Are you interested in how to budget as a couple?
The average couple brings a lot of financial stress into a relationship. In fact, most people have car loans, credit card debt, student loans, and even other forms of debt.
That is to say, not many people know how to properly budget. So, they bring those bad habits into the relationship.
According to Mint Intuit, 65% of Americans have no idea how much money they spend each month.
We strongly believe that budgeting is very important for financial success. All people should budget regardless of their financial situation.
Budgeting gives you permission to spend and allows you to live freely.
Above all, budgeting allows you to allocate money to the right categories and know that you're on track to reach your financial goals.
Without a budget, you will struggle with paying off debt, saving money, and investing for retirement.
Budgeting as a couple simply means budgeting together.
Most importantly, you should only budget together and combine your finances once you're married. All finances should be handled separately before marriage.
If you combine finances before marriage and the relationship ends, you have no legal protection for your finances.
Budgeting may seem boring but it will be one of the best decisions you make with your finances.
You and your partner will learn how to take control of your financial life, which will help lower stress and money arguments.
7 Steps on How to Budget as a Couple
Learning how to budget as a couple comes down to 7 simple steps. It may seem confusing at first but the more you work at it the easier it becomes.
Let's talk about the 7 steps required to budget as a couple.
Start with the basics and create a foundation
First off, it's important to sit down and talk about finances before you start budgeting. Ideally, this should happen before marriage but if not it's a good time to start.
Ultimately, you want to spend time learning about each other's spending habits, wants, and financial goals.
In fact, learning how each other views money will guide you in the future. Everyone is different so you have to be open to other ideas.
Remember, there's not a one-size fit all solution so it's key to work together to create a foundation you both can work with.
Above all, having a foundation you both agree with will help limit the number of disagreements down the road.
Your partner may be against some of your views and that's fine. It will require you both to make adjustments as needed so you know how to proceed.
At the end of the day, you are a team and you are both on this journey together.
Some of the best budgeting apps for couples include:
- EveryDollar, for zero-based budgeting
- Mint, for budgeting and credit monitoring
- Personal Capital, for tracking spending and net worth
- Clarity Money, tracks spending
- PocketGuard, provides a budgeting snapshot
- Honeydue, track spending, investments, and debt
You can also budget the old-fashion way using a spreadsheet.
Check out Tiller Money to download automated spreadsheets to help you budget.
List all of your combined income
In order to budget, you must know how much money you have each month.
This is why combining your income is critical for you to pay your expenses and other budget items.
Above all, your income sources should be the first line item in your budget. This allows you to work down the budget knowing how much money is available.
To get started creating your budget, list out all of your expected household income sources that you and your partner plan to receive. This could be bi-weekly, semi-monthly, or even monthly income.
Most importantly, include all of your income sources! This means your full-time jobs, part-time work, side hustles, bonuses, rental income, etc.
After that, determine how much you expect to receive from each income source. Total up these numbers to have an idea of how much money you will have to pay your expenses that month.
Ultimately, you should keep track of this number in your budget and make sure your expenses do NOT exceed your income.
List out all of your joint household expenses
Next, you want to list all of your joint household expenses on one budget.
You will have some expenses that stay the same each month and some that vary. For example, rent or mortgage, food, electricity, and water will be recurring expenses each month.
Certainly, create budget categories where your expenses can be categorized.
Here are some normal budgeting categories you can use for your household:
- Utility bills
- Household items
- Fun money
Breaking your budget down into categories will allow you to quickly understand how much money you're spending in each area. Your budget will be more organized and keep you on the right track. One thing to remember, keep your budget simple so you don't become frustrated or confused. Group similar items into one category. For instance, your "saving" category could include debt payments, building your emergency fund, and investing. Most importantly, learn what works best for you and your partner so you are on the same page with understanding how to categorize all of your expenses.
Schedule a monthly budget meeting
Having a recurring meeting is very important to learn how to budget as a couple. Learning how to budget as a couple comes from experience.
You only gain experience by doing your budget together. You both need to be involved with your spending. Certainly, one person can lead the household finances but it's a must both people be involved.
In fact, this is why a monthly budget meeting is needed. You can hold each other accountable for and discuss the progress of your financial goals.
Above all, you want to reconcile and review the budget to see how much is left at the end of the month and plan for the next month.
In the beginning, you may need more than 1 meeting per month just to get a routine. It might be helpful to choose a budgeting app or software to sync your devices together.
This allows you both to see an up-to-date budget whenever someone makes an update.
Ultimately, learning how to budget as a couple takes patience and understanding. You both will make mistakes but work together to resolve them lovingly.
If your spouse refuses to have monthly budget meetings or combine finances, you may want to seek counseling to address the bigger issues.
Solving the main issues as early as possible will help your financial situation in the long run.
A great way to stay on track with your monthly budget meeting is by creating a calendar event on your phone. This will allow each person to receive an alert before the budget meeting.
You can even consider creating multiple alerts so the meeting is not overlooked. This is a great way to be proactive when it comes to budgeting your finances as a couple.
Talk about finances often
To be clear, you should talk about your finances often and not only during your monthly budget meeting.
In fact, there could be adjustments needed in the middle of the month that can't wait until the budget meeting.
Talking about your finances often is a big part of learning how to budget as a couple.
The more you communicate, the more you will understand each other and the best approach to your finances.
Ultimately, the goal is reaching the point where talking about money is normal.
Create and discuss long-term goals
In every marriage, each person will have their own personal goals. However, it's important to create and discuss long-term goals as a couple.
Once you define your long-term goals it can help you with how to budget as a couple.
You may want to start a business or invest in real estate. Having these discussions early and often will help you plan together and create budget categories to reach those long-term goals.
Long-term goals may require you to save money that is allocated for a specific reason.
A great way to approach saving for a specific goal is to open a high-yield savings account that's separate from your checking account. This will allow you to only spend the money on that specific goal.
CIT Bank offers competitive interest rates for a high-yield savings account. This online-only bank is a great option for saving money while getting a higher return than other banks.
Regardless of the goals you may have, it's important to get started and be on the same page with how to budget as a couple.
Be patient and keep moving forward
Learning how to budget as a couple will require patience and understanding.
In America, money issues are one of the leading causes of divorce. This is why it's important to be on the same page as early as possible when it comes to finances.
Certainly, the differences in how you and your spouse manage money may be frustrating and very difficult to handle. But, taking time to view a different perspective about money can help reduce money fights.
Money problems can lead to living in poverty, which can lead to unnecessary stress.
It's beneficial to be patient and not get sidetracked on issues because there will always be differences in how you approaching budgeting as a couple.
You and your spouse are two different people and were born the way you are.
But, understanding these things at the beginning will create much more financial success.
Final words - how to budget as a couple
Don't let the frustrations of how to budget as a couple ruin your relationship. You should be open and honest from the very beginning to reduce any potential issues.
Most importantly, it's key to create good habits to avoid big disagreements later.
Create a plan for how to approach budgeting together and stick with it. Your finances are important to keep your relationship strong.
The fewer money fights you and your spouse have, the happier you will be.
Do you believe in budgeting as a couple? Why or why not?