Mastering Family Finances: Avoid Conflicts with Smart Spending Strategies

Managing finances is one of the most crucial aspects of any relationship. Unfortunately, many families fail to address this issue seriously, leading to misunderstandings, tension, and conflicts. To shed light on this topic, we turn to insights from psychologist Ksenia Sysoeva.

Models of Managing Family Budget

There are four primary models for managing a joint budget:

Joint Budget: Both partners pool their earnings into a single pot. Using a joint bank account can simplify tracking income and expenses, and planning the budget.
Mixed Budget: Both partners contribute a portion of their income to a joint budget while retaining some personal funds.
Single-Handed Budget: One partner manages all the money, distributing it as needed, while the other requests funds when necessary.
Separate Budget: Each partner manages their own income and expenses independently.

Each model has its pros and cons, and each family must choose the one that suits them best. For some, it’s normal to have both partners working and managing their own money while sharing common expenses. If this arrangement works for both, it’s great. However, if one partner is dissatisfied (often the woman), it’s crucial to revisit the approach and find a compromise. This is especially important when a child is born, as the woman will likely spend more time on family and childcare, requiring the man to take on more financial responsibilities.

In some families, partners agree that the man handles most financial matters by default, while the woman focuses on family and personal interests, working as she pleases. The key is that the arrangement satisfies both partners.

For effective financial distribution, it’s essential to improve financial literacy. All family members should share the same views on budgeting and finances. Regularly reviewing and adjusting the budget, tracking income and expenses, planning major purchases, and building savings and assets are crucial. Periodically revisiting and adjusting financial arrangements is also important, as life circumstances can change, and flexibility is key.

Budget Management Methods

Here are some tips:

50/20/30 Method: Allocate 50% of your monthly income to essential expenses (housing, food, transportation), 20% to future investments (debt repayment, retirement savings, savings), and 30% to discretionary spending (entertainment, shopping, hobbies, vacations).
Control Harmful Habits: Monitor habits like smoking, alcohol, energy drinks, and sweets. These not only drain your wallet but also harm your health. Aim to minimize or eliminate these expenses.
Track Expenses: Use tools like Excel or Google Documents to track your income and expenses. These tools can help you identify areas where you’re overspending and make necessary adjustments.
Avoid Strict Limits on Personal Spending: While limits can help save on spontaneous purchases or entertainment, they can also lead to psychological discomfort and tension in relationships over time.
Account for Unstable Income: If you’re self-employed or a private entrepreneur with fluctuating income, base your budget on the average annual profit or set aside surplus funds. Entrust mandatory payments to the partner with a stable income.

Most importantly, abandon the illusion that things will sort themselves out or that your partner will change their attitude and behave as you wish. In any matter, communication is key. Happy relationships are built through joint efforts.

For further reading, check out this article on Psychology Today about the relationship between money and relationships.