How to Budget as a Couple: Money Managing Guide

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Woman and man sitting on couch using calculator and laptop.

Are you in a new relationship, or just got married? Perhaps you’ve been with your partner for a while, but you haven’t quite brought up the topic of money.

Regardless of your specific situation, you’re probably wondering what to do to start managing your finances together.

So, if you’re struggling to manage finances with your new partner, or you’ve both decided to take control of your money goals, then you will want to follow these tips to avoid future money problems.

How to Budget as a New Couple: Money Managing Guide

Managing finances for yourself can be tricky enough. But trying to figure out a new budget with your partner’s finances may be a bit tricky too.

Financial troubles and disagreements often lead to divorce and separation, usually due to a lack of communication and agreement. And, your relationship is too important to risk avoiding money problems.

So, instead of worrying about what you can and can’t afford, when you both retire and how many vacations you can go on, try following these tips on how to budget as a new couple.

Collaborating on Financial Goals

Determining financial goals as a couple is a great way to start and set boundaries when it comes to shared finances.

If you don’t share all of the same goals, or you have differing opinions from your partner when it comes to finances, this should be communicated. Otherwise, you will probably run into some difficult conversations later on down the road.

Collaborating on short and long-term goals is a great way to maintain the financial health in your relationship. This will require honest communication between both parties.

Here are some great questions and financial goals you can discuss with your partner.

How much do we have in student loans?
Will we pay off our own student loans, or will we help each other?
Do we have any credit card debt?
What is our shared and expected monthly income?
What are our shared and expected monthly expenses?
How do we want to split the expenses?
Do we want to rent, or own a home?
How much of a home do we want, and can we afford it?
How soon are we likely to need a new vehicle?
Do we want to travel every year?
Do we want kids, and how many?
Will we help pay for our kid’s college?
Do we want to go back to school?
When do we want to retire, and how do we want to live?
Do we want to have life insurance in case of emergencies?

Because of the taboo nature of personal finances, it may feel uncomfortable to openly talk about money. Avoid using accusing language, and focus on keeping things factual and to the point. You can do this by using “I” statements instead of “you”.

“I would like to only pay for my student loans”, rather than “You should pay for your loans”. Attempting to keep the conversation in a positive tone can also reduce any friction or irritation surrounding the topic.

Money can be a difficult topic for some. So, allowing for some grace when talking with your partner about finances is a great way to be supportive.

If one or both of you have any money issues, addressing these topics sooner rather than later helps to avoid arguments, pent-up anger, and bitterness. And that’s certainly the last thing you want happening as a new couple.

However, once you have answered some of the financial goals with your partner, you can decide if they are going to be short-term goals or long-term goals.

Short-Term Goals, Long-Term Goals, and Joint Goals

With your list of financial goals answered, it’s time to discuss short-term goals, long-term goals, individual goals, and joint goals.

More than likely, any big purchases made will be on your joint goals list. Some large purchases like a car may be an individual goal, however.

Using open communication, start making and separating your list into short, long, individual, and shared goals.

For long-term goals, I highly recommend you place any savings you wish to set aside into a high-yield savings account. This can help you to make a few extra dollars in the process.

Any other money you set aside can go towards other financial goals.

Suggested Short-term Goals (5 years or less):

Yearly vacations
Build up an emergency fund
Pay off credit card debt
Pay off student loan debt (varies on loan amounts and lenders)
Save up for a mortgage
Purchase or pay off a new vehicle
Open a retirement account

Suggested Long-term Goals (5 years or longer):

Save up for a mortgage
Pay off student debt (varies on loan amounts and lenders)
Purchase a house
Leisure purchases (RV, vacation home, boats, etc.)
Save up for retirement

After deciding on the how you both wish to separate your goals, either short or long-term, it’s time to decide if these goals will be shared, or separate.

Any joint goals you’ve decided on should be contributed to equitably. This usually means choosing a specific percentage, like 10% of your monthly income, for example.

Individual Goals & Shared Goals

After you and your partner have decided on your shared goals, it’s time to determine how much you’d like to contribute and by when.

The key to achieving any goal you have is to make it a S.M.A.R.T. goal. Using this method, you will choose your goals to be specific, measurable, achievable, relevant, and time-bound.

