Breaking down Money Management for Couples
This course is conveniently divided into shorter segments so that you can enjoy each one on-demand. Let’s get started building your financial plan.
How to talk about budgeting with your partner
The approach you take needs planning and, most importantly, communication. The focus is to talk about your goals and create a baseline together from there. You're basically building a financial foundation to help budget, plan and make decisions that work best for your shared future.
In this first chapter, you'll learn ways to overcome budgeting hurdles as a couple. Take some time to watch the video together. Then, read on to develop a deeper understanding of how to handle your budget and goal planning with your partner.
Chapter 1: Overcoming hurdles
Finding your rhythm
Ever hang out with another couple and realize how very different you and you partner are in comparison? It's not a judgment about who's better or worse, it's just a realization of your differences. Every couple is unique. Lean in to what makes your relationship special and start building a better budget, together.
Put it all on the table
Managing money as a couple requires the perspective of each partner for it to work. Talk about your goals and how you want to achieve them together. Be open and honest and you'll figure out a budget that works for both of you.
Make it a date night
Make budgeting fun and plan a date night to talk about finances with your partner. Make and keep time for the two of you to work on your money plans together. These dates could turn into a great habit where you both have time to see how well your shared plans are going, make adjustments, celebrate and keep going. The fun part is you can bake your date night right into your budget!
To do: Plan a sensible date night to talk specifically about budgeting.
Great goal setting tips for couples
Setting goals with your partner takes a healthy mix of commitment, communication and collaboration. Think about using one of your financial date nights as a starting point for goal setting. Listening to your partner talk about their dreams could open up an entirely new layer of intimacy for your relationship.
After you watch the video, use the Money Management for Couples Worksheet to help you figure out what's best for you as a couple.
Chapter 2: Defining financial goals
Consider the short, medium and long-term
Being in a relationship implies some form of longevity between you and your partner. With that as a baseline, think about how you plan to reach your individual and collective goals together – both short-term and long-term.
Will shared checking and savings accounts work best for you, or should you weigh the pros and cons of separate accounts?
How much, and by when?
Specifics matter when you set goals. Make them clear and actionable so you know when and what it takes to accomplish them.
For financial goals, you'll want to be specific in both dollar amount and deadline for achieving your goals. This is a great tactic to use as you plan to pay off debt or save for a down payment.
To do: Write out your short (within 12 months), medium (one to five years) and long-term (five years or greater) goals. Make them clear and actionable goals by including a specific dollar amount and deadline for each.
Team up to customize your budget
There are key elements that differentiate budgeting as an individual as compared to budgeting as a couple. Once you have a foundational understanding of budgeting, you can make adjustments to customize your budget. We talk about the basics of building a budget in the video below. Watch the video then read on for more information on customizing your budget. Be sure to continue using the Money Management for Couples Worksheet.
Chapter 3: Building a budget
Get to know your expenses
Three types of expenses help you create a budget: fixed, variable and non-monthly. Look over your past spending to help you identify and categorize your expenses.
- Fixed expenses are set amounts you owe every month. Think car payments and rent or mortgage.
- Variable expenses cover non-set spending amounts like groceries, gas or even personal spending. To calculate an amount for variable expenses in your budget, figure out the average of your last three months of spending. That should get you close, but monitor it and make any necessary adjustments to keep your budget sound.
- Non-monthly expenses are set payments that you know you’ll have, but don’t happen every single month — think of taxes or license plate renewals.
You may see the future, if you think about it
Plan for your non-monthly expenses by estimating the amount you need and divide it by the number of months you have to save. Write this amount into your monthly budget and put the money aside so you have what you need when the payment is due. Fight the temptation to put this off or take from it for immediate needs. Non-monthly expenses could creep up on you if you're not prepared, leaving you in an unnecessary lurch when the payment is due.
Emergency Funds help you feel like a champ
When it rains, it pours. Chances are, you know what it's like to have one expensive thing hit you right after another. As you organize your money, set some aside for when those unexpected events turn up.
Emergency Funds could prevent you from using a credit card or tapping into a line of credit. And, when you get the chance to pay off an expense you didn't plan for, it feels great. Think of it like “insurance” for your monthly budget. In moments like these, you really appreciate the effort and discipline you put into your budget.
To do: Identify your expenses and start an emergency fund.
Talking through budget changes
You're probably picking up on the main point in all these chapters — communication is key to budgeting as a couple. This next chapter reinforces this fact after you've tried your budget for a while. Once you create a budget and test it, then you can come back and make any necessary adjustments.
Watch the next video and let's figure out ways to fine-tune your budget. After the video, keep reading for more thoughts on tweaking your budget.
Chapter 4: To join or not to join?
Know what's working… and what's not
After kicking the tires on your budget for a few months, you should be able to identify what's working well and what needs an adjustment. Whenever the time is right to discuss it, do it. You don't necessarily have to wait for a date night when you know something isn't working. Ultimately, your budget should be flexible, where it can be, in order for it to work well.
Be honest and make smart adjustments — as you go — to build a strong and healthy budget.
It’s not a one-and-done
Budgeting isn't a one-and-done effort, especially as a couple. Pay close attention during the first several months of trying out your budget. Take notes about what adjustments you need to make. Most importantly, talk through what's working — as well as what's not — with your partner.
Keeping the communication lines open and making adjustments along the way will help you both create a plan that sets you up to reach your goals.
To do: Set a date on the calendar when you and your partner can talk about your budget to gauge successes and struggles. The goal is to make good adjustments and customize your budget to help you reach your shared goals.
Find the right budgeting tools for you
There's no shortage of financial tools out there. And much like anything else in the real world, there's no perfect tool for budgeting. The reality is, you have to test different things to find what works for you.
In this last chapter, we review various budgeting tools that may or may not work for you. Listen to the conversation and use the Money Management for Couples Worksheet to help you see the benefits these tools could offer. Then read on for more suggestions for selecting budgeting tools.
Chapter 5: Helpful budgeting tools
This or that?
From new apps to pen and paper, choosing a system that works is a decision only you and your partner can make. Try what sounds good to you and don't be shy about dropping the ones that are just not working. Be willing to compromise or split duties if you can't come to a shared conclusion. There are plenty of options out there. Take the time to pick and choose until you find the right budgeting tools for you. The goal is to figure out, together, what works.
Take a chance on these
There are a few money management systems that have generally worked well for people. We think these are worth your time and energy to attempt. Let’s take a look:
- Cash Envelopes: Use cash for certain budget items, like personal spending, to prevent overdrawing your accounts. Simply put cash in labeled envelopes for the month and only use that money for what it's assigned to. Once the cash is gone, you're done spending on that item until the next month.
- Spreadsheet: Make a spreadsheet — free tools online could help here — to build out the categories of your budget and align money accordingly. Electronic spreadsheets are easy to build and adjust. You can also set up equations to help you tally totals and keep your money balanced.
- Allowances: Allowances help us all stay within the limits of our budget. Give you and your partner an allowance to spend or save as you wish. It's a healthy way to treat yourselves while also protecting your budget.
Refine as you go
Every six months, or as a major life change occurs, do a complete overview of your budget with your partner. Check out your goals and progress. From there, make necessary adjustments to keep you both on track.
To do: Choose a few different budgeting tools to try this month.
You’re ready to start thinking like a team!
You should now be equipped to understand how couples manage money. Working together, you should now be able to get a handle on your finances and build for your future.