Budgeting jointly with your partner or your significant other is crucial to successful family financial administration. Your budget permits you to arrange and track your spending, and it also lets you guide your spending mutually.
If you or your spouse haven’t created a budget before, you’re not alone. Nearly four in 10 Americans do not have a budget that closely matches their expenses.
Creating a budget can be challenging for married couples, but it can be done in a fun and entertaining way. A budget is simply a plan for your spending, however. Like all tasks, it should be discussed, changed, and reevaluated frequently to make sure you reach your goal.
5 Steps to get started budgeting as a couple
Budgeting can be confusing, as there are so many ways to approach it. Remember that this can be an enjoyable and constructive project that you and your significant other can tackle together.
1. List all of your combined income sources and amounts
Knowing what amount of money you have to cover your expenses and various other items in your budget is of the utmost importance. Far more important than your income is the item that is listed first on your budget.
To calculate your budget, list all the income you expect to receive between you and your partner during the budget period. Again, this could be a week, two weeks, or even a month.
Income can come from more than just your nine-to-five salary.
Once you have compiled a list of all your income sources, list out how much money you will receive from each. Add these numbers together to get a total amount of incoming money that will cover expenses for the budget.
Remember that your budget must not exceed this number.
2. List out all of your joint household expenses
Record your total income, and then list your monthly costs in one column. Certain costs do not vary month-to-date.
For example, rent or mortgage payments, groceries, and electricity are recurring expenditures that you will need to account for. These expenses can be arranged in twelve standard household budget categories.
Your bills can be categorized so that your expenses are easy to track. This enables you to see where most of your money goes.
Summarize your expenditures in the categories to which they pertain. Your “housing” category may include mortgage payments, HOA fees, lawn care, and property taxes.
Even if an expense does not occur each budget period, it is still part of your standard list of expenses.
3. Estimate how much you will spend on each item
Because expenses may be recurring, the total amount may not necessarily be the same each time. For that reason, it is important to review your expenses every time you create a new budget.
By recording your expenditures, you can identify what you should decrease your money budget for.
The easiest way to determine your expenses is to calculate an average over your previous few months’ prices. As an example, you might take a three month average of your groceries to get an estimate for the coming month.
In some situations, you can get an exact amount from a billing statement; in other cases, you will need to decide what your limit will be.
This is also true for things like gifts and discounts. You can figure out what to budget for these items. The key is creating realistic budget amounts that you can afford and stick with.
Calculate these figures and subtract them from your anticipated income. Does it exceed your expected income? If so, you may need to cut back on some expenses. If you are short of money, allocate the extra to savings or reducing debt.
4. Track expenses
Tracking your expenses is extremely important to budgeting. After all, you want to know how much you are spending.
You may store your budget spreadsheet on a Google Drive or Dropbox account so you and your spouse can reference or modify it at any time. Here are a couple useful budget templates and an example of one.
There are plenty of budgeting applications that let you link your bank accounts and debit or credit cards to track your expenditures. Apps can even categorize your expenditures for you and alert you when you approach your limit.
You can track your expenses as they occur or be set to log them every day. Regardless of which method you use, you need to be consistent in tracking your spending if it is not being tracked automatically by an app.
5. Schedule a standing budget meeting
Remember, in order to have a good budget as a couple, your budget should be flexible, modified, and revisited often.
To guarantee that this works out, schedule a budget meeting with your spouse. The purpose of your budget meeting is to review your expenditures and to formulate your next budget prior to you receive payment.
Make the dialogue lively and enjoyable (cook a good meal!) and forecast your expenses and budget that are coming up. This way your money is reserved ahead of time.
You can also talk about upcoming expenses and go over your monetary concerns. At the end of the appointment, there should be an agreement on what the upcoming budget will be and it should be recorded.
6. Talk about your finances often
Your budget meeting does not cancel your discussion with your spouse about the budget. You must remain in constant communication with your spouse about finances and expenses. It’s about getting to a place where discussing finances is something that you do.
Rules of Thumb for Successful Budgeting With Your Spouse
Now that you have an understanding of how to budget, you’ll both need to keep in mind and agree on a few other things to make it all work:
Create your budget with your spouse before you get paid
You should be proactive and not reactive with your money. If you buy your items after you receive the money, it is no longer a budget.
Budget as often as you get paid
You should budget your earnings accordingly, depending on when you actually receive it. If every paycheck is one month apart, you should budget on a monthly basis. However, if you receive your salary every two weeks, you should budget every two weeks. This allows you to regulate your expenses with your income and not to overspend. Make sure you are both aware of the other’s pay dates so that you know when to expect earnings.
Don’t budget for more expenses than your income
Your budget should allow you to stay within your means and not overspend. If you discover that your expenses exceed your income, it would be wise to sit down and take a long, hard look at your income and expenses to see where changes can be made.
Track your expenses jointly and consistently
The only way you will be able to see your performance and progress toward the plan is to understand what expenses both of you face. Both of you must know what sacrifices you are making. You also need to be aware of any unusual expenses you both may have.
Stick to the plan you both agree on
When your budget is finalized, do not deviate from it without first discussing it with your spouse. This will help you avoid conflict and also build mutual trust when it comes to your finances.
The last thing you want to do is get into an expensive argument or be upset because of a disagreement that neither of you honored the agreement (i.e. your budget) that you both made.
Review how you’re spending to your plan regularly
It is vital to review and pivot if necessary. Talk about your transactions, go over your bank statements together. Make it a duty, not a debate.
Talk about your long-term goals as well
Take some time to talk about your aspirations and goals and how you want to approach them.
You should establish goals and budget categories to start saving money for long-term goals, no matter how small your first step is.
Listen and communicate
Communication is the key to success in marriage and in budgeting jointly as a couple. There will be times when you don’t always agree with your partner on your budget but the key to overcoming the disagreements is by listening, expressing your own view, and finding a shared or mutual agreement. Remember, you are a team, not opponents.
You can successfully budget as a couple!
These guidelines of thumb will help you stay within your budget and avoid overspending. Ultimately, your financial goals ought to help you manage your income, rather than it feeling like a trap.
Working together on your budget is one of the best financial moves that a couple can make in their relationship. By budgeting jointly, you can work to achieve your financial goals as a couple.
Use this tool to generate money-making conversations that are sure to help you avoid conflicts of interest regarding how money is handled. Be sure to read our advice on how to maintain a healthy marriage asset list!