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The Ultimate Guide to Budgeting as a Couple

If you're on the hunt for “happily ever after," dreaming of you and your new love in a fairytale kiss with a sunset backdrop, budgeting is probably the last thing on your mind—but it shouldn't be. Money is an essential part of your lives as a couple, and can actually make or break your relationship.

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Budgeting is an important part of reaching your individual financial goals. And for those in a relationship, you have to manage the spending and saving of two people. If you aren't budgeting as a team or you have different spending and saving ideologies, the implications may cost you more than your nest egg.

It's no secret that money trouble is a major factor in failed relationships. In fact, in a 2011 study on the link between financial disagreements and marital conflict, Jeffrey Dew, a faculty fellow at the National Marriage Project and an assistant professor of Family, Consumer, and Human Development at Utah State University, found that “Financial difficulties predict increases in depression, decreased marital satisfaction, increased marital conflict, and higher likelihoods of divorce." And a 2010 survey by Citibank reported that 57 percent of divorced couples cited money problems as the primary reason for their split.

On the flip side, being on the same financial page can improve and sustain a healthy relationship. Budgeting couples are truly happier couples. The TD Bank Love & Money Study found that “couples who regularly talk about money are happier in their relationships than those who discuss finances less frequently.

Among respondents who said they talk about money at least once per week, 42 percent described their relationship as “extremely happy," compared with 27 percent of those who talk about money less than once per month and 38 percent of all respondents."

When all is said and done, if you and your better half don't get better at budgeting, you could be headed for trouble. Talking about how to manage your money as a couple can affect all aspects of a marriage—owning a home, raising a family, creating a retirement plan, and even growing your quality of life.

Love can only get you so far; you need money to finance the life you're building together. So many problems exist if couples don't sync their savings strategies—especially in the early days of the relationship—but with a little help and advice—this guide's got it!—you can flip the script to solutions.

Chapter 1:
Budgeting as a couple vs. budgeting solo

Before coupledom, you probably didn't have to share your financial decisions with anyone. You could go on a crazy shopping spree or decide to live like a monk, and—let's be honest—no one really cared. But once you decide to join your life with that special someone, your money choices affect someone other than you. “I bought a new gaming system!" can really mean, “We bought a new gaming system!"—whether or not you both agreed on it.

Healthy couples' money management requires intentional communication and some clear decisions about how you'll budget your resources. Of course, everything is rainbows and unicorns in these beginning stages of coupledom, but cash concerns can turn that into rain clouds and dragons real quick.

For most couples, the first question is, “How much do you want to combine your finances?" Your answer is not set in stone. New couples often change the way they share resources as their relationship deepens, but combining or separating your budgets doesn't necessarily reveal your relationship status.

Amanda Clayman, a financial therapist in New York City, says, “The most important things to consider are your financial goals, both individual and as a couple, and your organizational preferences." That means, before figuring out how to manage your money as a couple, sit down separately and write down:

Your individual financial goals


The way you've organized finances in the past on your own


The way you'd like to organize finances in the future


Once you've clarified your individual goals and organizational styles, it will be much easier to discover how to manage your money as a couple—today, tomorrow, and into the proverbial “forever."

Budgeting as a couple doesn't have to be an all-or-nothing venture. According to Clayman, some couples, like Kanye West and Kim Kardashian, keep their finances completely separate. This means they maintain separate bank accounts and don't have access to each other's earnings. However, they still need to make decisions about who will pay for shared expenses, like rent/mortgage, utilities, and, in their case, personal chefs.

It can be challenging to figure out how to split shared expenses, especially if one person earns much more than the other. For people coming into a relationship with a lot of money, it might make sense to keep finances separate—at least temporarily.

Some people also choose to keep things separate until they are more secure in the relationship. An unmarried couple that just moved in together, for example, may want to think of their finances like concentric circles—they each have separate earnings and expenses, but decide which expenses and/or earnings they'll share.

