PERSONAL FINANCE
The Young Family and Young Couple Guide to Money, Personal Finance and Financial Planning
 



 


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Personal finance for a young couple or family means, in a nutshell, what’s earned against what’s spent. After paying the dues, the family enjoys the balance. Sounds simple, doesn’t it? Not quite.
 
Take for example an employed husband and unemployed wife (or the other way round for that matter). Obviously, all bills are to be paid for by the gainfully employed partner.
 
Question is, after paying all the bills, how do you apportion the balance between them?
 
The unemployed partner may argue that it should be an equal split on the basis that being a housewife (or househusband) is as demanding and time consuming as any other job.
 
The employed partner may argue the opposite, being that employed elsewhere means getting to work on time, not being able to work in your own time, and the pressure of working for people - sufficient reasons for a larger cut of the pie.
 
It doesn’t sound all that simple now does it?

This is an extreme situation where one partner is gainfully employed and the other is not. Other similar cases would involve partners who are simply earning different levels of income, and doing different jobs with different responsibilities and stress levels.
 

Resolving the conflicts of personal finances between young families is extremely important. At this point in the young couple’s careers, the salary difference may not yet be that great. 

But remember, children need more attention as they grow up … the trade off for which is the career advancement of either parent.

Regular expenses and expenditure for young families may include:
    • House instalments
    • House rates and assessments
    • Utilities (electricity, water, cable, telephone, internet)
    • Groceries
    • Car instalments
    • Travel costs (petrol, toll)
    • Insurance (health, child education)
    • Savings
    • Child expenses (milk, food, diapers, medication, day care) 
 





These are a few ways of managing your expenses:
 
Semi-Dutch
 
In going Semi-Dutch, you spend for what you use.
 
This is easier when you have similar levels of income. The large expenses such as house instalments, groceries and utilities are shared but smaller expenses such as car instalments are paid individually. This is similar to finance arrangements of students living in shared accommodation.
 
Problems may start appearing if and when the difference between salaries increases. This may be compounded with increased fixed spending such as the purchase of a new, more expensive house. The partner earning less would ‘suffer’ compared to the one earning more.


The Paymaster Husband
 
Culture and religion might call for the husband to pay for all fixed expenses, such as the house, household bills, utilities and cars. Fine if that’s how you want to live your life, provided of course that the husband can afford to pay all that and still have money left over for himself.
 
The Semi-Dutch model sometimes metamorphoses into the Paymaster Husband when the husband can afford the expenses. The wife only pays for things she uses exclusively for herself.
 
However, for young couples and young families, this may not be a viable option – even if the husband wants the ‘honour’ in supporting his family.
 
 






 





Equal Share
 
Wasn’t marriage supposed to be an equal affair? Working together, towards a common goal? Facing obstacles and challenges together?
 
Any couple, young or old would know that it’s never a 50:50 matter when it comes to the wider aspects of a partnership through marriage. In finance, however, it could be.
 
The principle of Equal Share is deceivingly simple. All income earned is for the family. As such, it is pooled and all expenses are paid before dividing the balance between the couple – without regard to the earning power of each partner.
 
Of course, this is easier said than done. It requires complete understanding and openness in managing family finances. Most importantly, both partners must accept whole-heartedly that all income earned by the partners belong exclusively to the family unit.
 
Tried and tested, this method is probably the most equitable – provided that all the requirements, particularly from acceptance of the principle of the idea, are met.


What Next? 
Either way a young couple decides to handle their finances, the most important consideration is that both partners agree and fully subscribe to the method. Financial rifts can build up over time and it is difficult to gauge when it might hit breaking point.
 
Always be open and honest, but not rude and condescending. When only one partner is in short term debt, it is a clear sign that family resources are not being utilised most efficiently.
 
Revisit your financial position regularly and sort out any problems or disagreements as they surface. At the very least, before embarking on any purchase that requires monthly commitments, list down your income and expenses. Include deductions such as taxation and pension funds – it is much better to over than to under-budget. 


 
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