When you partner up, it’s likely that you are focused on building a home together and merging lifestyles: morning person vs. night owl, how to accommodate both of your vinyl and book collections, and so forth.
But there’s another important consideration: setting up a budget for two. You may choose to combine some, all, or none of your funds, But many people do want to mix at least some of their money and get on track for shared budgeting, spending, and saving.
This guide can help you explore your options and make the right decisions. You’ll learn such points as:
• Why to budget as a couple
• How to budget as a couple
• Pros and cons of budgeting as a couple.
How to Budget as a Couple
Here are some steps to take when you budget as a couple.
Decide How Much You Want to Combine Your Money
Depending on how much you want to combine finances as a couple is a key part of budgeting as a couple. Each of you will have your own money style and potentially money issues, so a frank discussion on how comfortable you are merging your money and sharing, say, your spending habits is a wise first step.
Calculate Your Combined Income
If you have decided on merging at least some of your funds, take a look at your shared income to know what amount you are working with. Consider if you are on salary, freelance, have side hustle income, or dividends/passive income to come up with the right number.
Determine Shared Expenses
Next, look at where that income will go. You likely have shared housing, food, utilities, transportation, insurance, and healthcare expenses in terms of necessities. You may have varying debt payments to make as well.
Perhaps one of you has more in the way of student loans or credit card debt than the other. Discuss what feels fair in terms of paying that down.
You will also probably want to take a look at your usual discretionary spending, such as what you pay towards dining out, travel, entertainment, yoga classes, clothing, and the like.
You may decide you are more comfortable keeping some of your money separate rather than have full transparency regarding every dollar spent. It’s your call.
Figure out Future Goals
Then, turn your attention towards saving. Perhaps you two want to buy a home in a couple of years, start a family, begin a business, or pad out your retirement account. Or all of the above. You’ll want to factor in those savings for tomorrow.
Make Your Budget
With this information in hand, you’re ready to create a budget. It can be wise to review a few different types together, such as the popular 50/30/20 budget rule, the envelope budget system, and the zero-dollar method.
Recommended: Check out the 50/30/20 budget calculator to see the breakdown of your money.
Create Joint Accounts
At this point, if you have decided to merge some of your money, you may want to open shared accounts, such as a joint checking and savings.
💡 Quick Tip: Help your money earn more money! Opening a bank account online often gets you higher-than-average rates.
7 Reasons to Budget as a Couple
Budgeting as a couple vs. budgeting as two individuals can have its pros. Consider the following.
1. Controlling Your Spending as a Team
One of the basics of budgeting is to prioritize your spending. Once you, as a couple budgeting, have decided where your money must go every month — toward groceries, utility bills, car payments, rent, and other essential expenses — you’ll have a better idea of how much will be left for discretionary expenses.
And instead of being restrictive, your budget could give you some spending flexibility. You’ll know if you need to cut back and when you can loosen up a little, and you’ll be accountable to each other.
Sometimes, one person in a couple budgeting is better at finances or just enjoys it more. It might be a good fit for that person to be in charge of managing the bills. But it’s also a good plan to come together for regular budget reviews so both of you know where the money is going and there will be some balance in the financial decision making.
Leave room for some splurges, or the spender in the family probably won’t be too happy. And be proactive about big purchases: Identify a threshold for how much each of you can spend so there are no surprises. Or, of course, you can keep some discretionary spending separate if this feels too stressful for the two of you.
2. Being Honest About Money Problems
This can be the time to talk about any hidden debts, bad habits that cost money, or if you can’t trust yourself not to overspend when there’s a credit card in your wallet.
Then you can start tackling those issues by setting spending limits, cutting up some of those credit cards, perhaps getting financial therapy, and, of course, incorporating those looming debt payments into your budget.
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3. Being Prepared for Emergencies
A common recommendation is to have three months’ worth of living expenses set aside in emergency savings in case you lose your job or are sick or injured and can’t work. An emergency fund can also be used for unexpected costs such as home or car repairs or a medical procedure.
