you may have to do some investigating. However, you should feel comfortable talking to your spouse about these topics and if you don’t I will be writing a follow up post about how to talk about these sensitive issues in a positive way.
#4 Do maintain a credit card in your name alone. But don’t use it. This may sound weird, but just do it. You never know when the proverbial shit will hit the fan and you will need a line of credit that only you have control over.
#5 Do keep track of fluctuating additional expenses. Things like grocery bills, holiday and birthday expenses, child care, clothes, out of pocket medical expenses, etc. If you keep track of these expenses for a 6 month period and then a 12 month period you can get a pretty good idea of your average monthly expenses for these “secondary expenses”. This is where budgeting will really come in to play. Eventually, we will talk about analyzing the money you have left over after you pay your household expenses to pay for these additional items.