Budgeting as a couple is critical in managing your household finances. Your budget not only allows you to plan and track where the money will be spent, but it enables you to direct the course of your finances together. It also helps you stay on the same page on your financial goals.

When budgeting as a couple, the most important thing to remember is that a budget is simply a plan for your money. And, like all plans, you should discuss, tweak, and revisit it often to ensure that you reach your end goal.

5 Steps to get started budgeting as a couple

Figuring out how to budget can seem confusing in itself since there are so many ways to approach it. Keep in mind that it can be a fun and positive challenge you take on with your partner. It comes down to five basic steps:

1. List all of your combined income sources and amounts

Knowing how much money you have coming in to cover your expenses and other items in your budget is of utmost importance. In fact, your income should be the first item that is listed on your budget.

To begin creating your budget, list out all of the expected income that you and your spouse will receive during the time period that you’re budgeting for. Again, this could be a week, two weeks, or even a month.

Income can come from more than just your 9-to-5 salary. Don’t forget to include income sources like:

• Side-hustle money

• Bonuses

• Dividend income

• Rental income

• Royalties

• Refunds

Once you’ve created a list of all of your combined income sources, list out how much you expect to receive from each one. Add these numbers together to get a total of how much income will be coming into the household to cover expenses for that budget. List this number at the top of your budget and remember that your expenses should NOT exceed it.

2. List out all of your joint household expenses

After calculating your total income, list your expected expenses in one column. There are some expenses that don’t change from month to month.

For example, rent or mortgage, groceries, and electricity are recurring expenses that you’ll need to account for. These recurring expenses can be sorted into twelve standard household budgeting categories.

12 Common household budgeting categories

• Saving

• Giving

• Housing

• Transportation

• Utilities

• Food

• Personal Care

• Medical/Health

• Insurance

• Household goods/supplies

• Debt payments e.g. student loans, credit card debt, car payments

• Entertainment/Fun such as at home date night ideas

Grouping your expenses into these categories not only keeps your budget organized, but it allows you to see where the majority of your money is being spent. Simply list your expenses within the categories that they belong to. For example, your “housing” category could include mortgage, homeowners association dues, lawn care, and property taxes.

3. Estimate how much you will spend on each item

Though some expenses may be recurring, the total cost may not be the same every time. Therefore, it’s important to review your expenses each time you create a new budget.

Estimating and listing your expenses also allows you to see what can be reduced in your budget to free up cash for other things.

The easiest way to estimate your expenses is to take an average of what you’ve spent over the prior months. An example would be taking a three-month average of your grocery costs to get an estimate for the coming month.

In some cases, you’ll know the exact amount from a billing statement, while in other cases you’ll just need to make a decision on what your limit will be.

This is true for expenses like gifts and savings. You can determine what you want to budget for these line items. However, the key is coming up with realistic budget amounts that you can both afford and stick to.

Total up these estimates and subtract them from your estimated income. Does it exceed your expected income? If so, you need to reduce some of your expenses. If it’s less than your expected income, allocate the additional money to savings or debt payments.

4. Track expenses

The most important part of budgeting is tracking your expenses. After all, you need to know if you’re staying within your budget.

Keeping an eye on your expenses also doubles as reminders for due dates. It helps you pay for bills on time and avoid penalties and fees.

There are two ways that you can easily track your spending with your spouse:

Shared spreadsheets or templates

You can house your budget spreadsheet on Google Drive or Dropbox so that you and your spouse have access to reference or edit it at any time.

Budgeting apps

There are tons of budgeting apps that allow you to connect your bank account and debit cards to track your spending. These apps even go as far as putting your expenses in the right category and alerting you when you’re nearing your budgeted amount. You can log your expenses as they occur or have a set time each day to do so. Either way, you’ll need to be consistent about tracking your spending if it’s not being done automatically by finance apps.

5. Be Open and communicate effectively about your finances and budget

Remember, in order to be successful with budgeting as a couple, your budget is a plan that needs to be discussed, tweaked, and revisited often.

To ensure that this happens, schedule a standing budget meeting with your spouse. The intent of your budget meeting should be to review your spending and to create your next budget before you get paid.

Your budget meeting does not negate talking to your spouse about the budget and spending as needed. You should be in constant communication about your finances and spending. It’s all about getting to the point where talking about your finances is just something that you do.

Budgeting as a couple requires dedication and being accountable to each other. Remember that your goal is to support each other and achieve your goals together. The first step is to create a budget you both agree on. Then, keep checking in and talking about what’s working, what’s not working, and what needs to change.

What is the best way to budget as a couple?

The best way to budget as a couple is by coming up with a budgeting approach that works for you. That said, you’ll both need to keep in mind and agree on a few other things to make it all work:

1. Create your budget with your spouse before you get paid

You must be proactive and not reactive with your money. If you wait until after your income arrives to create your budget, it is no longer a plan.

Before you sit down to create your budget, talk about how you both approach money. Understand each other’s spending habits and goals so you have a basis moving forward.

2. Budget as often as you get paid

Correlate your budgeting to every time you get paid. If monthly you should budget monthly; if bi-weekly you should budget bi-weekly.

This allows you to align your expenses with your income and not overspend. Make sure you are both aware of each others’ pay dates so you know when to expect income.

3. Don’t budget for more expenses than your income

Your budget should help you stay within your financial means and not overspend. If you find that your expenses exceed your income, it’s time to sit down and take a long hard look at where you can cut back or how you can increase your incomes.

4. Track your expenses jointly and consistently

This is the only way that you will be able to see your performance and progress toward the plan. You have to know what expenses you both have. You also need to know what irregular expenses you both have coming up.

Make budgeting and tracking your expenses easier by calling your providers and changing the due dates on your bills. So, they coincide with when you get paid.

5. Stick to the budget plan you both agree on

If you have to deviate from your budget, make sure to talk about it first. Not only will this avoid conflict, but it will also help you maintain trust with your significant other around your finances.

The last thing you want is to get into a big fight or feel disappointed because one of you didn’t honor the agreement (i.e. your budget) you both made.

6. Review your spending against your plan regularly

Your budget will evolve as your needs, wants, and goals change. That’s why it’s important to review and pivot if necessary. Talk about your transactions, go over your bank statements together.

7. Talk about your long-term goals as well

Take some time out to talk about your dreams and goals and how you plan to approach them. Want to launch a business? Travel the world? Save a million dollars and get a Certified Financial Planner to manage your portfolio?

These are conversations you should have and start planning together. A good idea is to create specific categories within your budget that includes your long-term goals like retirement savings, no matter how small you start.

What is the best budget for a married couple?

The best budget for a married couple all depends on your personal preference. You can create a budget using cash envelopes, percentage based budgeting, zero based budgeting, or reverse budget, for example.

• Cash envelope budgeting is exactly what it sounds like. You put cash into different envelopes based on your spending categories. If you find yourself over drafted one too many times, this might be an effective method for you.

• Percentage budget like the 50–30–20 method is as simple as can be. The rule is to divide your after-tax income into three categories like so; 50% to needs, 30% to wants, and 20% to savings.

• A zero-based budget asks you to assign a job to every dollar you earn while reverse budget tells you to put money in savings first before figuring where to spend the rest of your income. Try either of these methods if you’re focus is on saving or if you have irregular income.

Budgeting as a couple is one of the best financial decisions that you can make in your relationship. It allows you to talk about and work toward your financial goals together.