How to Budget as a Couple

Couple working on a budget sitting on a living room sofa with a laptop on the coffee table
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Budgeting as a couple can be a difficult process. It's hard to move from the mindset of caring only for your own financial needs to balancing the needs and wants of your partner.

Without taking the time to talk about money, though, couples can find themselves stressed about finances down the road. Long-term success requires a commitment to budgeting as a couple. Here's what you can do to start things off on the right foot.

Start with the Basics

Before you sit down to plan out your budget with your partner, spend time together talking about your financial habits, goals, and desires. Understanding each other and how you both approach money can help provide a basis for moving forward.

Understand that different styles aren't "good' or "bad." This phase is really about getting to know the other person and being honest. When you get it all out there, it's easier to know how to proceed.

If your partner is hesitant, you may need to change your financial approach. See if you can make it a more positive experience and frame the situation as working together as a team to get the best financial start together.

Determine Your Household Needs

Once you have a feel for each other's financial styles, it's time to determine the household needs. This includes expenses such as rent or mortgage payments, utility bills, groceries, car payments, and debt payments.

There is wiggle room on how much you spend on these items. You can save money by buying a less expensive car, cutting back on groceries or downsizing. But remember, these obligations need to be met before you spend on your luxury or extra items.

When you first start budgeting together, you might need to adjust expectations so that you are both on the same page. One person may want to save more and live cheaply while the other may be more of a spender.

As a couple, prioritize your needs over your wants as you budget together. Be clear about what should come first, and why. Additionally, if one (or both) of you have debt, you need to figure out how to handle it. You need a plan to tackle it in a way that allows both of you to feel comfortable.

Create Long-Term Goals

It's important to set goals to work on as a couple. These long-term goals should be part of your financial plan. The plan can help you determine how soon you can buy a house or when to start a family. It can also help you plan for retirement or your dream vacation.

When you have specific goals you're working toward each month, it can make sticking to a budget easier. If you are just limiting spending and saving without a goal in mind, it is easier to justify overspending on a regular basis.

Some good beginning goals are to get out of debt and to begin to save for a down payment for your home. You should also make saving for retirement an important part of your financial plan. 

  • Create a plan to pay off your debt. List your debts from highest interest rate to lowest and start paying them off one at a time.
  • Make clear savings goals and determine when you want to hit each of the financial milestones as a couple. A clear plan will help you be ready to buy a home or move onto the next step.
  • Figure out which tax-advantaged retirement accounts to start contributing to. 

Address Individual Needs

Once you have determined your household needs, start talking about individual needs and wants. These can include items such as gym memberships, clothing costs, haircuts, and other items you may spend different amounts on.

You may be inclined to give your spouse a hard time about not cutting back on the amount they spend on video games, while you continue to spend what your partner might feel is an exorbitant amount on your hair.

Recognize that your needs and wants are different from each other and be ready to compromise. You may want to set up an allowance to spend on your wants without being accountable to the other person.

Listen to your partner to understand what is important to them. You should each have money to spend on things that matter most to you as individuals.

As long as each partner is sticking to the budget, there is no reason to argue or fight about how that money is spent.

Should You Combine Your Finances?

A big question that comes up when budgeting as a couple is whether to combine finances. This is a matter of personal preference. However, there are three main approaches.

Combine All Finances

Pretty much everything from both of you goes into a big pot. All income and expenses are shared. Partners might have small accounts for their personal discretionary spending, but, for the most part, everything is shared.

Separate All Finances

With this approach, each person has their own accounts. Expenses are divided up and assigned to each partner. Bills might be divvied up based on a 50/50 approach, or it might be based on each person's income. In some cases, where one partner owns a house, the other might even pay rent.

Hybrid

Other couples find a hybrid approach makes more sense. Perhaps there's a joint account for household expenses and other shared goals (like vacations or saving up for a house). Each partner contributes to the joint account but keeps the rest of their accounts separate. Again, this can be a situation where each person contributes the same amount or each partner might contribute a percentage of their income, or there might be some other way to determine how much each person adds.

The important thing is to discuss how to manage finances before getting too far along in shared budgeting. Make sure both of you feel the approach is equitable and that you're both adequately protected in the event of a breakup.

Set Up Budget Meetings to Track Your Spending

You both need to take part in tracking your spending. A weekly budget meeting usually works for this. During this meeting, discuss where your progress toward shared and individual goals. Touch base about category spending and what's left.

In the beginning, you may need to go over this daily, but eventually, you can do it once a week, or even sit down once a month. It can help to choose good financial software that you can sync on your phones. In fact, there are plenty of apps available that are designed for couples to coordinate their finances. As you get better at following your budget, these meetings can be shorter and just as effective.

Keep in mind that when discussing finances, it is important to remain calm. If one spouse makes a mistake, find a solution and move forward. It does not help to dwell on mistakes or get upset.

Tips for Better Budgeting as a Couple

  • If your spouse refuses to combine finances, set up a household budget to handle the household expenses. You may want to seek counseling to address the underlying issues behind choosing not to combine finances.
  • If you are not married yet, you should set up a household budget and wait to combine all of your finances. It will protect you financially in the event of a breakup.
  • Your budget should always include long-term financial goals. You should also be regularly saving money. Remember to work up to saving a year's worth of expenses in your emergency fund.
  • Be sure to plan time together too. Cheap dates ideas can help you build your relationship and stay on budget. 

Bottom Line

Don't let budgeting cause undue stress in your partnership. When you start exploring the possibility of combining finances and living life together, it's best to establish good habits from the beginning, allowing you to avoid serious disagreements later.