How to Budget as a Couple

Couple budgeting

So, things are getting serious between you and your significant other and you’re ready for that next big step.

After all, nothing says romance like working out your finances together.

All jokes aside, and as dull as it might seem, budgeting is an important part of life that allows us to work out our expenditures and stick to targets in order not to be counting the pennies at the end of the month. There’s no worse feeling than miscalculating your outgoings and being hit with a huge interest charge for going overdrawn.

This handy guide will help you figure out your finances, track spending and budget for those bigger life goals like travelling or buying your first home together.

Together or separate?

Don’t worry, this section isn’t about breaking up.

Deciding whether you want to budget your finances together or separately is a big help with creating a clear understanding of who pays what each month. There’s no right or wrong answer for this one as varies from couple to couple and is all based on personal preference. But there are a few ways of looking at it when you’re considering options.

Combined: Almost all incomes and expenses are shared between the both of you, usually into one savings account that you both have access to, and bills/any other expenditures are taken out of this.

Separate: Both you and your partner have your own accounts and then the monthly costs are divided into a way that suits you. This can either be a fair split straight down the middle or can vary depending on how your incomes balance out. Again, this is completely subjective.

Hybrid: A hybrid of the two is great for things like household expenses such as bills or generic shopping trips for necessities like toilet roll, bread, and milk. This method can also be used for achieving shared goals such as funding holidays or a deposit on a house. Each partner has their own personal account to spend as they please but will also pay into a joint account – the percentage may vary depending on income or times of year.

Remember to discuss your options carefully and come to an agreement that suits the both of you. This way, there is a clear understanding of who owes and owns what if things were to unfortunately go sour.

Budgeting for bigger goals

If you’re looking to buy a house together or take on a big adventure vacation, the costs of doing these things need to be considered.

The average house deposit is 10% of the overall buying price, so that’s 10% that you need to have already saved up in your bank accounts before putting an offer in.

Finding that amount of money isn’t easy and will often mean that some luxuries might have to be missed out on in order to achieve your goal quicker. By budgeting for the things that you need rather than the things that you want, you will reach this target much faster than you would if you were spending on things that aren’t essential.

By deciding on set amounts to deposit into your savings each month, this will help you to budget the rest of your income more efficiently. You can even set up a direct debit each payday to allow that money to go into your savings account without really having to think about it. Just make sure that it is an amount that both of you can afford.

Household needs to consider

When budgeting as a couple, you need to consider your household outgoings. This could be the mortgage on your house, any loans you’ve taken out such as a loan for a car on finance, or simply utility bills and weekly food shops.

By shopping around and considering how much you’d realistically like to spend each month, you can find providers that better suit your needs rather than just sticking with the one you’ve been with for years as it’s convenient. Some companies even offer perks when you switch, such as a shopping voucher or credit to use with them.

An easy way to chop the price of your weekly shop is to avoid big names and brands where you can, as the cost of these items are usually much steeper than own-brand products.