Here’s an example of a SMART goal.

Specific – I want to save enough money for a down payment on a $100,000 house.

Measurable – I need to save $10,000 within the next 3 years (10%).

Achievable – I will set aside $270+ each month over the next 36 months.

Relevant – I am going to start a family in the next 5 years and will need a house.

Time-bound – I need to reach this goal within 3 years because I will have a family.

While using this smart method for all your goals, it may not be necessary for some of your short-term financial goals because you will reach them in such a short time. However, you will still want to know how much money you need to save, and by when.

At this point in your journey, you have decided on some of your short-term and long-term goals. Now, it’s time to decide on shared and individual goals.

There are a few reasons why some of your long-term goals should be separate rather than shared. But, let’s start with some of the easier shared goals.

What to do in retirement
Shared travel wishes
Deciding on where to live (both now and in retirement)
What kind of a house you want
If and/or how many kids you both want and when

Once you find some common ground on these shared goals you can start setting up these goals in a SMART format. The sooner you set up your goals, the easier it is to take action and actually reach those goals.

When to Make a Goal an Individual Goal

Here are a few goals that are better to have as individual goals. Consequently, though, these goals should still be discussed with your partner and agreed upon by both parties.

When you each want to retire (more on this in a second)
If you both want kids, will one of you be a stay-at-home parent for a time
Travel wishes that only one of you may have
Any career choices you each have

The reason it’s a good idea to have some long-term goals as an individual goal is that it is more financially responsible and practical.

One of these is when you each want to retire. Because of the age difference between some couples, it isn’t practical for them to retire at the same time.

Mostly, this is due to health insurance, social security, and the ability to withdraw from your 401K at a certain age. If both partners are on one insurance, it isn’t practical for that partner to retire yet, leaving both without health insurance.

Many adults close to retirement age are now choosing to work part-time jobs now, rather than choosing full retirement. Part of this is to supplement their expenses and reduce any strain on their 401K or avoid withdrawing from social security.

Another reason many retirees opt for a part-time job is to take advantage of the part-time benefits, mainly the insurance that comes with it.

Investment Advice and Goals for Couples

Most jobs will have a 401K or other retirement system in place for individuals to contribute to while they work.

But, I believe it’s just as important to have an additional retirement account that you can monitor more easily and contribute to over the years.

There are also plenty of other reasons you may want to open other investment accounts.

College fund for your children
Saving up for a vacation home

In most cases, you won’t need to pay for investment advisory services. These are often available through your workplace, or your investing company.

There’s also tons of information available for free online, so as long as you use your best judgment, you don’t typically need to pay for a certified financial planner.

However, as you get closer to retirement, you may want to consider speaking with a financial planner to discuss your available options, answer any questions you have, and make any necessary adjustments.

Budgeting Tips for Newlyweds and Couples

Once of the easiest ways to start budgeting as a couple is to use budgeting apps, spreadsheets or some other type of tracker.

I recommend using this free Budgeting Tracker for Couples. (Any updates will appear on your original copy of the Google Doc)

This budgeting tracker comes with a page for tracking your income, expenses, and a final page that tracks everything in a table. The spreadsheet makes it easier to visualize and see your progress from month to month.

Starting a new budget as a couple means tracking all of your income, expenses, and monitoring spending habits.

The great thing about a joint budget, and any budget really, is that it is flexible. It will change over time and you can adjust how you divvy up your expenses.

A shared budget will help you track your household income to avoid overspending, and so you can better plan and save for your short-term, and long-term goals.

50/30/20 Monthly Budget Rules

The 50/30/20 budget rule is something that you can choose to follow and adjust to your need.

The premise of this budgeting rule is that 50% of your income is for necessary costs. The next 30% is for wants, and the last 20% is for needs.

Your necessary expenses include all household expenses, car payments, loans, and anything that must be paid every month to survive and avoid additional debt.

Any other expense is usually considered a want, or discretionary spending.

When you track your spending and income from month to month, you will get an average of your expected income and expenses.

Once you have your expected averages, you can choose how much of your budget you place into discretionary spending (aka, your wants).

If you tend to be an overspender or an impulsive buyer, you may need to put more specific spending limits into your spending categories. For example, I can budget for $100 in entertainment each month, but I will specify that only $50 is for shopping, and the rest is for movies and eating out.

