Working with a budget every month has been vital to reaching our financial goals. Learning how to budget as a couple took time and effort but it was so worth it. Our monthly budget allows us to plan for expenses, track spending, and save for short term and long term goals.
Whether you and your partner are considering making a budget as a couple for the first time, or you are re-vamping how you manage money together, I hope this article will help you both get on the same page with money (literally).
Budgeting as a couple will require money talks
Learning how to budget is a skill. It’s about facing your past money mistakes and figuring out how to take control of your money rather than having it control you. As a couple, budgeting can be even more challenging. You need to account for two individual needs and household expenses.
Learning how to talk about money is an essential first step before you commit to a budget together. Check out 10 of our best couple money talk tips to get started on your money conversations.
7 Steps to Build Your Budget as a Couple
You can build your budget as a couple with these 7 basic steps.
1. Decide the time period for your budget
You can decide the time period you’re budgeting for. It could be one month, one week or every two weeks.
We have a monthly budget. We are one month ahead in our budget, so we simply move our money from savings (last months income) into the checking account and use this for the entire month. This only makes sense because we are one month ahead. Previsouly, we did a bi-weekly budget to line up with our paychecks.
You get to choose what makes sense for as a couple.
2. Account for all monthly income sources
You need to know how much money you collectively have as a couple to budget with. Add up all income sources. This can be more than each of your paychecks. If you have income from a side hustle, bonus, or refunds you need to account for this too.
In most budget sheets, your total income will be listed at the top of the sheet. Then you can see how much money you have to work with each budget period. You spending should not ever exceed this number. Otherwise, you are more than likely going into debt or dipping into other savings accounts.
3. List out all of your regular expenses
Right underneath your income, you need to account for your regular monthly expenses. Our free budget template includes the following monthly expenses:
- House gas
- Cell phones
- Prime (we put a little away each month to save for this yearly expense)
- Auto insurance (we put a little away each month to save for this yearly expense)
- Subscriptions (Gym memberships, bark box etc.)
- Dining Out
- Personal shopping for each person
This is a detailed list. You could group your regular monthly expenses into simple categories instead. For example, you could make a group called “Utilities” which would house the electric, water, garbage, and house gas expenses. We like to see everything written down so we don’t group things like this. Again, a good couple budget is the one that actually works for you! So be flexible with it and try out different ways to organize it.
3. Look at your debts and add them to the budget
You need to account for your loans. After monthly expenses, list out all of your debt. Some examples include:
- Student loans
- Credit card debt
- Personal loans
- Auto Loan
(We don’t like to include a mortgage here because most people are not going to pay this off early)
Once you have these written down, you also need to write down the minimum payment due each month. Ideally you are trying to pay off you debt, so keep a line item under each debt for an extra payment.
The method you choose to pay off debt can differ, but I prefer the Avalanche method. This simply means you’re paying off the highest interest debt while continuing to make minimum payments on the others.
4. Set your savings goals and add them to your couple budget
Even if you are paying off debt, you should still be saving something each month. You can do both at the same time. We are investing, saving and paying off my student loans and this is factored into our monthly budget.
Hopefully, you went through the couple money conversation list and have some savings goals. If not, now is the time to make them. Here are some examples of savings goals to include in your budget:
- Emergency fund
- Retirement contributions outside of your automatic work contributions
- Pet emergency fund
- Kids college fund
Add these items to the budget. You don’t need to put in an exact number yet. That is the next step.
5. Estimate your expenses and make your first budget
This step is crucial. It’s where you start putting in all the numbers next to each category.
- You will need to estimate the actual cost of each monthly expense first. You can do this by looking at your bank statements, credit card purchases and bills. In some cases, you will have an exact number (like the bills). In other categories, you may need to estimate how much you expect to spend.
- Once you do this, see how much money is left in the budget to allocate as an extra debt payment. Write this down.
- Lastly, how much money can you put towards each of your savings goals?
Keep in mind you will need to make adjustments. If you put in a $300 personal shopping budget for each person, but find you have $0 to put towards an emergency fund, it’s time to re-prioritize and lower your personal spending. Find the areas in the budget categories you can both agree to adjust to you can reach other financial goals.
6. Track your spending
Your budget should be done at the start of the period. For us, we create our budget at the start of each month. As the time period progresses, you need to track all of your expenses. You can do this manually with a spending tracker spreadsheet or you can use an app like Mint.
It’s important each person in the partnership has access to spend tracker. This kind of labor should not fall on one individual. Plus, this kind of tracking keeps money transparent between two people.
7. Schedule money dates (especially at the end of the budget)
Charles and I have been doing money dates for a long time. Even before we learned how to budget as a couple. These money dates were a time to talk about our financial goals. How much we wanted to save for our future and how much debt we needed to pay off.
It’s really important to keep these money dates reflective and hold each other accountable. BUT you need to do so with respect. This isn’t about rubbing anyone’s nose in a mistake. If you went over budget, you both went over budget. You are a team and money dates are there to keep the team on track.
Every financial plan needs to be flexible
To ensure your budget is successful you need to both remain flexible. Here are some ways to make budgeting as a couple go smoothly:
- Do not shame the other if a mistake is made
- The personal shopping money should allocate a certain amount to each partner. They can spend it on ANYTHING and the other partner should not have a say.
- Stick to the plan as much as possible
- Check-in on feelings
- Revise the budget if it’s not working. (If one person feels it isn’t working, than it’s not working)
- Track your spending jointly
- Budget jointly
Don’t let the budget stress you both out. You will go over budget. You will each have disagreements. That’s why we like to think of ‘the budget’ as a working, living document that exists to help us master our money.