UMe’s Helpful Tips: Budgeting for Couples
So you’ve read all our blog posts about budgeting tips and you’ve got your budgeting method all tidy… but what if you’re budgeting for two? Splitting bills and finances with your partner or spouse adds a new layer to consider — we’ve got U! Read on for some helpful tips. Sharing is caring, even when it comes to expenses.
Creating a foundation and maintaining a budget together is key, whether your partnership is new or you’ve been in a years-long relationship.
Tip 1: Talk about it
For some, starting is the hardest part. And talking about money is no exception! In many ways, discussing income and expenses can make one feel vulnerable. When you establish a plan and begin with a financial foundation, you’re setting up for success! By collaborating on a strategy and creating clear expectations with your goals and budget, you are appointing ground rules that will set you up for long-term success.
Of course, how much you share of your finances and expenses depends on how you DTR (define the relationship). Here are some examples of what you might want to consider discussing at different stages:
- Dating: Who foots the bill for date night? What if there is a pricey event on the horizon (A.K.A. covering Coachella passes or Disneyland annual passes), how will you each save up for it? Design a plan for how these costs are shared, so each of you feels comfortable and expectations are clear.
- Co-Habitate: Figure out what each person can truly afford for rent and utilities and what each of you is comfortable spending on things like groceries and entertainment. Try starting with your individual budgets using our tips on envelope budgeting or zero-based budgeting, we even have info on budgeting framework for gig workers — and bring your budgets together to compare and contrast. How will your financial wants and needs differ? What does each of you consider a shared expense versus a personal one? You’re going to be sharing some fundamental necessities, so get clear on what you expect from each other.
- Partnership/Marriage: Co-parenting, making a big purchase like property, or getting married — chances are your financial lives will also be intertwined for quite some time. In addition to bringing your individual budgets together, you should also have a look at the amount of debt you each are responsible for. What amount of that debt needs to be considered, if not all of it, debt like credit cards and car payments. What are some big life goals like higher education that will need to be taken into consideration, and how are those expenses going to be considered when sharing financial responsibilities? Determine how much each of you expects one another to spend on big life purchases.
- Long-Term Commitment: If you’ve been together for several years you already know that your joint financial responsibilities, wants, and needs will evolve with time. And the conversation around money will too! Talk about what is most important, collectively. For instance, how much is each person saving for retirement? What kind of life insurance benefits you both the best? What kind of emergency savings do you individually have, and what is the expected contribution for each person to put into joint savings efforts?
In every type of relationship — whether it’s long-term or long-distance — both parties can benefit from open and honest conversations about financial expectations and goals.
Tip 2: What to Split
Now that you’ve had a chat to establish goals and expectations, you should decide on how you’re going to tackle managing money as a couple, about which expenses you’ll share, and how you’ll divide it up.
Have a look at your individual and joint expenses. Begin by listing everything essential A.K.A. your “need-to-haves.” If you’re cohabitating this will include rent/mortgage, utilities, insurance, groceries, and auto (payments, fuel, insurance, and, don’t forget, maintenance); your list may also include expenses for kids or pets. Tally up how much you’ll need for each line item every month.
Next, just like you did with your essentials, list out your “nice-to-haves” A.K.A. your discretionary expenses. Stuff like your Netflix subscription, date night dinners, fitness fees — whatever it is that you both share. Clearly lay out how much you’re willing to spend on each and agree on the amount! You can always edit these line items at any time!
UMe Pro Tip: U can save on streaming services with these tips.
As a bonus, you can also define if there are individual expenses that you want to share as a unit like helping each other out with student loan debt, medical bills, or even credit card debt in order to lower your debt-to-loan ratio and qualify for other big life items like getting a new (or bigger) home together! Depending on your circumstances, there could be a lot that might make sense to share, especially if you’re aligned to work together on a bigger financial goal.
Tip 3: How to Split
After determining what expenses you’re going to share, you should next decide how much you are both responsible for. There are a ton of different options for U and your loved one… And the best part is, as your financial situations evolve, you can (and should) edit the split as needed! If you start a new business, have a kid, and/or decide to go to grad school — you should reconvene and find an updated way to split your expenses. Here are 3 different ways you can do your split to get you started:
- Halfsies: This one is pretty easy because it’s a pretty straightforward option: Each person splits the bill in half. A.K.A. 50/50. If you both have similar incomes and individual (non-shared) expenses, this could work out quite well. Keep in mind that you’ll probably have to set time aside to have a budgeting meeting to sort out what 50% is each month.
- Income-based contributions: In many pairings, one person brings home more than their partner. Often it makes sense for couples to do the split based on how much income they bring in. For example, if one person (let’s call them Person A) makes 60% of the household income, with this strategy, Person A would then pay 60% of the total household bills. This makes a lot of sense when one person makes a lot more than their partner, like if Person B is a student.
- Item-based: With this method, each person picks items or categories they are responsible for and this way it’s not about splitting everything down to the penny. For instance, Person A pays the electricity, gas, and Disney Plus bill; and Person B pays for the water, home insurance, and Spotify bill. You can still employ the principles of the Halfsies or Income-based methods when deciding on which bills to choose.
Tip 4: Co-Managing Your Budget
If all the steps above seem like a lot of work, trust us when we say, it will pay off in the end. Plus, you don’t have to do it all in one day! You can take a few days to work across these steps. Once you have those steps tackled, you are ready to use your new budgeting super-power!
We recommend opening a joint account in order to pool money efficiently and make paying for your expenses easy! If you’re not ready to do that quite yet, you can utilize a spreadsheet or use an online budgeting app, then manually transfer money across your autonomous accounts to pay bills as they come.
Okay, about that joint account. With a UMe checking or savings account, you should decide how to put funds into your account, just give us a call to set up a new account for U and your partner. If you’re not already a UMe member, U can open an account easily today — just give us a call or stop by the branch! Here are some common options:
- Manual transfer: Set up a monthly calendar alert to remind you to transfer funds into your joint account, and utilize options like online banking or Zelle to initiate a transfer between your individual accounts into your joint account.
- Direct Deposit: You can have your employer directly deposit a certain amount from your paycheck into your joint account, in addition to your individual account.
- Paper checks: Write yourself a check and deposit it into your joint account by visiting our ATM, popping into our branch, or using our handy-dandy UMe app!
The Road to Success
Laying the foundation for your financial responsibilities and goals coupled with clear communication makes for success! Setting up budget ground rules you can commit to as a couple will help both of U avoid big blow-outs around finances when things don’t go as planned. It’ll take the pressure off because you’ll know what to expect, financially, and that’ll free you up to debate more important things — like who should have won that GRAMMY! Taking proactive action to manage your money, together and individually, might even be fun as you plan your life together, whatever stage you are in your relationship!
UMe Pro Tip: This budgeting strategy doesn’t just work for romantic couplings! This can also work for roommates, siblings, co-parents… U name it! If you have a shared financial responsibility, these tips can help U be collaborative!
Dealing with money can be stressful — alone or together. The right structure can be more like holding hands than throwing hands. Remember, communication is key. U can do it! For more tips like how to save more money monthly, check out this blog post!
If you have questions or need help that is more customized for U, just give us a call or shoot us an email. We’re more than happy to help — helping is our favorite!Call us Email us
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