Studies show that disagreements about money —how to spend it, how much to save each paycheck, and how to split living expenses—are the reason most couples fight. One of the best ways to avoid arguments over finances is talk about your financial goals and work together to create a budget you both can live with.
Here are nine tips to create a “couple budget” and help avoid those fights in the future.
Don’t Be Afraid to Talk About Money
Most couples go to great lengths to avoid talking about money, especially if one or both carry a large amount of debt. But it’s important to be upfront about your income, savings, debt, and spending habits before you try to set up a budget together.
Don’t try to hide how much you owe or how much of your paycheck you typically spend each month. A SoFi survey found that even the most communicative couples will go to great lengths to hide their financial information from each other, including keeping secret bank accounts, lying about their spending, and hiding their debt.
Be Upfront About Your Financial Goals
Talking about money also means sharing your money goals. Your partner’s aim might be to become a millionaire by the age of 40. You might be happy to just get out of debt.
Whether you are saving to buy a house or hoping to pay off your student loans in five years, you and your partner need to have a clear understanding of each other’s financial goals so that your budget supports both of you. You may also want to create a shared long-term goal for you to work on as a couple.
Track Your Daily Expenses
Before you try to set up a budget as a couple, you’ll want to understand how much of your income you each spend every month. Create a spreadsheet to keep track of how much you are spending each month on housing, utilities, entertainment, groceries, transportation, health care, insurance, eating out, personal care, clothing, travel, loans, and child care, if applicable.
For an easy way to track your money, sign up for SoFi Relay. With SoFi Relay you can keep tabs on your cash flow and spending habits, plus find ways to save, in real time.
Agree to a Budget and Stick With It
Committing to a budget isn’t always easy, but a good rule of thumb is to put 20% of your income towards savings, 50% towards necessities such as housing, utilities, and groceries, and 30% towards discretionary spending such as eating out and entertainment.
Another way to approach your budget is to list all your sources of income and monthly expenses and compare the two. Ideally, you should have more income than expenses.
You and your partner can decide how to use the difference, whether it is adding money to a retirement account or saving up for a dream vacation or a down payment on a new home.
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Set Up a Weekly Meeting
Talking about money doesn’t end with disclosing your income, bills, and goals, and then agreeing to a monthly budget. Many couples set up a weekly meeting to discuss upcoming bills and expenses.
You can use this time to make any adjustments to your budget or plan for any unexpected expenses and determine how to use any unanticipated income such as a bonus or inheritance. It will also allow you to discuss and evaluate any long-term financial goals.
Be Open About How You Will Handle Debt
Be upfront with your partner about how much you owe, whether it is credit card debt, a student loan, a car loan, or all three.
Then make a plan for tackling that debt as well as deciding together what your new financial goal will be once you and your partner are no longer using discretionary income to pay off debts.
Make Sure You Have an Emergency Fund
Many people agree that it’s important to set aside three to six months worth of living expenses in case of an accident, illness, or job loss.
Even if you can’t set aside enough money to cover a full three month’s worth of expenses, it can be a good idea to set aside at least a few hundred dollars in case of an unexpected expense.
Don’t Forget About Retirement
While retirement may seem like a long way off, you and your partner should still factor contributing to a retirement account into your budget plans. Even if you’re paying off debt, saving for retirement should be an important part of your budget. You’ll both thank yourselves later.
Decide How to Split Costs When Living Together
Even if you don’t want to combine your checking and saving accounts, you will need to come up with a plan for sharing household expenses.
One way to split costs when you live together is to set up a household account that you each put money into. This account would be used to pay for any shared expenses such as housing, utilities, and groceries, as well as shared entertainment expenses.
SoFi Money Can Help Keep Track of Your Money
SoFi Money, a cash management account, allows you to transfer money to other people with no fees through its peer-to-peer transfers. If the other person also has a SoFi Money cash management account, the transfer is instant.
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