Looking after your personal finances as a couple should be a crucial goal, and one of the best ways to achieve this is by building a budget every month. If you don’t know how to budget as a couple, you are likely to face many common financial challenges, including credit card debt, impulse buying, and the temptation to live above your means.
If you have been trying to understand how budgeting for married couples work, there’s no need to bug your mind about it anymore. This post will explain some of the best tips for building a monthly budget with your spouse and the major benefits of budgeting your income.
How Much Money Should A Married Couple Save?
According to Dave Ramsey, saving between 10-20% of your monthly income is ideal. As a married couple, you can apply this simple rule. If you combine your finances at the end of the month, it shouldn’t be difficult to deduct 10-20% and deposit it into your savings account.
Reasons Why Budgeting Is Important For Couples
There’s no denying that budgeting is a good financial habit. It is one of the simple practices that help to improve your finances. But more importantly, here are some specific reasons why you must learn how to budget as a couple:
Budgeting As A Couple Helps You To Prioritize The Right Things
Budgeting helps you to outline your expenses in order of priority. You will be able to pay attention to the essential expenses rather than exhaust your money uncontrollably. This is also important when it comes to planning for the future.
If you have any long-term goals, such as paying off a mortgage or building your child’s college fund, a budget can help you achieve them on time. The main reason is that budgeting enables you to save money and organize your finances.
Budgeting As A Couple Helps You Prevent Overspending
One of the reasons you are probably overspending your paycheck is that you don’t know how to budget as a couple. Remember that a budget is like a plan or a blueprint for how your earnings should be spent. It shows you the right things to spend money on without having to make impulse purchases.
Budgeting Helps You To Plan For Retirement
Irrespective of how much you earn every month, you need to plan for retirement. A good budget will help you curb bad spending habits, which makes it easier for you to save enough money in your retirement fund.
Each month, it’s advisable to build investment contributions into your budget. This means you should be committed to saving a certain amount of money in your 401(k), IRA, or any other retirement fund you intend to use. Although this means you might have to sacrifice a little, it’s for the betterment of your future when you retire.
Budgeting Helps You To Be Prepared For Emergencies
This is another valid reason why budgeting for couples is essential. There’s no better way to prepare for emergencies than having an emergency fund – a certain amount of money reserved only for impromptu expenses.
You never can tell when you’d get laid off, fall sick, lose your car, or have to go through a divorce. You need to be financially prepared to control situations like these. That’s why every good budget is expected to have a category that allows you to save money in your emergency fund.
Paying $10 to $30 into a savings account for emergencies every week will make a huge difference after a few years. But if you’d like to learn more about this subject, here’s a post that will teach you how to build an emergency fund in 7 easy steps.
Budgeting As A Couple Prevents Bad Spending Habits
When it comes to spending money, there are various mistakes or bad habits that should be avoided. For example, making big purchases you aren’t prepared for, shopping without a list, or paying for services you don’t use are some common bad spending habits that eat up your finances.
A good monthly budget can help you prevent these things from happening, provided you are disciplined enough to stick to the budget. Even if you earn up to $1 million annually, you won’t build a stable income or achieve certain financial goals if you have bad spending habits.
How To Create A Budget As A Couple
If you want to learn how to budget as a couple, the first step is to set financial goals. Categorize your goals into short-term and long-term objectives. Setting up these goals will serve as a motivation to encourage you to build a monthly budget consistently. For example, if you have a long-term goal of saving for retirement, that’s enough reason why you must take budgeting seriously.
Once your financial goals are set, the next thing you must do is determine your net income. Your net income refers to the money you have left after taxes and deductions. You are to build a budget based on your net income, and that should be the yardstick. Ideally, the total cost of your budget should never be greater than your take-home pay.
Having known your net income, the next important step is to add up mandatory expenses. This is the stage where you actually create the budget itself. Itemize all your essential bills and expenses in various categories, such as utilities, food, health, loan payments, mortgage, insurance, etc. After listing your expenses, also determine how much you need to save toward your financial goals.
For instance, if your take-home pay is $8000, and the total cost of your mandatory expenses is $4000, it means you still have $4000 you can direct toward savings and discretionary spending. You should decide how much you want to save from what’s left.
