Budgeting for couples: 6 easy steps for success

By E. Napoletano | Citizens Staff

Key takeaways

  • Early conversations about money can help transform cohabitation into a shared sense of financial confidence.
  • It's important to have shared and individual financial goals, and a savvy budget can make room for both.
  • Some couple may want to use joint checking or savings accounts to pool their income and save as a team.

First things first: Congratulations! Whether it's marriage or moving in together, you're entering a new and beautiful stage in your relationship. And if you haven't already, it's time to think about budgeting for couples.

When two become one — especially under one roof — it's common to have a few questions. How do we talk about money and save together? Do we need a joint checking account? How can we get the most out of our dual-income household?

Here's the first tip: Don't stress. Financial planning for couples might come with some changes compared to the solo lifestyle, but it doesn't have to be a hassle. Using a step-by-step process can take you and your beloved from the very first budgeting conversation to having confidence in your financial future.

Advantages to budgeting as a couple

While some couples keep separate finances, budgeting as a couple comes with some pretty impressive benefits. From approaching your financial goals as a team to building shared strategies that help transform your dreams into real, live adventures, here's a peek at the pros that come with building a financial dynamic duo.

  • Mutual respect. Whether your new household has two incomes or one, a combined budgeting strategy honors everyone's contributions to your goals — financially, emotionally and intellectually.
  • Shared ownership. With a mutual respect for each other's contributions, it's easier to build a budget that both of you can own and make suggestions to improve throughout the years.
  • A sense of support. A shared budget can help remind you that you're not alone when life's financial stresses come along and that you'll find a solution together.
  • Leveraging the power of two. While it's a bit cliché, two heads can be better than one. Planning your financial future with your better half means you have access to all of their ideas, strengths and experiences. How incredible is that?

Your step-by-step guide to budgeting for couples

Whether you're a new twosome or old, these tips will help you and your significant other manage your finances together.

Step 1: Get on the same page

If you didn't have the money conversation before you combined households, that's OK. The key is to have that conversation as early as possible. By doing so, you can build a budget that accounts for everyone's financial habits — whether shared or different.

"It seems like it happens — more often than not — that you've got one saver and one spender," says June Thompson, Senior Vice President, Checking and Deposits at Citizens, "but you have to both agree to a budget."

The most important action to take during this first step is identifying your shared financial goals. It can help to start this conversation by going through different goal categories one by one to identify which ones you both think are most important in the short- and long-term.

  • Emergency savings. Do you have some? Do you need more? What's an amount that makes you both feel safe?
  • Retirement savings. How much do you each have saved? In what types of accounts? How much of your paycheck goes toward retirement savings? How much do you want in savings when you retire?
  • A place to call home. Do you want to buy a home or another home? Do you need to refinance your mortgage? Do you want to buy a bigger place to grow your family, and if so, how soon?
  • Education savings. How many kids do you have or plan on having? Do either of you plan on going back to college? If so, how much do you need to save to make those dreams come true? Your shared goals can run the gamut, and you'll tailor them to fit your hobbies and other aspirations. Now's the time to get all those ideas on the table so you can agree on what's important.

Your shared goals can run the gamut, and you'll tailor them to fit your hobbies and other aspirations. Now's the time to get all those ideas on the table so you can agree on what's important

Step 2: List all your income

While it can feel taboo to talk income when you're first dating, it's a critical topic when you decide to share expenses under one roof.

In this step, get together and make a list of all your income — and from every possible source. Possible income streams go beyond your biweekly paycheck. They can include earnings from part-time or gig work, rental property income, pensions, dividends and more.

When you have your income list, you may just feel a sense of satisfaction when seeing several smaller dollar amounts add up to your household's "haul" for the month.

Step 3: Tally your current expenses

Now it's time to list your expenses. Thankfully, you have some help you can leverage. Your online banking software likely has a way to separate debit transactions and other withdrawals, letting you download a list of your expenditures. You can also look into budgeting software that can translate your bank statements into itemized expenses.

Some of the most important expenses to track include:

  • Housing payments
  • Student loans
  • Other loans (personal or auto loans)
  • Insurance
  • Utilities
  • Gas and parking
  • Credit card payments
  • Food

Step 4: Categorize your expenses

With your list of expenses in hand, it's time to sort them into two separate buckets: discretionary and non-discretionary.

Expenses that aren't essential — think entertainment and maybe your daily latte — fall into the discretionary category since you have a choice of whether or not to spend the money. Other expenses — like your rent or mortgage payment, utilities and debt payments — must be made each month and fall into the non-discretionary category.

Step 5: Set a savings goal

Now that you have an idea of the money coming in and going out each month, the two of you can figure out how much you want to save each month.

First, do some quick math by subtracting your expenses from your income. The number you get is the amount you can put toward savings. If you want more money to go toward savings, consider using the 50/30/20 budget rule. With this model, you put 50% of your income toward "needs" or non-discretionary spending, 30% towards "wants" or non-discretionary spending and 20% toward savings. You may find that you need to modify part of your spending in one of those three categories to reach your savings goals.

The ways you two can use your savings should ideally loop back to those goals your set together, and can include:

  • Each making a monthly contribution to an IRA
  • Boosting your payroll contributions to your employer's 401(k)
  • Chipping in $50 each per month toward a dream vacation
  • Investing some extra cash in a certificate of deposit (CD) for a longer-term goal

It's also important to ensure that your individual financial goals are honored in this process. Having an open and honest discussion about your top shared and individual savings priorities is fuel for financial harmony for the duration of your relationship.

Step 6: If necessary, open a joint account

Once you have your goals ironed out, it's time to determine how you can work together to achieve them. Some couples pool their income in joint checking accounts, while others might use a combination of joint and individual accounts.

While couples often use checking accounts to manage monthly bills, tracking your financial goals together can help you stay organized and motivated. For instance, if you’re working toward a Caribbean vacation and saving for a home, tools like the Citizens Savings Tracker™1 can make it easy to monitor your progress. This digital feature allows you to set specific goals, track your savings in real-time, and make adjustments as needed to stay on course.

Whether you’re saving jointly or pursuing individual goals, leveraging tools like these can help you celebrate milestones and stay aligned on your financial journey!

Keep your savings goals on track. Citizens Savings Tracker helps you save in just a few taps. Follow the link to learn more. Member FDIC.

Going forward: Revisit your plan

Savvy budgeting for couples also includes a review strategy. A quick review — monthly, quarterly or twice-yearly — can help you assess your spending and saving compared to your budget. If you've drifted away from your initial plan, you can craft a strategy together to get back on track.

"I think it's important to revisit your plan with some frequency," Thompson says. "Your life can take many unexpected twists and turns, and it's important to incorporate them. It also is a great time to have conversation around whether any of your goals have changed, or if you'd like to add new ones."

Ready to start saving toward your goals as a couple? Open a savings account with Citizens and we’ll be with you every step of the way.

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Disclaimer: Views expressed may not necessarily reflect those of Citizens. The information contained herein is for informational purposes only as a service to the public and is not legal advice or a substitute for legal counsel. You should do your own research and/or contact your own legal or tax advisor for assistance with questions you may have on the information contained herein.