When Two Become One: How to Budget as A Couple

First comes love, then comes marriage, then comes the money issues. With finances being the leading cause of stress in a relationship, it is no surprise that money consistently ranks among the top reasons couples fight. Although finances are a big part of our lives, income, debt and financial goals are still topics that many couples fail to think about when they take their relationship to the next level by getting married or moving in together.

Combining expenses and budgeting as a couple is no walk in the park. According to a Bank of Montreal poll, 68% of people say fighting over money would be their top reason for divorce. Learning how to shift your mindset from thinking about your own finances to now thinking about your finances as a couple can be tricky. However, just because money is difficult to talk about doesn’t mean the conversation should be avoided completely. Committing to a budget as a couple will not only benefit your relationship, but it will benefit your future.

Having The Talk

Sitting down and having a conversation with your partner about money is the first step in making sure you are both on the same page about your finances. Being open and honest about your income and spending habits will make choosing the right budget that much easier. During this conversation, it may be apparent that you and your partner have different spending habits and may not be as financially compatible as you thought.

What should you do if you and your partner have different tendencies and goals when it comes to money? Tackle prioritizing your needs and wants first. Figuring out the differences between your needs and wants and those of your partner will give you a better idea of how much money you can afford to put towards those needs and wants. Once you take the time to talk about spending habits, you may realize that one partner may consider themselves a big-spender while the other prefers a cheaper lifestyle. An open conversation will ensure a compromise is reached when choosing a joint budget.

As a couple, you should have some similar goals in mind when it comes to your future. If you’re thinking about buying a house, a new car, getting married or starting a family, you should consider those goals while making your budget. If you are both on the same page with what you want, you will be more motivated to save and budget your money wisely. Taking the time to hear what each person wants out of life and the relationship is crucial for a successful financial future together. In the end, both partners must agree that the approach they choose is the best for themselves individually and as a couple.

Choosing A Budgeting Approach

When deciding to start joint-budgeting, there are three approaches that you can take to match your lifestyle and financial situation.

1. The All In. This approach is generally used by married or long-term common-law partners who trust each other financially as it involves creating a joint account. All income and expenses from both partners are placed in the same account. Each person may choose to have their own small bank account for personal spending, but most of their income is placed in the shared account that can be viewed and accessed by both partners. In a study of 1000 married couples, 65% reported they were happier in their relationship once they pooled their money in one account.
2. The 50/50 Split. Using an approach like this is a good idea for newlyweds or couples that have just entered a relationship with their partner. Each person will keep their income in their own account and agree to split household expenses equally. Having separate accounts will allow the couple to still feel financial freedom while still contributing to the necessary expenses of the household.
3. The Tailored Approach. Choosing to budget your money using the tailored approach is the happy medium for both partners in the relationship. This way, you have the benefits of a joint account alongside the independence that comes with both of you having your own accounts. Household expenses and savings for goals (e.g. a trip, a home, etc.) are split and put in the joint account while all other expenses are kept separate. Depending on the circumstances, partners may choose to split their money equally or pay a percentage of the expenses based on their individual income.

Keep The Conversation Going

Once you have chosen the right approach for your relationship and financial situation, each partner must take responsibility for tracking their spending. Setting up frequent informal budget meetings to discuss spending and financial goals weekly, biweekly or monthly will help keep the conversation going and ensure you are both on the same page.

There is more than one way to do this, however, if you want to stick to using a budget all year round, having an online planner may be the easiest way to do so. As a couple, using a budget planner on Google Docs, OneDrive or another shared site is an efficient way to track your spending. Having a digital document makes budgeting less of a hassle and allows you to access it from anywhere.

When two incomes become one, the conversation around budgeting can easily be a topic that is forgotten or even avoided. By having the talk and choosing a budgeting approach that is right for your unique financial situation as a couple, you are setting yourselves up for a future of less financial stress and more happiness.