Budgeting for Couples That Works Better Than Counseling
People love to make sayings about what types of couples stay together, but I have my own favorite: "Couples that budget together stay together." Because let's be honest, there are many of these sayings that, while good for some couples, aren't necessary for all couples. Like "couples that cook together, stay together". Maybe cooking together is a way that some couples spend time together and share a hobby. On the other hand, cooking isn't for everyone. Like in my case, where my boyfriend is a way better cook than me, and he enjoys cooking way more than me. So he cooks while I get some other work done, and that works great for us.
Or the saying "couples that go to the gym together stay together". Going to the gym with your partner can be a nice way to stay healthy together and possibly have fun going and working out together, but sometimes it is hard to find time in your schedule to go to the gym with someone else, and you just have to fit it in when you can. Not going together won't ruin your relationship, but it may sometimes be necessary due to schedule conflicts.
As I said, "couples that budget together stay together", actually does set an important foundation. I am not saying that you should share all of your money with your partner and get a joint bank account. On the contrary, I do not recommend doing so. What I do recommend is being open and honest with your partner about finances, reading my article now to get some helpful tips on budgeting for couples, and then making the decision that is best for you and your partner.
Pros/Cons Of Budgeting Together
Budgeting together with your partner can be a great step. It is also a big step. Is it the right step for you and your partner though? Well, that is a decision that you will have to determine with your partner. There are many pros and cons to budgeting together, and we will go through some of them here.
Know what you are getting into
You don't want the first time to hear about your partner's mountain of debt to be right after the wedding, when you get declined for a mortgage loan. This is of course an extreme example, but it happens. Your partner having debt is by no means a reason to not get married or stay with them. According to 2022 statistics, about 46 million people in the US have student loan debt that totals around $1.75 trillion. So the likelihood you or your partner has student loan debt - or another type of debt - is not unlikely.
The point isn't to judge the other person for having debt. The point is to know what their financial situation is, so that you can determine how this will affect you and your financial situation, in this way "knowing what you are getting into". In essence, be informed.
Future planning
This relates to the point above, but it goes a bit further. Instead of just being informed, you need to take the information you find out and use it to plan your future. Be proactive. Determine your shared needs, and see how this fits into your future plans and budget.
When you create a budget with your partner, you will better be able to determine your shared needs. This can include anything from paying off student loan debt, planning a pet into your budget, or even planning future children into your budget. Find out what is important to you, what is important to your partner, and what is important to the both of you. This can also help you become even closer to your partner, as you find out what his or her priorities are. And the most important, try to stick to your budget. Otherwise, all your work about budget planning is useless.
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Stop arguing about money
Many couples argue about money. In fact, a survey in 2017 found that "almost half of US couples argue over finances...and 60 percent do not like their partner's spending habits". This isn't just a problem from a few years ago though, it is a problem that couples always seem to have. Especially now with the recent COVID-19 pandemic, couples have been disagreeing and arguing about how to handle their finances.
While discussing money may always lead to some disagreement or argument, actively choosing to have a serious, calm discussion about budgeting with your partner is a step in the right direction. Don't just fight when a problem with finances comes up; rather, take the time to discuss finances with your partner now, so you can discuss what is important to each of you now. Then you are less likely to be surprised when something happens in the future and your partner reacts a certain way.
Money can be a touchy subject
Some people are more comfortable with the topic of money, but many people get uncomfortable when discussing money and finances. Whether it's because they make less money than you do, they have a pile of debt they hadn't previously disclosed with you, or they just have an unhealthy relationship with money due to their upbringing, some people will not be happy talking about money matters.
Just because something is uncomfortable to talk about does not mean that you shouldn't do it though. In fact, if something is a difficult conversation, then it is possibly even more important to discuss it. Discomfort may just point to how important the subject is.
Just try to be conscious about your partner's feelings throughout the discussion, and be a good listener when they voice their concerns.
Sharing sensitive financial information
This might go without saying, but do not share your sensitive financial information with someone you cannot be sure you can trust. Time does not matter in the long run of a relationship. Sometimes it is true that "when you know, you know". However, if you have only been dating someone for a few months - or a few weeks - and they ask you for your financial information, it is probably best to just say no.
If you have known someone for a while, are in a serious relationship with them, and truly feel like you can trust them, then still take a step back to think things through. Your partner may be really nice and honest, but you never know what someone is willing to do once a relationship goes South. I don't want you to end up on Judge Judy, suing your ex for the money they haven't repaid for a loan you took out for them in your name.
I don't want to scare you or cause you to distrust your partner. I just want you to be smart about who you give sensitive financial information to.
What you find out may not be so nice
As a relationship gets more and more serious, you will learn a lot more about your partner over time. Sometimes this means finding out some things you don't like. This is also a risk of budgeting with your partner. You may find some skeletons they've been hiding in their closet, such as a gambling problem, a huge pile of debt, or has some large financial responsibilities - like child support for children you didn't know about or alimony for an ex you didn't know about.
On the other hand, you may find out some very positive things about your partner and their financial situation. For instance, maybe they are big savers. Maybe they worked their way through college, coming out almost debt-free. Or maybe they even have a higher salary than you thought.