On the flip side, many couples choose to combine their finances completely. They share a bank account, credit cards, loans, and expenses. For some, tradition dictates that this is a sign of true commitment. For some, budgeting as a married couple with kids and a plethora of shared expenses and even shared business ventures, sharing resources is just one more way they share life. But, budgeting married couples don't all divide resources evenly.

Check out this list of pros and cons for help deciding whether to combine your finances or keep them separate:

"We're going to combine finances"

Pros

  • Streamlines life—you do most things together, why not money, too?
  • Two heads are better than one—you'll offset each other's weaknesses
  • Shows long-term commitment. Or, put another way, you put your money where your mouth is.

Cons

  • May not match your level of relationship commitment
  • Could cramp your style, especially while you and your boo are figuring out the balance of power
  • Means a more complicated exit strategy if things don't work out

"Nope. We're keeping separate finances"

Pros

  • Let's you focus on getting in sync in other areas of life—money can wait
  • Minimizes life changes—If it ain't broke, don't fix it!
  • Gives you more autonomy—and you can adjust as your relationship gets more serious

Cons

  • Detailed decisions about who pays for what. The more you share life, the more decisions.
  • Can convey less relationship commitment than you intend.
  • Increases the temptation to keep secrets if you don't intentionally communicate

If neither of these solutions sits well with you, you're not alone. Sometimes couples with one unified budget set aside money for each person to spend autonomously on whatever they want. Carl Camp, CFP, recently retired after a 31-year career as one of America's top wealth advisors, insists couples set a limit on their individual spending. “Consider how much you're OK with one of you spending on a purchase without the other one being consulted," he says. This helps each individual retain a sense of freedom within the financial unity.

Deciding how much you want to share earnings and expenses is important for having a healthy relationship. It's also a decision that should be revisited when you experience major changes in your relationship, careers, or personal lives.

Chapter 2:
Communication: The first step to couples' budgeting

Deciding how you'll budget together doesn't just require one initial powwow and then a hope that you both stick to the plan. Consistently good communication is absolutely essential for budgeting as a couple, but most of us don't want to spend precious relationship time talking about money.

Experienced experts and countless stories of failed marriages, however, beg us to talk through how to budget as a couple. Tsega Worku, a marriage and family therapist in Pasadena, CA, estimates that financial disagreements are an issue for 80 percent of his therapy clients.

Some couples are waiting for the right time to talk about the best ways to budget as a couple. Putting off talking doesn't make it any easier. Casey Slide, a writer at MoneyCrashers, advises serious couples to start talking about finances right away: “It's best to do this before you get married, but if you have not, discuss finances with your new spouse as soon as possible."

To avoid losing our freedom, many of us avoid conversations about budgeting like the plague—but that eventually catches up to us.

You can't hide it. Any debt you have will rear its ugly head.

Take the case of “Will and Jessica."

The two had been together for years but didn't have a solid budgeting practice in place.

They set up a meeting with their financial planner to figure out how to better manage their resources.

Alas, like a daytime talk show gone wrong, their meeting exploded when Jessica confessed that she'd secretly run up $30K in credit card debt and had been hiding it from Will.

This started them on a long journey of rebuilding trust in their relationship as they climbed out of massive debt.

Years of counseling, stringent spending limits, creative debt consolidation, and lots of tears later, they beat the odds.

Their marriage survived the ordeal, and they came out happier—with a growing retirement savings and a dogged commitment to telling each other the truth about their finances.

But this painful journey could have been avoided if they'd kept up regular, honest communication about their spending, especially from the get-go.

Don't let miscommunication be the deal breaker

So how can you avoid miscommunications about money? Implement these simple tips, gleaned from PolicyGenius:

“Decide together how you will pay bills." Separately? Or will you split the responsibility?


“Be equal partners with defined goals." You'll contribute differently, but couples' budgeting takes two.


“Be honest and realistic." No secrets and no pipe dreams—this is real life.


“Write down your budget." If there's no proof, your budget talk didn't happen.


