Nobody likes budgeting. It’s a lot of work to track your spending by category, splitting transactions to make sure they’re categorized correctly, and staying disciplined to maintain the budget month after month, year after year. And building a budget for a couple is even more tedious and challenging.
The way most people approach the budgeting process doesn’t set themselves up for success. And at its worst, tracking your budget category by category, transaction by transaction will cause couples to fight about money and nitpick each other’s transactions.
In this article, we’re going to talk about why the ways that most people build a budget for a couple doesn’t work, how to approach budgeting instead, and how to review your budget over time.
Note: If you’d prefer to listen to this article, you can get a podcast version of this post here: Money and Marriage Podcast Episode 144 – How To Build A Budget For A Couple (That You’ll Actually Stick To!)
Why Budgeting Doesn’t Work for Most Couples
Done correctly, budgeting can be much less painful—and much more effective—than you might expect. If, that is, you approach it with the right perspective, goals, and expectations in the first place.
Before building your family’s (new) budget, it’s worth considering how most couples approach budgeting the wrong way, which prevents their budget from sticking and hinders their growth.
Here are the biggest mistakes I see couples make when it comes to budgeting:
They treat budgeting as the focal point of the journey rather than a tool to use along the way. Too often, when we talk about budgeting, we only focus on the budget itself and the numbers that comprise it. When I ask clients how their budgeting has gone in the past, they tend to start diving into the numbers immediately.
But the point of a budget for a couple isn’t just to hit your numbers. Instead, we budget so we can accomplish our savings goals and live out our mission statements. Without focusing on this dream for the future and how your budget can help you get there, budgeting becomes a dreary, cumbersome exercise. It’s no wonder it is such an unpopular activity! But by focusing on your budget as a tool in your pocket to use to help you live your dream life, you will have much better results sticking to your budget in the long run.
They interpret “we need to budget” as “we need to cut our spending.” Simply put, the point of a budget is not to force you to cut back your spending.
Instead, the only goal of your budget – at least at first – is to understand where your money is going.
You should not sit down with your spouse and be prescriptive right out of the gate about the need to cut your household spending by 10% this month. Instead, approach the budgeting exercise with the spirit of trying to understand where your money goes each and every month.
(Of course, you might decide to cut some spending at the margins after going through the budgeting process, which we will discuss later. But the key takeaway, for now, is that even though you might cut your spending as a result of your budgeting work, that would only happen as a result of the increased understanding you have about where your money goes. It certainly isn’t the point of the budget!)
They make budgeting too difficult, too complicated, and too granular for them to manage in the long run. You’ve probably gathered that I’m not a fan of tracking your budget transaction by transaction.
There might be circumstances where it’s worth digging into the transaction-level data to pinpoint where things are going wrong, but generally, the more time you spend reviewing your bottom-line financial numbers, the better. If you hit your spending and savings targets in the aggregate, there’s no need to drive yourselves crazy digging through the weeds.
They view budgeting as restrictive. Raise your hand if you’ve ever been tempted to touch the plate at a restaurant after your server brings you your food and warns you, “Careful, the plate is very hot!”
It’s human nature to want to do something when we are told not to. This means if you approach budgeting in a restrictive way (“I can only spend $20 at coffee shops this month!”), then your immediate gut reaction is likely to be to want to spend money at coffee shops.
These types of restrictions usually only last so long before something has to give. And often, what gives is a spending spree that blows up your budget.
Instead, I recommend approaching your budget as a way to spend your money guilt-free. In creating your budget, you and your spouse will agree on how much spending is appropriate for each of you, given your income, fixed expenses, and other goals. By definition, you can spend everything in your budget without worrying or feeling guilty. By following the plan you create for yourselves, you’re setting your family up for less financial anxiety by not just protecting your financial goals but actually giving yourselves permission to enjoy the money you are spending.
