Top 10 Budgeting Components for Couples

Budgeting isn’t just more manageable with two people working on it; it is also one of the things that couples can do together to strengthen their relationship by working towards the same goal. It can help the couple to reach any financial goal they set their eyes on, whether it’s a house, car, or even a big marriage function!

In this post, we will discuss 10 budgeting components for couples that will make it easier and more understandable for you to apply these and create an effective budget.

Table of Contents

Budgeting Components for Couples

1. Setting A Shared Financial Goals

Even when you and your partner work together, it’s not necessary that you both have to follow one goal. Both of you will have a different idea, different individual goals, and even the same goals; you have to incorporate all of those plans into the budget by discussing your ideas and being on the same page about whether you want, how much it will cost, and how to pursue it.

Your goal can be anything from saving for a new house, planning a wedding, buying a car, or investment plan for kids. So, where do you start? You both begin by listing your financial goals and ideas down, then prioritize them, whichever seems more urgent and beneficial and then set a deadline for each goal, after which you will top-fund that particular goal.

For example, if two of your top priorities are to save for a wedding and a house, you can assign a budget to each goal. Let’s say your wedding is after 12 months, your budget has reached up to $25,000, and you both earn $15,000 per month collectively, and the house you both like requires a $50,000 down payment, and you have time for 24 months.

Let’s say you save 40% of your income for this purpose, so that will be $6000 per month. As the wedding has a closer deadline, you have to allocate a bigger amount of funds. If you assign $4000 to the wedding and $2000 to the house till the first one is complete, you will have $24000 for the wedding by the 6th month.

For the house, you will have collected $12,000 in the first six months. But after the wedding budget is complete, you will assign the complete $6000 for the 18 months, which gives you $6,000 x 18 months = $50,000.

Wedding Fund Checklist:

Month 1: Save $4,000 ✅
Month 2: Save $4,000 ✅
Month 3: Save $4,000 ✅
Month 4: Save $4,000 ✅
Month 5: Save $4,000 ✅
Month 6: Save $4,000 = $24,000 total ✅
Month 7 (1st week): Save $1,000 more = $25,000 goal achieved! 🎉

House Fund Checklist:

Months 1-6: Save $2,000/month = $12,000 saved ✅
Months 7-24: Save $6,000/month = $50,000 total by Month 24 ✅

2. Tracking Your Income and Expenses

One of the key budgeting components for any type of budget is to list all the sources of income and all the fixed and variable incomes. As there are two people, the chances are there might be two fixed sources of income, some other side gigs, or any other source; list them all down and calculate how much you both are likely to earn each month for better fund allocation.

Once you have your income settled, track down your expenses. This might take time as there are some bills and expenses that fluctuate every month, so take your time, track your expenses for 3-4 months, and plan as per the more expensive month to create a more secure budget.

There are two types of expenses you have to categorize your expenses into:

Fixed expenses are the ones that won’t change and will always be included in your budget; these include your subscriptions, rent, EMIs, and utility bills.
Variable expenses are the bills that keep fluctuating every month; these include your electricity bills, dining out, groceries, or other entertainment spending.

3. Build a Savings Plan Together

As a couple, it is important to plan for your future, whether it’s retirement, vacation, house, or kids, and savings play a huge role in it. Even if you earn decent money, without a proper savings plan, it will all go to waste. So, once you have the list of things you both need, plan how you can save for those things regularly.

Here are some things you guys plan to save for together:

Building an emergency containing up to 6 month’s worth of funds would help you get by easily in the same way you do now.
As a couple, it’s important to go on vacations to keep things fresh. So, set aside some vacation money or something for new hobbies.
Consider saving for retirement; you can open a retirement account and start putting in some amount every month.

One of the best ways to go for a couple’s savings account is to create a joint account where you both put your money for the goals you set up; this could give you a monthly estimate of how much you both have for savings.

4. Debt Management

Debt is always a stressful factor, whether it is an individual budget, a couple’s budget, or a business. And it must be handled carefully, or it might rip your other plans without you realizing it very late.

Some of the common debt examples are credit card debt, car EMIs, home loans, student loans, etc. There might even be a situation where you both have individual debt obligations, so make sure you both come together and tackle this problem.