Talking about money matters sounds simple, but many couples struggle to do it. In TD Bank found that 39 percent of couples talk about money less than once per week—even though we make financial decisions daily.

Understanding why couples have so much trouble communicating about money can help us to improve. Therapist Worku says, “The way couples deal with each other regarding finances is closely tied to deeper aspects of their relationship."

Although your relationship many be bright, shiny, and new right now, it's important to think about down-the-road issues and how your attitudes, perceptions, and foundational beliefs may come into play. “If a wife, for example, complains she just can't trust her husband with money, chances are she doesn't trust him for other reasons as well," says Worku. That's why he views budgeting as a couple as a valuable opportunity to improve more than just your finances.

Set aside more time than you think to talk about money. It's complicated

Many couples don't realize how much there is to talk about when budgeting as a couple. Budget meetings are not just about looking at the numbers. What else are you bringing to the budgeting table? Worku encourages clients, “Gaining insight into why you do what you do with money, combined with new skills and habits, can revolutionize the way you relate to each other in more than just finances."

To dig deep in your couples budgeting (it's never too early—or too late), make sure you:

  • Own your past influences. How did your parents manage money as a couple? How do couples typically deal with finances in your culture or religious tradition?
  • Own your present actions. How have you been spending this past month?
  • Ask yourself if there are other reasons for your spending or saving habits.

Even if you do realize how important communication is, sharing the truth about your spending habits can be scary, especially when your relationship is fairly new and your significant other has different values in this area. Once the cat is out of the bag, you'll have to deal with your partner's reactions to it. Camp says, “As a couple, it's good to understand the reasons behind why the person is the way they are."

It pays to not be a jerk when you talk about money

But how can we smoothly broach these sensitive topics as a couple? More than just knowing you should communicate, you need to know how to communicate. Start by following these four tried-and-true tips:

Set up regular times to talk about budgeting as a couple. In these times, make sure you don't just talk about how to save or spend, but also why.


Listen to each other well. Both of you are equally important in making this budget work.


Again, be honest about your past and present debts and spending.


Be kind and gracious. You will both make mistakes. Elle Kaplan, finance expert and founder of LexION Capital, explains on Brides, "Playing the blame game will do nothing but halt this positive progress."


Even if communication seems to be one of those sticking points as a new couple (hey—it happens!), Worku affirms that “with the right combination of counseling and professional financial input, you can improve in as few as 3 to 6 months." Of course, extenuating circumstances or co-existing challenges can lengthen that process. But, there is hope for change in even the most difficult relationships if you commit to working through the issues.

Chapter 3:
Deciding on compelling goals for a financial match made in heaven

Often we don't have a clear, compelling goal to keep us motivated in budgeting. For most of us, budgeting is not fun. However, if you can identify what you both want, and why you want it, the rest of the budget process won't feel like such a chore. Think of it as a fun “new couples" challenge that you can tackle together.

Chuck Blakeman, world-renowned business advisor, speaker, and author, writes in “Making Money Is Killing Your Business" that if you don't have a “Big Why," you'll never reach your financial potential.

He explains, “Making money is not an empowering vision. Those who chase something bigger than just making money are much more likely to make a lot of it. We call that a Big Why." A “Big Why" is about a higher purpose. It will entail measurable action steps along the way, but it will always motivate us to push onward.

What's the difference between a monetary or material goal and a “Big Why?" Check out this comparison:

No matter where you are in your relationship, buying stuff is rarely a compelling goal. But if you can tie your financial goals to what matters most to both of you, sacrificing for your budget will be easier. Getting out of debt, for example, is a goal for many couples, new and old. But detailing the reasons why you want to get out of debt is what will keep you on track for the long haul.

To discover your Big Why—something that can be of tremendous significance for new couples who think they've found “the one"— ask yourselves:

  • How do we want to be significant in the world? What are we passionate about?
  • What do we want to accomplish that will actually never get done—it'll be a goal forever?
  • What would we be happy doing for the rest of our lives?

