Björn Berg answers questions by the readers of online news outlet Vísir.

A 32-year-old man asks:

Absolutely.

A household budget is one of our best friends when we want to improve our financial situation. It can seem overwhelming and complicated, but it doesn’t have to be that difficult if we approach it in the right way.

What are the goals?

Before you get started, it’s very important that both of you are on the same page.

It’s not enough to agree that you should “do a budget”. You need to want the same outcome.

So start by setting shared goals. They can be broad or very specific.

A broad goal might be to stop feeling that knot in your stomach every time the end of the month approaches. It might be to work towards a larger home, or to stop taking out consumer debt altogether.

A more specific goal could be to become completely debt-free before the age of 50 and take one sunny holiday abroad each year, within a fixed budget agreed in advance.

Trust me, if this is going to work, both of you need to agree on the goals and genuinely want to reach them.

Where should we start?

There are many ways to keep a household budget, and there’s no shortage of templates, apps and online advice.

Still, I recommend starting the old-fashioned way.

Sit down together on the sofa after the children have gone to sleep, with pen and paper. You may have popcorn. You may mix Malt with Appelsín if that helps.

The key point is that you’re willing to do this and that you have at least half an hour of peace.

One of you can be the note-taker. The goal for the evening is to start sketching out a simple visual draft of your household budget.

Draw a few boxes on the paper and fill them in as you talk things through. In each box, write an amount you both agree to try.

For example, your boxes might look something like this:

Fixed costs: insurance, municipal charges, medicine, heating, water, electricity, loan payments and similar costs.

Regular savings: Christmas, home maintenance, car replacement, travel and other future expenses you know are coming.

Groceries and household essentials: food, cleaning products and basic household items.

Entertainment and leisure: media subscriptions, eating out, theatre, cinema, music, books, exercise and other things that make life enjoyable.

Personal spending for each of you: clothes, shoes, haircuts, cosmetics and similar expenses.

Don’t simply copy my categories.

Create your own boxes, based on how your household actually works.

Keep in mind that a financial effort is not so different from a physical one. It won’t last if you’re torturing yourself, and it works best when it’s tailored to you. So be especially careful not to start eating food you dislike or making everyday life miserable.

But everything else should be on the table.

The carrot

What number comes out of this work?

How much is left when your planned household spending is subtracted from your total household income?

The difference may be quite a bit larger than it has been in recent months. That is often one of the first benefits of creating a household budget.

But knowing the number isn’t enough.

Now put that amount into a mortgage calculator and see what it could do if you used it to make extra payments on your loans. Or put it into a savings calculator and see how the money could grow over time.

That should give you the carrot you need to make the budget work.

How do we run the household day to day?

Now it’s time to work out the details.

Create a weekly or monthly meal plan and make sure your grocery budget is realistic. Then go through the other categories in the same way. Once the structure makes sense, you can move it into a spreadsheet, budgeting app or other tool that suits you.

Then you need to keep the plan alive together.

Share the work of shopping and paying bills. Support each other. Review the budget regularly, especially during the first few months. If things go badly, don’t give up. Make the changes you need.

Finally, decide in advance what you’ll do if the result is even better than expected.

Will the extra amount go towards the mortgage?

Will it go into a travel fund, savings for the children, or the bathroom renovation you’ve been talking about for ages?

Isn’t this overwhelming?

I promise you this can go well if you work together, prepare properly and give yourselves the time you need.

The uncertainty and the knot in your stomach caused by lack of structure are what feel overwhelming.

A well-designed household budget is the opposite.

It helps you plan for the future, gives you a much clearer view of your position today, reduces uncertainty in the running of the household and improves your finances both in the short term and the long term.