Budgeting for Couples

One big thing that couples fight over is money. They may not agree how to spend their money or they may not agree on miscellaneous purchases that their significant other racks up. One way to solve these problems to have separate, in addition to, joint accounts. Please see my hub on combining money for more information on this. In this hub, I will focus on how to create a budget. Creating a budget together will allow couples to express their views regarding spending and saving and come to an agreement on how much money to allot for specific expenses.

The first step would be to make a list of all your fixed expenses. For my husband and I, this included rent, our time share payments, Netflix, phones, electricity, food, Internet, gasoline, savings, and miscellaneous (gifts for friends and family, incidental purchases, etc.). For the purposes of this blog, I am using “fixed expense” in reference to those things we know we will spend money on every month. Food, electricity, and gas costs may vary due to how much we consume, but we can rest assured that we will spend money on these things each month. I’ll refer to fixed expenses such as food, electricity, and gas as flexible fixed expenses. The trick is to determine how much you think is okay to spend on each of these flexible fixed expenses every month. Also, notice that I included savings on this list. You always want to make sure you have a cushion to fall back on which is why savings is important.

Before you determine how much you want to spend on your flexible fixed expenses, first determine what your income combined with your significant other’s income is and then compare this sum with how much your fixed expenses are. For example if your fixed expenses total $2,000 per month and your combined net income is $5,000 then that leaves you with $3,000 to work with for your flexible fixed expenses. Also take into consideration how much you each want to keep in your own accounts each month and subtract that from the total you’re working with. If you each want to keep $500 in your own accounts, for example, then subtract $1,000 from the $3,000 in this scenario, so you’ll be left with $2,000 for your flexible fixed expenses. You might allot this as follows: $800 for food, $100 for electricity, $300 for gas, $200 for miscellaneous costs, and $600 for savings. Please note that this is just an example. Your income, fixed expenses, and flexible fixed expenses are probably very different.

After you’ve determined your fixed and flexible fixed expenses, add them together to see what your total monthly expenses are. In the above example the total monthly expenses was $4,000. Also look at how much each person is keeping in their own personal accounts; in this example is was $500 for each person per month, for a total of $1,000. So to determine how much each person contributes to the joint checking account each month, the following equation would be used (a will represent one person’s income, b will represent the other person’s income): (a-500)+(b-500) = $5,000.

So, to sum up, the following steps can be taken to prepare a couple’s budget:

1. Make a list of your fixed monthly expenses.

2. Determine what each of your monthly net incomes is.

3. Add together your monthly net incomes.

4. Decide how much each person wants to keep in their respective personal accounts.

5. Determine your budget for flexible fixed expenses.

6. Figure out how much each person will contribute monthly.

And then, congratulations again! You’ve just taken a big step in the right direction by establishing a budget with your significant other. This will undoubtedly prevent many many money arguments and also start you on the road to savings.