Talking about a Big Why may sound like pie-in-the-sky when you're getting started on how to budget as a couple, but Blakeman's method of digging deep has helped thousands to reach beyond financial wellness to joyful lives.

Chapter 4:
Finding—and sticking to—a budgeting plan that works for you

Once you've picked up some communication tools, set regular times to work on budgeting as a couple, and come up with compelling goals, it's time to find a budgeting system. There is no one “best" way to budget as a couple, and you'll probably find that you disagree on the best way to do it.

You're not alone—one newly married Payoff writer relayed her struggle: I was as shocked at his paperless system as he was by my extremely detailed financial road map, nestled safely inside my red book. I'm sure we were both wondering, “How have you survived so long living this way?"

There are many methods and tools out there, but which one works for you and your partner? Are you a sucker for the latest tech tool, or do you pine for the quill and ink you saw in the antique store last week?

If you don't take the time to figure out how you'll budget as a couple in the early stages of your relationship, be prepared to fight a whole lot more. In a 2012 survey about financial rifts and couples, the American Institute of CPAs found, that “almost half (49 percent) most often argue about unexpected expenses; a third (32 percent) argue about insufficient savings." If you budget together, you'll know what to expect and can avoid nasty arguments. And you really can't put a price tag on that, can you?!

There are essentially two main types of budgeting—physical and virtual—and they both have strengths and weaknesses. Physical systems require you to use cash, keep physical accounting ledgers, and meet frequently. Virtual systems utilize digital spreadsheets, websites, and apps to keep account of your money.

Physical budgeting systems can help

Physical systems, like Dave Ramsey's, are beneficial for couples that want to keep a tight rein on their spending—a good idea, especially if you're still finding your relationship footing. Some people find that the act of writing expenditures and deposits down in a notebook or ledger, or even entering them manually into an Excel spreadsheet, keeps them mindful of their budget. MoneyCrashers recommends a physical system for “couples that typically have lower incomes and must be careful not to overspend."

Ramsey's budgeting method encourages couples to take physical money management even further using the envelope system. In the envelope system, you put away your credit cards (or get rid of them altogether) and use cash or checks as much as possible. You place the cash in different envelopes for different budget categories. When the cash for any given budget category is gone, you stop spending. If it's urgent, you can borrow from another envelope, but you can't make more money appear.

Not sure if it will work for you? Check out the pros and cons of these physical budgeting systems:

Pros:

  • Physically seeing and handling your money gives you a better daily grasp on how much you're spending.
  • You won't be able to spend more than you have.
  • Your spending mistakes will teach you to live with less rather than rolling over into future debt.

Cons:

Digital budgeting systems

Digital systems to manage your money are great for couples that manage life well with technology. In fact, according to Pew Research Center, 51 percent of adults already bank online, and 35 percent of cell phone owners bank using their mobile phones. Is this you two?

  • Do you already manage schedules by maintaining and sharing your Google calendar?
  • Do you use shared shopping and task list apps?

If you both answer “yes" to the above, a financial management app might be one more tool in managing your relationship.

Virtual systems can do more than physical systems, but more isn't always better. Check out these pros and cons:

Pros:

  • Saves time with automation as most of these programs sync to your credit cards and bank accounts and quickly input information to detailed couples' budgeting worksheets. They also facilitate paying bills with the click of a button.
  • Keeps you up-to-the-minute on your spending, Financial management apps can sync your individual actions to your combined budget so you both know what's happening in real time.
  • Provides more comprehensive management capabilities—all your income, saving, spending, investments can all be handled in one app

Cons:

  • Out of sight, out of mind. Mindful spending is harder when you can't see the actual money.
  • Information security: You'll be placing a lot of sensitive financial info into the hands of a tech company.
  • Requires some action if you plan to use cash; you'll need to take pictures of receipts or manually input your expenses

Depending on your preferences, you and your sweetie might want to combine physical and virtual systems to suit your preferences. Consider ways that both of you will feel more in-control of your money—something of utmost importance when you're new to being “two."

