5 Essential Tips on Budgeting for Couples
Newlyweds meet many challenges when merging their lives, from living together for the first time to combining finances after marriage. New couples must decide how to manage their finances to work toward achieving joint goals.
Here are five budgeting strategies for newlyweds to set you and your spouse up for financial success.
Photo by Alvin Mahmudov
1. Discuss bank accounts
Have an open discussion about merging your money. Decide whether to move forward with a joint bank account or keep individual accounts. This is a personal decision that may depend on whether you both work and where you are in your life stage.
If you decide to combine all accounts, set clear expectations and make sure you’re both on the same page for budgeting each month. It’s smart to set a spending limit that neither of you will go over without consulting the other. This approach avoids any surprise transactions that could cause friction in your relationship.
Even if you choose to keep your finances separate, it makes sense to have at least one shared account for recurring household expenses, such as mortgage and utility payments.
2. Agree on a budgeting tool and approach
Design a budget that works for both parties. Discuss how you want to manage your budget so it meets both of your needs.
Many couples choose to use a budgeting app like Mint, while others prefer a budget software that gives them detailed reports. Some couples choose to stick to the more traditional method of pen and paper. There are limitless budget spreadsheets and worksheets available online that can help guide you through the budgeting process.
You’ll also need to choose a budgeting approach to help determine where your money should be going. If you don’t know where to start, consider using the 50/30/20 budget which breaks down as follows:
50% goes to needs. This includes the cost of groceries, housing, transportation, and other necessary expenses.
30% goes to wants. This includes the costs of dining out, traveling, shopping for clothes, and buying gifts. Think of it as the fun category.
20% goes to your savings fund and debt repayment. Depending on your financial situation, you may choose to contribute to both simultaneously or tackle your debt first if you have high interest rates.
You can also search for example budgets that mimic your family size and income to gain a better understanding of how much you should dedicate to different categories each month. There’s no right or wrong way to put together a budget, so find what works as a couple.
3. Consider using the envelope budgeting system
The envelope budgeting system is a great way for newlyweds to begin tailoring their budget from combining finances after marriage. It’s one of the most effective budgeting strategies because it helps change your mindset when it comes to spending money.
By forcing yourself to use cash, you make a tangible connection to the money you’re spending rather than just mindlessly swiping a card. With envelope budgeting, you use envelopes to divvy up cash based on discretionary budget categories, like groceries and entertainment. Once you spend all of the cash in that envelope, you stop spending within that category.
4. Write down joint goals
You’re more likely to achieve a goal if you can visually see it. Put your short-term and long-term financial goals on paper.
For example, are you trying to pay off student loans and credit card debt? Do you want to take a vacation once a year? When do you want to buy your first home together?
Each goal should have a timeline and specific target numbers. Make sure your goals are clear and attainable based on your income and future plans. Start prioritizing your goals as a couple and build an action plan for your budget.
5. Save for your future
Saving for your family’s future should be a team effort, meaning both partners should be actively saving and working toward long-term financial goals. If you’re a dual-income family, both spouses should be contributing to joint savings goals. This helps avoid tension from one person feeling like they’re carrying the weight of saving.
Even if you’re a one-income household, there are ways to ensure everyone is working together and on the same page. Track your budget regularly, so you can flag any poor spending habits and cut back on unnecessary expenses. This will help maximize your money and put more towards your savings goals.
Many couples — even those that have been married for years — have trouble talking about finances, but it doesn’t have to be that way. From the start, agree to remove emotion from the discussion and focus on making decisions that help reach your goals as a couple. As you grow in your marriage, re-evaluate your financial plan and make changes that meet your lifestyle.
If you and your spouse need support navigating your joint financial goals, a financial coach can help you define your plan as newlyweds. Reach out for a consultation today.