Whether you recently moved in together, got engaged, or simply want more transparency around how your partner manages money—creating a couples budget is a point almost all serious relationships reach. And that’s a good thing.
First, many expenses work better when coupled together; for example, when claiming a dependent on your employer-provided health insurance. And more often than not, combining home and auto insurance policies, or working together to hit spending thresholds for certain credit card rewards often makes a lot of financial sense, too. Second, understanding your financial compatibility (and improving upon it) is a key factor in any successful relationship.
Budgeting together isn’t difficult. But it does require planning and clear communication about your preferences, your boundaries, and practicalities, such as staying organized. Check out our step-by-step guide for creating a couples budget to help set you up for a happy money life together.
The first component to building any budget is determining how much money you make together.
Before you even start thinking about dividing expenses, first list your total household income, including any full time, part-time work, and passive income sources. Traditionally, a couples budget is created on a monthly basis (as most expenses are due monthly). However, if one or both of you are self-employed, rely on sales bonuses, or pick up seasonal gig work, you might want to create a budget using a time scale that’s aligned to the way you live and work. For instance, you may want to factor several months in advance, or go lower and aim for a bi-weekly budget. The goal is to do whatever feels right based on your personal income streams.
>Pro Tip: Don’t include income you haven’t received yet. It’s better to draw up a sensible budget using conservative numbers based on what you made in the past than overestimate how much you might make in the future.
For those temporarily without work due to COVID-19 or other reasons, list unemployment benefits as monthly income, and break out any severance packages into monthly amounts. If your upcoming income is $0, that’s okay, too. Once you break down your household expenses (in the next section), you can come up with an action plan to make sure you’re covering your bases.
The next step to creating a successful couples budget is understanding where is your money going. Start by listing every expense you have as individuals, then categorize and track those to see what expenses overlap. For instance, is your restaurant budget substantially higher than your grocery budget? How does your partner’s expense list compare to yours? Are you overpaying for two separate car insurance policies or cell phone plans when you could cut your costs significantly by combining them into a single “family” plan?
Typical expense categories include housing expenses (rent/mortgage, utilities, internet, insurance), commuting, groceries, travel, and entertainment. The categories themselves don’t matter as long as they make sense to you and your partner. The point here is to create an accurate picture of your expenses and spending as a couple.
Go back through your credit card statements, cash receipts, and bills from the past few months (or longer, if your expenses fluctuate seasonally) and list the cost or average spent in each category. Keep track of who paid for what. If an expense is billed annually or every three months, break down the average to match whatever time period you’re budgeting for. This exercise alone will tell you a lot about how you both manage money, and where you can save on shared household expenses.
Next, decide what combined household expenses you feel comfortable sharing—and which expenses you want to keep separate. There’s no right answer to how you accomplish this, and some decisions may have both emotional and financial components. For instance, even though you may save money claiming yourself as a dependent on your partner’s health insurance, you might not feel comfortable tying such an important safety net into someone else’s plan.
A good way to evaluate this is by looking at the amount, usage, and your level of personal attachment or commitment for each expense. For instance, splitting a relatively inexpensive and frequently used Netflix or Spotify subscription is an easy expense to consider sharing and reducing household costs. On the other hand, combining cell phone plans, and auto or health insurance policies carry higher price tags, requiring a higher level of commitment as a shared expense.
Once you’ve categorized and evaluated all your expenses, you can begin talking about which ones you want to combine as a couple. Groceries, rent/mortgage, and miscellaneous household expenses are typically shared, but not always. What’s important is coming up with a couples budget that feels comfortable, and makes sense given how you live your lives together.
You’ll want to remember to keep track of which partner is paying for which expense, so you know how the budget is broken down individually. A couples budget template can save you the headache of manually calculating and tracking your divided expenses.
The last step is deciding how to pay the bills, and who will pay what expense. One popular option is opening a shared bank account. Each person puts in half of the shared expenses each month, and one person is designated to pay some (or all) bills from the shared account. Alternatively, some couples prefer taking responsibility for certain expenses that are paid directly from separate bank accounts. Another way is one partner makes all the payments when they come due, while the other pays their portion directly to their partner.
However you decide to pay the bills, the important thing is that you talk about your preferences and get on the same page ahead of time. Plus, staying on top of your shared bills will help you both get and maintain good credit scores—and potentially help you avoid arguments over money.
Planning a couples budget is simpler when you know what might trip you up on the way to couples budget bliss. Below are a few tips for clearing the most common hurdles you may face.
While combining expenses is a great way for couples to reduce costs, it can sometimes also lead to power struggles and resentment. To avoid this, be upfront with one another about your personal expenses, values, and goals from the get go.
If one partner loses their job or is furloughed, talk about shifting expenses around so the person who is still employed covers more of the expenses temporarily. Having an expense budget makes it even easier to quickly pinpoint who is paying what, and quantify what expenses need to be covered. And as we mentioned, certain expenses—like auto insurance and cell phone plans—can be reduced simply by bundling them together.
Talking about finances is very personal. For some, even if they’re in a committed relationship, it can be hard to be open and honest when it comes to money and finances. While you may take this as a sign your partner isn’t as comfortable with the relationship as you’d assumed they were, often it’s much more likely that it’s just a matter of communication style.
If a sit-down, straightforward conversation isn’t working, consider more creative solutions, such as a financial compatibility quiz or questionnaire. Tools like these can help you both by starting the conversation around shared financial goals, before you dive into the specifics of dollars and cents.
If you and your partner have the same financial goals, always agree how much to spend on purchases (large or small), and share similar values, consider yourself lucky. For the rest of us, we’re not always going to agree when it comes to money.
The key to money success is planning ahead, being honest, and setting some boundaries that you both can agree on. For example, let’s say your partner wants the full cable lineup plus every sports channel. On the other hand, you are perfectly happy with Internet only and your subscription to Netflix. If your SO pays for the cable solo and you cover the streaming, you’ll likely both feel more comfortable in the long run.
If one person consistently wants to spend more than the other, seriously consider calendaring quarterly money dates to check-in on your goals and agreements. Even if you disagree on small things from time to time, having a formal reminder that you’re working toward much bigger goals together can help reframe your perspective.
Taking time to create a budget as a couple can not only help you save, it’s a big stress reducer. And while talking finances might feel intimidating at first, following the steps to breaking down income, expenses, and shared responsibility can also bring a welcome sense of relief—and even improve your relationship. Being open to navigating shared household expenses with a little advance conversation and planning is really all it takes to build a couples budget.