7 Best Budgeting Tips For Couples
Budgeting becomes easy when you know some of the hacks for building a successful monthly budget. Here are 7 useful tips to help you learn how to budget as a married couple:
1. Use Budgeting Apps
Financial technology experts have made budgeting easier by developing easy-to-use mobile apps for building monthly budgets. These apps can help you track your expenses and automatically make specific payments when you connect your bank account and credit card to it.
More importantly, some budgeting apps have a unique feature that cancels any paid subscriptions you don’t use anymore. This will help you save money, especially if you look forward to cutting down costs.
In case you need recommendations of mobile apps for building a budget, here are 10 best budgeting apps to help married couples manage money together.
2. Budget As Soon As Your Paycheck Arrives
Always remember this, as it is one of the essential tips for budgeting as a couple. Some folks find it hard to build a budget immediately after they receive their salary. This has to be one of the most fatal budgeting mistakes that will affect your personal finances. Not budgeting your paycheck on time due to indecision or anxiety will eventually make you fail to budget at all.
For instance, if you receive your paycheck in the fourth week of the month, you are expected to budget that money within a few days. It shouldn’t exceed that week. If you delay, you could spend the money inappropriately.
This is another reason why it’s advisable to use a budgeting app. The process is mostly automated, and some budgeting apps remind you of your obligation.
3. Your Budget Shouldn’t Exceed Your Income
You can’t learn how to budget as a couple when you are not living below your means. Ideally, your expenses should never exceed your net income. The moment you allow this to happen, you are living above your means. Living above your means comes with several financial challenges that will prevent you from budgeting.
When building a budget, be reasonable with your expenses. Cut down costs if you have to. Always give room for savings. Remember, you have an emergency fund to build and need to plan for retirement. You will only achieve these objectives if your budget is within your income.
4. Track Your Spending Regularly
This is one of the budgeting tips for couples you must prioritize. Tracking your expenses will help you determine if you are sticking to the budget or not. You can either track your spending with a spreadsheet or a budgeting app.
Create a spreadsheet on Google Drive or Dropbox and ensure you and your partner can access it anytime. Any of you can check the spreadsheet to see if you are staying within the budget as a couple.
On the other hand, budgeting apps also make tracking your expenses very easy. These apps put your expenses in the right category, and you will be alerted when you are about to cross the budgeted amount.
5. Avoid Impulse Buying
Impulse buying is the habit of spending money on items you never budgeted for. If you’re keen on knowing how to budget as a couple, you must avoid impulse buying at all costs. Do not make any purchases outside your budget except during an emergency.
Impulse buying is the easiest way to break your budget and spend recklessly. Shopping with physical cash, avoiding online shopping, and ditching your credit cards are some of the simple strategies that will prevent you from buying things impulsively. Observing these techniques will help you learn how to stick to a budget as a couple without making any impulse purchases.
6. Communicate Effectively As A Couple
If you want to improve and execute your budgeting ideas as a couple, you must communicate with your partner regularly. There are so many important things concerning budgeting to talk about. For example, if you want to adjust your budget, that’s not a decision you take on your own. You must properly discuss with your partner and make a unanimous decision.
Besides, communicating with your partner about budgeting and personal finance can result in some financial improvement. Good ideas on how to build wealth or pay off debt faster can be born out of a conversation between you and your spouse. As much as it seems unrelated, communication is one of the best budgeting tips for couples.
7. Talk About Your Financial Goals
Knowing how to budget as a couple is not enough. While budgeting, you should also consistently discuss how to achieve your financial goals as a couple. Take some time to examine your goals and how you intend to approach them.
Do you want to save money for the down payment on a house in a few years? Do you want to renovate your apartment or get a new car? These are financial goals that you can’t sweep under the carpet. You have to communicate with your spouse to devise a strategy for achieving them.
However, remember that you and your spouse will not always agree on the same idea. The key to dealing with such arguments is by being considerate and listening to each other.
Final Thoughts On How To Budget As A Couple
If you get confused or anxious, you can speak with an expert. You can’t always figure out everything on your own. Get help from a reliable source when necessary. But more importantly, remain consistent with budgeting as a married couple. Budget your income every month, not once in 3 months or twice a year. Do it monthly.
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