Not only can a couple budgeting determine how much to set aside each month to build that emergency fund, you can also choose which expenses to put off or do without if you don’t have enough in your fund when a crisis strikes.
Some budget ideas for couples who need to cut back on spending are reducing the number of date nights you had planned or putting your tax refund toward a bill instead of taking a spring vacation.
Having a budget can help you replace panic with a plan, and having a financial tool like SoFi can help you keep tabs on your cash flow and spending habits.
Recommended: How Much Should You Keep in an Emergency Fund?
4. Creating Goals
If there’s a “fun” part of working together as a couple budgeting, this is it: deciding your priorities for the future.
Whether it’s saving for a home, having children, taking a cruise, starting your own business, or all of the above and more, your budget will help you focus on the things that are most meaningful to you as a couple.
Your strategy can help you set aside the money to reach those goals, aka turning the dreaming into doing. And you’re more likely to stay on track if you’re checking in on your spending each month.
5. Deciding How Much to Combine Finances
You will likely want to tackle the question of whether to have joint bank accounts vs. separate bank accounts or even a little of both. Making the right call can strengthen your bond financially and holistically.
You may decide to completely merge your bills and bank accounts, or you might want to keep your own accounts and divvy up the bills. There are pros and cons to each approach in budgeting for married couples or cohabiting couples.
Combining accounts can simplify your finances and build trust. But if you feel strongly about financial independence — or you’ve been burned in the past — you may feel more secure if you have your own money. Negotiating an agreement that’s comfortable for both parties can be a real win-win.
6. Reducing Financial Stress
Here’s a solid upside to merging your money: Once you get the numbers down on paper instead of just swirling around in your head, you may feel more in control of your finances. Even if the situation is shaky, you can take steps to do something about it. What’s more, you are likely on a path to making your money work harder for you.
7. Having Something to Talk About
Here’s another benefit: Once you create your couples budget, you’re going to want to revisit it on a regular basis. You can discuss how your various budget categories are holding up and if you need to make adjustments. Or how to tweak your budget so you can afford that destination wedding. You’ll be able to sync up as a team.
It’s a good idea to go over any upcoming expenses that aren’t in the budget or only come up occasionally. And you can talk about how you’re doing with your short-term financial goals as well as your long-term ones.
An example of longer-term money aspirations? You can take a closer look at how college expenses for your future kids are trending. Or what might be a good monthly retirement income for a couple.
💡 Quick Tip: Bank fees eat away at your hard-earned money. To protect your cash, open a checking account with no fees online — and earn up to 0.50% APY, too.
Are There Any Downsides to Budgeting as a Couple?
Now that you know the positives, consider these potential negatives whether you are marking a married couple budget or budgeting as a couple living together:
• A partner could feel as if they have less control over their money, which could be uncomfortable.
• A person could feel as if their partner’s spending habits are challenging.
• The full transparency of merging finances could be a problem for some people who don’t like sharing their financial life.
• There could be more time and effort and potentially banking fees involved as you set up joint accounts and find a new way to operate as a team.
Budgeting and Saving with SoFi
The good news, especially for those who dig technology, is that there are plenty of online tools and apps that can help you put together a budget and manage your money as a couple.
Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.
FAQ
What is the best way to budget as a couple?
A key decision will be how much of your money to merge, looking at shared income and expenses, determining goals, and then finding a budget that works for both of you. Regular check-ins to see how you are managing your money are important too.
How do you split finances as a couple?
This will vary from couple to couple. Some will want to pool all of their resources and pay everything 50-50. Others may have circumstances (such as one partner having considerable credit card debt) that indicate a different arrangement may be necessary.
How much should a couple save per month?
How much a couple should save per month will depend on a variety of factors such as income, cost of living, and debt. However, many financial experts suggest saving 20% of one’s income is a good guideline.
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