Since budgets are flexible, if you can lower your necessary spending to under 50%, the rest can be used to save up to reach your goals sooner or enjoy life a bit more. Leaving below your means is a great way of doing this.

The key to budgeting is to make it a practice. There are times when you will be good, and times when you won’t be. But, don’t shame yourself, or give up. Give yourself some grace, and get back into tracking your budget.

Using Budgeting Spreadsheets or Planners

Deciding how you want to track your budget is all based on personal preference.

Some people enjoy a printed planner to write out their budget. Others, like myself, prefer spreadsheets where I can plug in my numbers, the work is done for me, and I can more visually see my spending habits.

And, there are also others who enjoy using budgeting apps where everything is tracked for you by connecting your credit cards and bank accounts.

I usually avoid budgeting apps in most cases because I find that I am less accountable if it is all done for me. But, if an app works for you, or you don’t have an extra hour or two each month, then use whatever method works for you.

You can grab this free couples budgeting spreadsheet.

Why All Couples Should Have Their Own Separate Accounts

Everyone should have their own private checking account for several reasons.

Personal safety (worst case scenario – an abusive relationship)
Financial security (in case other bank accounts are hacked into)
Independence
For individual/separate expenses

With an individual bank account, this allows you to have some independence in how you spend your hard-earned money. Plus, the other benefit of having a private bank account is that you can pay for any separate expenses.

This can be a car, student loans, hobbies, or leisure expenses.

Unfortunately, while no one expects to find themselves in an abusive relationship, it can happen later on down the road. And, it can happen to anyone.

And, unfortunately, financial abuse occurs too, with or without other kinds of abuse.

So, both partners can make sure to protect each other and themselves by each having separate bank accounts. This is something that both partners should respect, and allow.

With having separate checking accounts though, it’s important not to share your personal checking account information with your partner. No matter how much you may trust them. This is for the personal safety of both parties.

As unpleasant as domestic and financial abuse can be to talk about, it’s important to keep in mind. So, if your partner does not allow you, or does not want you to open your own checking account, it may be time to consider whether you are in a healthy relationship.

If you fear you may be in this situation, talk with a trusted friend or family member. Or you can also talk with the National Abuse Hotline.

Why All Couples Should Have a Joint Account

While every couple should have their own private checking accounts, it’s also important to have a joint checking account.

A joint bank account allows you both to contribute equitably towards your shared goals and shared expenses.

There are two types of accounts couples can have.

Joint Checking Account
Joint Savings Account

The checking account will help to cover routine expenses like bills and utilities, groceries, and other agreed-upon joint expenses.

The savings account should be used for the short-term and long-term shared goals. Once you have both agreed upon your shared goals, you can decide how much you want to contribute to those goals on a regular basis.

I recommend using a SoFi savings account for your savings goals. SoFi allows you to create individual vaults for your specific goals. And, the best part about having a savings account with SoFi is that they have a high-yield savings account. So, even if you can’t always contribute very much money to your goals, you can still earn some interest each month (up to 4.6% APY).

It’s also important to discuss what expenses other than the routine expenses your shared account will pay for. Here’s a list of a few things you may want to share the cost on.

Eating out together
Entertainment (seeing a movie together)
Items for pets
Groceries
Living expenses

Final Thoughts on Budgeting as a New Couple

Managing personal expenses can be tricky enough, but adding a second person, and maybe even other family members can come with its struggles. But, it doesn’t have to be as hard as it seems.

With open and honest communication and a bit of cooperation, managing a budget as a new couple can actually be kind of fun.

The benefits of budgeting as a team means that both players can reach their goals sooner. And this can mean an early retirement, more vacations, debt-free living, financial freedom, and more.

So, if you’ve recently tied the knot, or you’ve officially moved in with your significant other, perhaps it’s time you both came together and planned your financial future together.

After all, what isn’t fun about planning and dreaming up a fun future together with loved ones?

About the author

My name is Nicole Nicolet and I am the owner of the personal finance and small home business blog Let’s Make Life Great. I write about different ways to save money, make money, plan finances, blogging and how to grow a business from home.

My passion is to help others in their financial and business journey so they too can live their best lives.