You might try:

  • Using an app to keep track of regular automated bills
  • Withdrawing a set amount of cash for the partner who'd prefer a physical system
  • Taking 10 minutes a day to physically write down what you spent, in addition to having the app. At the end of the month, compare your notes to your tech to see if you'd like to adjust your method.

Chapter 5:
Spreadsheets and worksheets can be romantic (sort of)

If you've decided to go digital in creating and keeping your budget, you'll quickly find there are hundreds of options, ranging from simple online worksheets to comprehensive software systems. But you've gotten this far in slaying the budgeting beast together, so don't freeze up in the face of overwhelming possibilities. Spreadsheets are a great first step in digitizing your budget.

To the uninitiated, creating a budget from scratch can feel intimidating. Complex software appears mystifying—why does it say that you spent $1,200 a month on food when all you remember buying at the grocery store were toiletries? To get a hands-on feel for budgeting without having to deal with physical methods, try using a spreadsheet template. There are some great options out there:

  • Words of Williams has a free, downloadable budget worksheet that's great for budgeting novices. It includes features like a fuel calculator and a 13-minute video tutorial to help you get started with the sheet.
  • A simple spreadsheet made from one of Excel's budget templates might be just what the doctor ordered if you like creating your own sheet but want to share it online.
  • You can also add your budget to Google Sheets so you both have access to edit it whenever and wherever you'd like. Plus, this option is completely free. Be sure, however, to refrain from entering your complete account numbers to prevent theft if your Google account gets compromised.
  • You can also use spreadsheets to supplement your main budgeting tool and help with specific budgeting goals. This debt reduction calculator worksheet creates a simple payment plan for your debts after giving you a clear visual on the actual numbers.

Feel free to get creative in combining other couples' budgeting methods with using spreadsheets. For example, you might track your regular bills with a spreadsheet, and your non-essentials with the envelope system. Make a plan, try it out, and adjust as needed.

Chapter 6:
Tech tools: Couples' budgeting apps and software

Many couples would rather not dig into the math and detailed work needed to create their own comprehensive budget spreadsheet, so they look for a less hands-on approach. With 64 percent of American adults owning a smartphone today, budgeting couples have more access to technological money management help than ever before.

But the vast array of apps and programs available for couples' budgeting are difficult to assess. The best app for one couple may be the worst choice for another. Read on for recommendations based on your personality and lifestyle as a couple.

The pinstriped suit. Do the lyrics to “My Way" make you cringe, asking, “What's wrong with the usual way?" Quicken is the tried-and-true standard for budgeting software. It's basically a smart worksheet that can be as connected as you'd like. You can download your credit card and bank statements with the click of a button, or enter information manually. They've recently added an app that will allow you to use Quicken on the go, too.


The Jekyll and Hyde. One of you loves digging around in the details of budgeting line items, and the other would rather budget through osmosis. You Need A Budget (YNAB) can meet both your needs. YNAB has great help for the process of deciding on a budget, which provides a framework for couples to find agreement. YNAB requires you to log your expenses, but it connects to most major banks so it can use your account info and credit card spending to offer feedback on how you're doing with sticking to your budget. It also offers extra tools for paying off debt or investing earnings.


The Diva. Not afraid to admit you want it all? Mint is among the most popular financial management apps, offering a variety of budget-boosting features. It connects to your financial institutions, helps you plan your budget, categorizes your expenses, and even suggests ways you can improve. It goes above and beyond by offering you free credit scores within the app and paid credit monitoring, too. If you can think it, Mint can probably do it, which makes it one of the most comprehensive, hands-off budgeting apps out there.


The Loner. If you'd rather keep your spending to yourself, and you're not too fond of data entry, an unconventional choice like Wally might be the app for you. Just make sure your location services are on, upload a pic of your receipt, and Wally will record the expense. Another unique aspect of this app is its lack of connectivity—Wally doesn't store data on the Web or allow you to export data to other devices. This can be a negative, but for some couples, it's the perfect tool.