List both of your debt obligations to make a clear plan. So, there are two ways you can go on eliminating debt obligations:

Snowball Method: Pay off small and easy loans as a priority.
Avalanche Method: Pay off high-interest debt obligations that can create bigger financial issues.

In some cases, you can even consolidate your loans into one. This makes things easier to track and handle.

5. Assign Roles and Responsibilities

With two people in the mix, there will be more responsibilities and things to oversee, so both of you have to split these responsibilities based on your skills and interests.

For instance, one could focus more on investment-related aspects, while another can handle the savings account. One can handle all the fixed expenses, and the other can handle the variable ones.

Splitting the responsibilities not only reduces the burden on one person but also ensures that budgeting takes little of your time and energy.

6. Setting Spending Rules and Boundaries

Budgeting doesn’t mean you have to provide details about every penny you spend; that just makes it more complicated and stressful. Plus, you have to report every little detail on the record, which is impractical.

So, to avoid this insane scenario, set a discretionary budget that I set for personal spending for both of you. This budget is for both of you to enjoy your life, whether you spend it on shopping, eating, or even going to a movie together.

So, how do you set this up? Agree on some amount your partner can spend without consulting you. To do this, establish a monthly personal spending allowance and make sure there is room for fun money.

7. Preparing for Emergencies and Contingencies

One of the key budgeting components is to plan for unexpected emergencies. You cannot predict everything, so both of you must establish a plan that supports you guys in unexpected situations like accidents, car repairs, job loss, or something worse. These scenes aren’t pretty, but they are important.

One of the key things here is to establish a joint emergency account. This account should contain 3-6 months’ worth of expenses that can cover both your expenses till you recover from the situation.
Another thing you should consider as a couple is to set up insurance plans for your health, life, car, home, and everything that is dear to you.
Additionally, discuss how things are to be if something happens to your partner. Who is to receive a power of attorney, and what is to be included in the will for each partner.

8. Reviewing your Budget

As it goes with life, things keep changing, and so should your budget. Keep track of your budget to make sure that it includes everything you have planned and that it’s working effectively. Not only that, if there are some major changes in life, like a new loan, new member, or promotion, these things are to be included in the budget to ensure that plans are up to date.

9. Make Communication a Priority

Couples working together means there are going to be a lot of arguments. With the time you guys spend together, it’s bound to happen, but make sure you guys don’t move away from the main issue.

Here are some things you should consider to keep things on track:

Have a biweekly or monthly check-in where you both provide an update on your side of responsibilities or provide suggestions to each other if things go off track.
Make sure you stay objective and don’t blame each other if someone is off track from their budget responsibilities; instead, help each other.
Whenever you guys hit a milestone or complete some debt obligations, have a small party or a dinner to celebrate your win. This will help you guys keep things light and stay motivated.

10. Using Automation Tools

As both working adults, budgeting might be difficult to handle. But thanks to banks, advisors, and other little tools, your tasks can be eased.

You can set up automated deductions for your savings account once your income gets credited; this eliminates the manual work and makes sure you stick to the plan.
You guys can even visit a financial consultant who will help you create a practical plan, give you tax-saving advice, and more.
Use spreadsheets to keep track of your spending.

Frequently Asked Questions (FAQs)

Should couples combine their finances or keep separate accounts?

For shared expenses, it is recommended to create a joint account to make budgeting simpler. But for individual financial goals, it’s up to you.

How can couples handle differences in spending habits?

Couples can create a discretionary budget that allows both of them to set aside a personal budget that they can spend without consulting their partner.

What should we do if one partner earns more than the other?

The key in these situations is to consider fairness, which means if one is allocating 60% of their income for home expenses, the other should do the same.

Final Statement

Budgeting as a couple is a complicated yet necessary task. You are to live with your partner and share your life; it also means sharing your financial obligations and helping each other be financially free and plan for every event.

By following the given ten points, you can not only ensure a proper structure to follow but also have the freedom of time as you don’t have to invest all your time with your partner handling half the things. The budget plan will also help you achieve all your goals and have steady and secure finances.