Ugh, tax season. As the dread slowly creeps in, you’re faced with utter confusion and feeling as though you need to learn Math 11 all over again (my least favorite subject of all time). If this time of year is a recurring nightmare for you, like it is for me, it’s time you ask for a little help in this department, instead of putting it off until the very last day (April 15th).
As hard as it is, let’s try to look at the positive side of tax season!
It can be a really great time to talk to your partner about your finances, if you haven’t done so already. You can approach it in a couple of different ways.
The reveal: How much do you make? Finances can be personal to some, and you may not want to share your exact number. First, it’s important to talk about comfortability around finances. If one of you is a little more hesitant, perhaps you feel as though you make a lot less than your partner, start off by giving one another a range. For example, if you make $43,000 a year, you can say you make between $40K-$50K. This way you’re providing a good ballpark of where you sit, without having the pressure to share everything all at once. If you wish to share your exact salary, that’s great! The transparency can help you down the road with expectations around joint expenses.
If you’re an accountant or someone who doesn’t get a headache while doing your taxes, help your partner out. Sit down and teach them how to file their taxes. There are so many different filing services online that are easy to use like TurboTax. Even just having someone walk-through the service and explain it, can ease the stress.
Shared account or credit card: Do you or are you planning to move in with your partner any time soon? It’s a great idea to talk about how expenses will be divided and shared. Some couples decide a shared credit card works well for them. This way, things like groceries and household items are on one card. It keeps track of where you’re shared expenses are coming in and what’s being paid off and when. If you don’t like relying on a credit card, you can also choose to open up a shared account that you can each pool money into every paycheck. It’s important to make each of the contributions realistic for one another as well. If one of you makes substantially more than the other, talk about how much each of you is capable of contributing. Perhaps the person who makes more, can pay more in rent as opposed to splitting it evenly.
Budgeting 101: Not Excel, anything but a spreadsheet!! Honestly, sitting down and working through a spreadsheet to keep track of your monthly expenses is life changing. I hate looking at numbers with all my might and even I can do this. It’s one of those tasks that you continue to put off, because it’s not as fun as going out with your friends, or baking cookies on a Sunday night. But, it will provide you a really clear idea of exactly where your money goes every month and how you can save better for things you actually want to work toward. It’s really quite shocking how much you can spend on something as simple as your morning coffee. Writing out your expenses on a spreadsheet gives you a really great visualization of habits, or areas you can cut back on. If you need a Starbucks every morning, maybe you cut that back to four times a week instead of seven. If you buy lunch every single day, why not cut that back and buy more groceries and do some meal prep every Sunday night vs. watching your favorite Netflix show? I’m not saying drastically change what you’re currently doing, but tweak it and look into areas that you can be saving a little more.
If you’re not sure where to start, you can categorize your monthly expenses and spreadsheet like this:
- Mandatory: this includes things like rent, hydro, cell phone, internet. These are fixed payments that you simply can not adjust or live without.
- Flux: this includes anything you can adjust how much you spend. This usually includes things like groceries, wellness, transit, eating out, entertainment, shopping, gifts, credit card payment and travel etc.
- Savings: this is the area of the spreadsheet where you put in the amount you’ve put into savings for the month.
Now once you’ve written in all your labels, look at your bank account and start adding up receipts and slot them in where applicable. Over the course of the month, you’ll notice areas of big spends and smaller spends so you can adjust accordingly for the next month. Your partner and you will be one step closer to saving up for your next trip or buying a new car!