How to Build a Budget For a Couple (Without Fighting About Money)
The starting point is to complete a budget planner. Don’t overthink it, a budget planner is “just” a spreadsheet where you can lay out your spending in advance to help you set monthly savings targets for yourselves. A few notes on this:
- A good budget planner should give you space to list your individual and joint expenses. The budget planner I use for my clients has three columns: a column for joint expenses, a column for your expenses, and a column for your spouse’s expenses.
- You will probably need to complete your budget planner by category (housing, food, entertainment, and so on) at first. I don’t want you to track these numbers by category in the long run, but I suggest doing the initial budget planner by category to make sure you don’t miss anything.
- The goal of completing the budget planner is to identify how much you intend to spend every month, and, in turn, how much you expect to save each month.
If you want a copy of a budget planner, email me (bill@pacesetterplanning.com) and I’ll send you a copy as soon as I can. (Note: if you don’t listen to the podcast version of these articles, you’re missing out! Sometimes, I go off script – this offer to email a budget planner wasn’t part of the episode outline, but the idea came to me in the moment and was somewhat entertaining. However the idea came to me, though, I stand by it!)
Once we have your total estimated savings and spending for the month, you can move on to tracking your savings progress.
Here are a few tips to use when you complete your budget planner:
Start with your mission statement and goals. People fight about budgets and spending when they are only looking at the savings and spending numbers and not considering why they are looking to save money in the first place. By anchoring the conversation around what the budget will allow you to accomplish, you’re going to get a lot more from the conversation.
We’ve talked about a family mission statement on the blog a few times in the past. A mission statement is the most important tool you can use to decrease money fights and accelerate your financial progress as a family. If you want help developing your mission statement, I suggest getting a copy of my book, Marriage-Centered Money, and working through the exercises included in chapter 9.
Once you’ve agreed on your mission statement and goals, it usually is much easier to agree on the bottom-line budget for a couple. By focusing the conversation on how you can achieve the goals and desires you’ve already articulated, you are empowering yourselves to identify how the budget can help you make these things a reality. This tends to make for a much more productive and peaceful process when setting your family budget.
Be mindful of your financial differences and money scripts. You and your spouse’s money scripts heavily influence the way you make spending decisions—and in places where your money scripts are opposites, this creates fertile ground for financial arguments.
It’s important that the final version of your family budget respects both of your perspectives and strikes the right compromises to make sure each of your individual needs is appropriately addressed in the pursuit of your family mission statement and financial goals.
For example, it’s very common for one member of the couple to be more highly motivated to save money (the “saver”) and the other member of the couple to be more inclined to spend money (the “saver”).
In completing your budget for a couple, the “spender” will have to accept the need for some parameters on how much money can be spent as a family. But—and this is important—the spender gets quite a bit of say in what those parameters are! So, if you’re the “spender” in your marriage, you need to accept there will be some new guardrails set around how much money can be spent on a monthly basis. (Although, again, the good news is that you get a say in what those guardrails should be!)
On the other hand, the “saver” is also going to need to accept that as a family, their budget might not call for as much money to be saved as they have saved in the past or as much as they would like to save each month. Your family budget is going to give your spouse (and you!) permission to spend up to a certain dollar amount per month, and you need to accept these terms to move forward. Although, again, you also get a say in what the overall savings number should be.
Don’t use historical spending estimates (within reason). Whenever I ask couples to create a budget, the first thing that tends to happen is that they pull out historical credit card statements to try to start figuring out what their budget should be. “We usually spend $750 per month at restaurants, so I guess our budget for restaurants should be $750 per month.”
The problem with this approach to creating a budget is that it’s a great way to focus your budget on cutting spending—which we’ve already agreed is the wrong way for your family to create a budget.
Instead, I invite you to use this opportunity as a way to approach your family’s financial decisions with a clean slate. You’ve taken the time to articulate your family’s financial priorities going forward—let these priorities dictate your future budget.
That being said, you don’t need to take this to the extreme. If you want to go back and look at your family’s average water utility bill or double-check your auto insurance premiums using your historical spending, that’s totally fine. Historical spending can be a great way to quickly pull together your fixed expenses.
But overall, don’t let your past spending dictate your future—this is your chance for a fresh start!