Just be prepared to be surprised by what you find out while working out your budget and financial picture with your partner.
Tips: Budgeting For Couples
Once you have weighed the pros and cons and decided to go through this process, it is a good idea to read through some tips for budgeting for couples. Before building a budget with your partner, remember to:
Be open and honest
Don't hide any important details during your conversation with your partner. If they ask a question, answer it honestly, and if you do not want to answer, let them know why. It is essential that you do not lie during this time. If you are embarrassed about some accumulated debt or other financial issue, be transparent about this. Your partner should not judge you for this; rather, they will probably be happy that you were honest with them. Be as open and honest as you would like your partner to be with you.
You don't want to be surprised that your partner has thousands of dollars of credit card debt five years down the line, and neither do they. Relationships are built on trust, but so are budgets. If you have inaccurate information, then your budget will not be accurate, which could lead to issues down the line - like not being able to cover all of your shared expenses.
Ask questions
If you are curious about something, just ask. It is important when making a budget to have all information possible, so asking questions and gathering data is necessary. If your partner is willing to and interested in creating a budget with you, then they must have a lot of trust in you, so don't be shy now! Ask anything and everything. You know your own spending habits, but do you know the spending habits of your partner? Do you know what their financial priorities are?
Be prepared
When you are working on a budget, you will need to utilize a large amount of information. When you are working on a budget for two, you will need to utilize double the amount of information. So make sure you come prepared. Collect all of the papers and information you can on all income, expenses, spending habits, and debt that you can. Being prepared and organized will save you a lot of time later on.
Be patient
Creating a budget can be stressful, but creating a budget with your partner and showing them a vulnerable side - your financial side - can be extremely stressful. Just remember, your partner feels this way too. Be patient with one another. You are supposed to figure this out together. Once your budget is completed and you have created financial goals, also be patient. It may take some time for you each to adjust to the new parameters of spending and saving. Everyone is trying their best, so be patient and work together.
Follow These Steps To Build Budget For Couples
Now it's time to create your budget! But do either of you already have your own budget? If so, then this process will look a little different than if you are both starting from scratch. First I will go through some budgeting basics, and then I will go over the two main scenarios: creating a shared budget from scratch or combining budgets.
Budgeting Basics
Before just jumping in, let's go over the budgeting basics, since budgeting for couples has the same basis as budgeting on your own. Here we will go over how to build a budget.
The first step to build a budget is to gather all financial information. This includes all income and all expenses. When you are budgeting as a couple, you will need this information from both parties. When collecting this information, make sure to collect information on fixed income and expenses, which are income and expenses that are the same every month, as well as variable income and expenses, which are income and expenses that slightly change every month.
Once you are done gathering financial information, it is time to organize the financial information. My favorite way to organize my budget is via Excel or GoogleSheets, so that everything is easily accessible, organized, and calculable - Excel will calculate everything for you if you set it up to do so. I personally have several sheets on my Excel budget. The first sheet is the overview, where I have the information on all of my income and my partner's income in one column; all of my fixed expenses, my partner's fixed expenses, and our shared fixed expenses in one column; the balance in our bank accounts in one column, and the information for all of my student loans - including total due, interest rate, amount due per month, and date due each month - in one column on the far right side.
Then I have a sheet for each month. Each month we track our variable expenses. My partner and I keep a column for eating out, a column for groceries, and a column for miscellaneous. This way, we can also track how much we spend eating out versus cooking at home. In our miscellaneous section, we always label what we spend money on that month, like going to the movies, getting a haircut, or going on a trip. This spending is different every month, but it is still important to track, and it can show you where patterns occur. For instance, maybe you go to the movies every week, and maybe that is eating up a lot of your disposable income. This doesn't mean you have to stop going to the movies, but maybe you should only go every other week or find theaters with movie deals.
After you have organized all of your financial information, it is time to start prioritizing. This is the step where you decide what in your budget is essential and what may be negotiable. Of course fixed expenses are non-negotiable. But maybe you go out to eat multiple times a week usually. You do not - and should not - just cut out everything non-essential, but you should cut back if necessary. Maybe just plan going out to eat once a week or once every other week. Decide together with your partner what is important to the two of you.
After you have set priorities, you need to track your budget over time, preferably monthly. Make sure you are actually sticking to your budget.
Creating a Budget From Scratch v. Combining Budgets
Creating a budget from scratch is clearly going to be a lot more work, but if you do the work now, it will be easier later, if or when you need to adjust your budget over time. One positive of creating a budget from scratch is that you will have a fresh look at your financial picture, as well as a fresh start gathering your most recent financial information, rather than relying on information gathered a year or two ago.
If one or both of you already has a budget, then it can allow for an easier start. If one person has a really helpful template, for example, the other can just input their information and work from there.
Conclusion
Speak to your partner and see where they're at and if they have their own budget already. From there, you can work together to make the best budget for you both.
There are some effective budget management skills that everyone should know, but in the end, it is all about communication with your partner. Voice your priorities and listen to theirs. And remember, "couples that budget together stay together".