Choosing a budgeting software or app seems like a big decision, but like any budgeting plan, it's not set in stone. If the app you chose isn't working well, try another one. Most of them are free or inexpensive and don't take long to set up. Whichever tech tools you choose to use, make sure you decide as a couple so you can stay on the same page with your financial plan.

Chapter 7:
Budgeting TLC: Classes, coaching, books, and side hustles

Learning how to manage money as a new couple is an ongoing pursuit, and we all need that extra push at some point along the way. But which financial planning experts should you trust to teach you? It's important to do background research on any potential advisors, coaches, and authors.

Even the most popular and effective ones will have critics, but checking out the expert's past successes and failures and what other experts say about their ideas can help you evaluate their recommendations with sober judgment.

To get started, check out this list of some of the most popular resources out there:

Back to school. Best-selling author and personal finance expert Dave Ramsey developed Financial Peace University, a 9-week course that guides people through the basics of planning and implementing a budget. Ramsey focuses on helping people get out of debt, raise their credit score, and spend within their means by planning and using a cash-based envelope system. His organization has helped more than 4.5 million people take control of their money through these classes and coaches. According to Ramsey, the average family experiences massive financial benefits within the first 90 days of implementing the program—typically paying back $5,300 in debt and saving $2,700. Other financial advisors have critiqued Ramsey's investment strategies, but most agree that his followers learn to be disciplined spenders—the first step in making any budget work.


The book club. There are several authors to recommend, but a great book to get you grounded in the basics is Ramit Sethi's “I Will Teach You to Be Rich." Sethi covers everything from setting goals to budgeting to making extra income. Buy two copies and review a chapter a month at your regularly scheduled budgeting time. It'll be time well spent.


Ask an expert. We all need expert advice or coaching sometimes, but it can be hard to find good financial or relationship support. Check out these tips to find the best:

  • Look for financial advisors who adhere to fiduciary responsibility standards and have a Series 65 license. This means they're bound to put your welfare before any possible benefits gained from recommending certain investment products or plans.
  • Search reputable trade associations, like The National Association of Personal Financial Advisors (NAPFA).
  • Ask local friends and family—a personal recommendation can be the best one.

If you need relationship support because of money struggles, look for a certified marriage and family therapist. You can do a search for one with the American Association for Marriage and Family Therapy. Also, friends, social networks, places of worship, and community organizations can help you find a good match.

Show me the money: Creative ways to cut costs and earn more

If you've run out of ideas on how to spend less, check websites like The Penny Hoarder for tips on ways to save. Also, check out these sites for coupons galore:

  • RetailMeNot has online and in-store coupons for a vast majority of retail stores.
  • Honey is a new Chrome extension that searches the web for promo codes before you check out at an online vendor.

Some sites will also provide brain fodder for finding that side hustle you've both been trying to discover. Check out this article from Inc for 30 side job suggestions. Then ask yourself:

  • Do I have a hobby that could generate some income? Lots of people turn fun activities like baking, reading, and sports into business ventures.
  • Do I have an expertise that people need? Maybe you can do some consulting.

Wherever you live, there are resources to help you and your partner budget as a couple. You can make use of local advisors, online classes, books, and more on your journey toward financial health in your relationship.

For the love of budgeting

It's tempting to think of budgeting as a couple negatively—it's so not romantic, we know. Oftentimes, we dig in our heels when we should be revving our engines to start the process. At one point or another, many of us have muttered, “What a waste of time!" or “We'll never be able to make a budget work—why bother?"

But the one thing we'll all agree on: Divorce stats and past experience don't lie. If you're going to make it as a couple beyond the blissful beginning, you have to figure out a way to budget as a couple.

The good news is that budgeting as a couple has never been easier. You have fantastic systems and tools at your disposal. Plus, you can ride on the coattails of experts and friends who've walked this road before you and lived to tell the tale. Most important, you have each other.

With good communication, clear goals, and solid budgeting, you can get out of debt, spend wisely, and even save for the future. So grab your partner and start talking about budgeting as a couple—financial freedom is just around the corner.

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