Don’t forget periodic expenses. Raise your hand if you’ve ever come back from a vacation to a huge credit card bill and you weren’t sure how you were going to pay for it.
It happens to everyone at some point or another. We get into a good rhythm of maintaining a monthly budget, and then a huge, one-off expense throws one month completely off the rails.
You should be sure to include periodic expenses (spending that you know is going to happen regularly but not frequently) into your budget for the year and set aside money accordingly. There are some bank account structure strategies you can use to help you track this money going forward, but for now, make sure you include it in your budget.
Reviewing Your Budget
Once you build your budget for a couple at the category level, the only things that matter are your total spending and savings numbers.In order to build a budget that’s accurate, you need to set some granular targets for yourself. You can’t say, “Our budget says that we are going to spend $6,000 per month and save $2,000 per month” if you don’t calculate that $6,000 per month spending number accurately. This necessarily involves breaking your spending down into $1,750 per month on rent, $700 per month on food, and so on.
But once you’ve calculated each of your spending targets at the category level, the only things that matter are the bottom-line total spending and saving numbers.
I really don’t care if you spend $20 or $200 per month at coffee shops. The only thing I care about is if you are saving as much money as you agree to each month.
So, once you break down your budget by category, you should look at the total calculated spending and savings your budget projects you to achieve each month. Once you know these numbers, you can double-check a few key things:
Are your total savings and spending targets realistic? If you typically save $1,000 per month and your budget shows you’re expecting to save $5,000 per month, that’s a sign you may have missed something in completing the budget planner. But if the total spending and saving numbers are in the ballpark of where you’d expect them to be, that’s a good sign that you made a good first pass through the budget.
Is the total monthly savings rate sufficient to help you achieve your goals? Setting specific savings goals is outside the scope of this article, but it’s important to incorporate your goals when considering your budget.
If you set a goal of saving $500 per month for a new car and $1,500 per month for a down payment on a house, you would want your total monthly savings rate in your budget to be $2,000 per month. If you find the savings amount in your budget isn’t sufficient to meet the financial goals you have, then—and only then—would I recommend going through the budget in more detail to find the most efficient places to cut spending (or earn extra income) to make sure you’re able to hit your goals.
On the other hand, if your savings rate in your budget is enough to hit your financial goals, do not go through your budget with a fine-toothed comb to try to find places to cut your spending. If you are able to save as much money as you need to in order to realize your family mission statement, you’ve won the budgeting game. By definition, you can feel free to spend everything else guilt-free since you’re doing enough to hit your savings goals as a family!
Once you have a realistic budget for a couple that will allow you to hit your savings goals, it’s time to stop tinkering with the budget. If you need to save $2,000 per month and can consistently do that even if you spend $200 per month at coffee shops, that’s great. Go spend the $200 at coffee shops guilt-free—you’re doing everything you need to do financially. There’s no point in digging into the weeds if you’re saving enough money to accomplish your goals.
Track Your Savings Progress: The Only Part of a Budget For A Couple That Matters
Once you’ve identified these savings targets, the final step is to track your progress over the next few months.
If your budget suggests you should be saving $2,000 per month, I want you to take a snapshot of your bank account balances now, and review them again a month later.
If you do this correctly, you should have an extra $2,000 at the end of the month. Better yet, you will have set up a transfer to move this extra $2,000 to your savings account, an investment account, or use it to make a payment on your debt.
Your goals should dictate what to do with the money you save. Your budget gives you a target to aim for.
And one more time for good measure: if you’re hitting your savings target, there is absolutely no need to dig into the transaction level spending details and nitpick at your spending. The only times you should be reviewing your spending in this level of detail is if you are double checking for any fraudulent transactions (which is a good idea), or if you are consistently missing your savings targets.
Finally, be patient with yourselves. It typically takes at least three months for couples to get their savings target accurately dialed in. Do the best you can in getting your budget planner accurate out of the gate, and work to make it better in the first few months.
If you need help setting your savings goals and building your budget for a couple, I encourage you to schedule a free breakthrough session with me whenever you’re ready.