Here's a problem that many couples might be familiar with (you might identify with one of these statements more than another): How do you justify your little splurge to your significant other? And how do you confront your significant other over their little splurge?

In fact, money matters can be a real source of conflict in relationships where the pool of available cash is shared. So thank God for budgeting. Here's how we nipped the problem in the bud.

If you are unfamiliar with budgeting, the concept is pretty simple. All your cash inflow (be it virtual or physical) is given a job, i.e., it's put into an envelope. Or a virtual envelope. For example: We have an envelope titled "Rent" where every month we budget what we need to cover the rent. Some envelopes are important — you know how much you need in them and when, and they better have enough money inside when you need them. Others are less important. Budgeting helps you prioritize your expenses and as a nice side-effect also lets you make decisions based on spending patterns, etc. Without a budget, most people will tend to be either stingier than they need to be, or spend more than they can afford.

Back to the problem at hand. When we started budgeting, we decided that each of us would have a budget with our name. Every month, we'd put 25€ in each category. (That's what we started with, and then that went up as we earned more.) When you want to spend some amount, if it's within your budget, everything's good. Each has then money they can spend however they want, with no discussion required.

It's easy to see though that if you want to buy something more expensive, say a laptop for 700€, this probably isn't going to cut it. You'll have to save for 2.5 years on this budget, and spend nothing in the interim. So you arrange for a negotiation with your SO and hack out a deal that you both agree with. Or you sell some stuff and the proceeds land in your budget. (Get creative, but be fair.)

You can build on this system as you see fit. We're pretty comfortable with budgeting, so we've extended it with further categories, such as one that involves both of us, which we use for stuff like going to the cinema.

The nice thing is that this works superbly whether you're a spender or a saver, whether you earn little or a lot. If someone gives you a monetary gift, you can put that in your budget if you want (it's so hard to spend hard cash nowadays).

We've been using YNAB for quite a while, and it works very well for us. If you sign up, consider using this link, which should give us both a free month.