Budgeting as a couple can be difficult – from caring only for your own financial needs, you’ll now also have to take the needs and wants of your partner into account. You’ll have to manage the spending and saving of two people.
Budgeting can be a touchy subject, and sometimes it’s just easier to ignore the topic all together. Though, without taking the time to talk about money, couples can find themselves stressed about their finances down the road. Long-term success requires a commitment to budgeting from both of you – as a couple.
Figuring out how to budget can seem confusing as there are so many ways to approach it – though, it comes down to 5 basic steps:
List All of Your Combined Income Sources and Amounts
Knowing how much money you have to cover the expenses in your budget is crucial. So, make a list of the expected income that the two of you will receive during the time period you’re budgeting for – which could be a week, two weeks, or even a month. Besides your 9-to-5 salary, don’t forget the income you get from sources like bonuses, dividend income, rental income, royalties, and refunds.
List All of Your Joint Household Expenses
After you calculate your total income, it’s time to list your expenses. There are some expenses that do not change from month to month – such as rent or mortgage, insurances, and electricity bills.
These recurring expenses you can group into different categories, such as housing (mortgage, lawn care, property taxes), transportation (fuel costs, parking costs, bus fees), food (coffee take-aways, groceries), insurance (car, health), debt repayment (loans), entertainment (cinema, museum), and so on.
Estimate How Much You Will Spend
Even though some expenses may be recurring, the total cost may not be the same every time – you therefore have to review your expenses each time you create a budget. Estimating your expenses allows you to see what costs can be cut in your budget to free up cash for other things.
The easiest way to estimate your expenses is by taking an average of what you’ve spent the months before. Total up these expenses and subtract them from your estimated income. If it exceeds, you need to cut some of your expenses; if it’s less, you can allocate the additional money to your savings or paying down debt.
Track Your Expenses
The most important part of budgeting is to track your expenses – after all, you need to know if you’re staying within your budget. You can either use spreadsheets which the both of you can access to reference or edit at any time, or a budgeting app that will allow you to add your bank account and debit cards to track the spending.
Schedule a Budget Meeting
Remember: in order to be successful in budgeting as a couple, you’ll have to do this together. You both need to take part in tracking your expenses. The purpose of your budget meeting should be to review your spending and create your next budget before you get paid. To ensure that this happens, schedule a budget meeting weekly or monthly – and try to make it fun and relaxing. It’s all about getting to the point where talking about your finances is just something that you do!