Suggestions required - Budgeting tips for Couples with Joint Accounts

Suggestions required - Budgeting tips for Couples with Joint Accounts

I'm not sure if this question has come up in the past, but figured I would ask for some suggestions/help with this particular problem....

My partner and I have been together now for 5 years and have secured an IP and PPOR together and have done quite well in this regards,

However recently I have felt that we aren't exactly managing our money well, not squandering it away so to speak, but not keeping a budget either.

I have brought up the need for us to prepare/stick-to a budget on numerous occasions however the counter argument I get is that it is simply too hard to stick-to a budget whilst we have a joined account.

I was wondering if any other couples/investors have encountered similar problems and if anyone could offer up some tips/hints to help...

Note:-
We have discussed having separate accounts again but the hassle doesn't seem worth it in (at least in the short-term)

Thanks in advance

 

It sounds like setting a budget isnt the hard part, but sticking to it.

I will assume you're disciplined enough to not make withdrawls on your loan excluding some unforseen medical disaster or the like.

Have you got an offset account or redraw facility with your PPOR?

One solution is to have your salaries automatically transferred to this account. Use a Credit Card with no monthly account fees to pay for everything else and at the end of each month pay off the CC balance by transferring out of the offset/redraw. If that monthly payment exceeds your budget you can then review the CC statement and trouble-shoot the cause.

You will likely need to have a small amount in a debit account to pay for non CC items and to make any necessary cash withdrawals, so make sure to set this to a fixed amount and transfer any excess above this amount to the appropriate investment/PPOR.

I like this method because:

1. Its transparent and regular. Its not to hard to stick too, the spending is tabulated for you in the form of CC statements and the necessity of payment ensures you reviewing spending monthly.
2. Its not too rigid. Assuming you provide a small buffer in your budget, if one or the other of you overspend a little each month it won't be a problem and it wont turn into a blame game.
3. It makes your money work for you. By having your money offset your mortgage and paying for things on a no fee credit card, it maximises the amount you can save on PPOR repayments.

Note: This method just enforces the budget through better savings against your home (carrot) and by avoiding CC debt (stick). If you cant control CC spending this can turn bad - the last thing you want is an accumulated CC debt.

 

Hi Vagon,

Thanks for the suggestions/idea's

Our joint account is currently setup as an offset for our PPOR loan, with ~30k sitting there it's hard to "not" spend on frivolous items...

But I like the suggestion of using the credit-cards, as it means we can have our discretionary spending without feeling too bad about it.

Will suggest to her and see how it goes!

 

Set the budget...then track it. I know it sounds An@l but it keeps it in your sights. So check it each month !!!


Its amazing how many silly little things that we spend our money on and how much they gobble up.
Example:
I spoke with a client of mine on this. She's a single Mum, three kids. Each day she picks her kids up after school and after her work. Most days they stop on the way home to pick up some milk, bread etc, and the kids do the daily performance of "oh Mum...can I have a this or that". Each of those things costs say $1.50, so thats $4.50 per day, five days a week all year = $1170 and thats being conservative.

Joint accounts - agree how much cash you need each week and what it's for - at the start of each week thats the cash you get out and that's it!

Look at your phone/internet plans - consider VOIP, its saving me about $1800 per year.

Electricity is getting nasty too.

 

That is something I want to bring up in another thread... (will link back to this in a moment)

We're on a fairly decent DSL plan, but very rarely use our home phone, so really should go for a Naked DSL plan and save on the home line rental ...

I described the suggestion to my GF last night and she's happy to give it a go, however there's still a point of contention...

I was thinking that we budget $75 / week (~$300 / month) and I only spend half of that then I'd only transfer $150, where as she wants to still transfer the full amount...

Problem I have with that is it seems to defeat the purpose of the Offset account in the first place...

 

Budgeting is a common issue, in part working out what it is you are budgeting for, having funds available with the temptation to spend any-time if the funds are available etc.

I prefer setting up two bank accounts, a general transaction account and an offset (against the PPOR). I know many people only use one but the issue is the funds are available to spend and no sense of savings is being accomplished.

You decide what portion of salary you want to save and direct debit that direct from your employer into the offset. That account becomes almost sacrosanct. The main portion goes into the general transaction account from which day to day spending occurs and is limited to what you have.

If you have the discipline to use credit cards safely, set a small limit on them so you cannot easily overspend and have an auto-sweep each month to pay off before interest is charged and it comes from the transaction account.

You may not gain the full impact on interest savings if you have a balance in your transaction account but it is often small beer if you separate the two and have a growing balance in your offset because you are forcing yourselves to only spend what you set up initially.

I agree with looking at expenses and make savings as well.
There are other actions you can take but it depends on how you have set up your loan accounts and are funding your IP, whether you can use a debt recycling strategy or not.

Greg