Many couples struggle talking about money openly with each other. It doesn’t have to be that way. Here are five steps to start to budget as a couple.
Money is a commonly cited problem among relationships. This shows that talking about finances or setting a budget as a couple is a difficult thing to do.
If we ignore it, however, we will be leaving space further down the line for even more problems. At a different level, by avoiding the topic of money, we could also be in neglect of our financial self care.
Don’t know where to start? Start with the most basic (yet foundational!) aspect to personal finance: budgeting. Budgeting is the system that will allow you to reach some of your money goals. It is how you can gain a clearer picture of what your cashflow is and whether this matches your long term goals. Key to remember is that budgeting can look many different ways.
Here are five steps towards starting to budget as a couple:
1. Talk About Your Why
First, if you are talking about money with your partner, it is because you see some sort of future with this person. You wouldn’t be talking about money on a first date, really…
With this in mind, ask: why is it important that me and my long-term partner talk about our finances? What collective goals do you have? When we start from our why, it will become easier and more sustainable to continue showing up in this space.
Second to this is identifying and talking about a why behind our relationship to money. For example, if you are the person initiating money conversations and are more willing to talk, let’s consider why our partner might not participate or why this topic would make him feel uncomfortable.
2. List Your Income & List Your Expenses
Now that you have created an open, comfortable space to talk about money, we need to start laying it all out there. First, each of you will list out all sources of income. These include:
- Side hustle money
- Dividend income
List them all out to get an idea of how many cashflow streams you have. Add up all these numbers to see total incoming cashflow between the two of you.
We are then going to do a similar thing for expenses. As individuals first, list out all of your expenses. This will give you an idea of anything you may need to prioritize with your money (ie massive debt). Once you finish this list of expenses individually, come together and list household expenses as a couple. Some ideas are:
- Mortgage or rent
- Date night
We do this practice at an individual and collaborative level for two reasons: we want to set SMART goals and be efficient. For example, if we set a financial goal to save $60k in one year for a house down-payment, while someone is carrying a high-interest $30k+ loan, we may not be setting ourselves up for success. Let’s be honest about our money mindsets and current capabilities.
3. List All Of Your Accounts and Re-Draw Your Money Map
You’ve now got a solid understanding of what your cashflow is, aka what money comes in and how does it go back us. The next step in setting a budget as a couple is redrawing our money maps, or the relationship across all financial accounts.
For this part, you will return to your goal-setting, as some of your goals may also determine what accounts you open or start using. For example: if you have small sinking funds going from the start of the year, these funds could live in their own account, while larger financial goals might be better-suited for high yield savings accounts or short-term investing. Here is when you will also continue talking about individual priorities and goals that may affect our contribution rate, etc.
Maybe you decide to open a joint account after realizing that maintaining separate accounts will be too complicated. Maybe you figure out a system where there is no need for a joint account!
4. Set A Tracking System
How will you ensure that you are on the path you intend to be on? How will you know that your current system is working for you?
A core component to budgeting is mindful spending. Note that we are not saying frugality; we are saying “mindful.” With mindful spending, we encourage you to log your transactions and stick to the individual budget you have created. In a couple, your goals will definitely become moving pieces. Think through which accounts will allow for that.
Today, there are little excuses for why someone cannot budget. Here is a list of seven budgeting apps.
5. Check in periodically
Communicate. No matter how often we talk about it, money can always remain a more sensitive issue, particularly for first-generation wealth builders. We can normalize talking about money, but some of the trauma, for example, that’s tied to it won’t just disappear overnight.
Check in periodically to see how you are feeling about the state of your money as a collective; where your short term and long term goals are; and whether you still agree with your current budgeting buckets.
We are thinking so much about this thanks to our guests from Sunday’s episode, Gay Husbands on FIRE. They talk openly about what money conversations looked like for them, why they’re glad they started talking about money early into the relationship, and some of the ways they’ve learned how to budget as a couple. Listen on your favorite streaming platform!