How to Budget as a Couple

Conversations about finances aren't exactly romantic, and budgeting can be a touchy subject, especially when you have different views about spending and saving. Before discussing how you'll handle your bills and other expenses, be sure that you agree on how to go about combining your finances as a couple, then consider the method that works best for you. That might include combining all, or part of, your income. For some couples, this "what's mine is yours" approach can work especially well if you share the same saving, spending, and tracking habits.

Other couples may prefer a "yours" and "theirs" method. For example, one person might pay the mortgage, while the other covers utilities and other household expenses. Individual expenses, including car repairs and shopping, could also be handled individually. An advantage of this method is that you don't need to agree on an adjoined or shared budgeting approach.

Whichever approach you choose, here are five tips for a united budget.

1. Calculate Your Combined Monthly Income

An alternative to splitting your bills 50/50 is to split your bills based on your respective incomes. This is especially useful if one person earns more or less than the other.

Here's how to calculate your monthly income. If you have an annual salary, start by dividing that number by 12. Even if you expect to receive annual bonuses that increase your take-home pay, or your salary is commission-based, calculate the lowest number on your paycheck over the last year, then budget according to that number. (Calculating your income based on your highest earning month could mean that you have a month where you're spending more than you're bringing in.)

2. List Your Shared Expenses

There isn't a “right” or “wrong” approach to budgeting as a couple. However, one method might work better than another. In any case, one important step is to identify your shared expenses. Some common examples include:

• Groceries
• Utilities
• Rent or mortgage
• Streaming services
• Cell phone and Internet

If dividing your expenses, determine who is responsible for each expense. You may consider dividing expenses by income, especially if one person earns more than the other. For example, if your partner has a lot of debt, you might offer to help out with some or all of their payments. Another option is to cover a larger percentage of the household expenses to reduce the financial strain on your partner. Depending on your preferences, however, you may decide to combine all of your money and manage your expenses holistically.

3. Determine Your Shared Goals

Whether your shared goals are more practical, such as paying off debts or padding college funds for the kids, or you’re dreaming of a vacation, a second home or a remodeling project, here's your chance to plan what you'll do with any leftover money after you've covered the essential expenses.

Although it can be exciting to discuss your shared goals, it's crucial that each person has equal input in this conversation. It's also important that you both agree on these goals and commit to a savings plan you can afford on a short- and long-term basis.

4. Build Your Joint Budget Using a Couple-Friendly Tool

If you're struggling with money management, a budgeting app can help you manage your finances and prevent overspending. Here are some popular options for couples:

• Honeydue – This free app can sync to both partners' bank accounts and can help you manage your money, track spending and coordinate bill payments. Other perks include reminders to pay your bills along with the ability to set spending limits and receive an alert when the other person is reaching the limit.
• You Need a Budget (YNAB) – Every dollar has a job with this subscription-based app. Once you link your investment accounts, bank accounts and credit cards, they're automatically synced with the app. Besides customized spending strategies, you'll also find educational resources and free workshops. YNAB is particularly useful for getting out of debt.
• Goodbudget – With the assistance of digital envelopes, couples can save for big goals that matter most. It's also a handy way to track your household spending and set aside money for certain categories each month, such as rent, food, travel and debt payments. You'll see an alert if you've overspent.

5. Set Up Times to Meet and Track Spending

Set a specific time to talk with your partner and identify what you want to talk about beforehand. Meeting at regular intervals can also keep you on track with your financial goals and can give you the opportunity to discuss any potential issues. Valuable topics to cover during these meetings include whether you're overspending or can save more, or can reduce debt to minimize interest charges, for instance.

Budgeting isn't the most exciting topic, but it can help create a solid foundation for your relationship. To discuss strategies for combining finances and budgeting together, contact the office today.

^{This material was developed and prepared by a third party for use by your Registered Representative. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security. The content is developed from sources believed to be providing accurate information.}