Budgets are for everyone
Why do people seem to hate budgets so much? It seems like people think budgets are the fun police or the enemy of enjoying your life.
That couldn’t be further from the truth. Budgets are like your accountability partner. They help you PLAN for where your money should go – and guess what, they work. You can save a lot faster, or pay off debt a lot faster, if you have a budget. I know from experience!
Command your money
As a couple, it’s extremely important to agree on a budget each month. Telling your money where to go will put you on the road to financial independence, but it will also give you peace of mind.
A budget doesn’t necessarily force you to spend less money, it forces you to spend your money ON PURPOSE. That’s the big thing. As long as you spend your money on purpose, on things that the two of you agree should be prioritized in life, then your budget is your friend. The budget is your roadmap to your shared goals and dreams.
Beginner budget template for couples
Is your current budget confusing? Did you just get married? Are you just now interested in living a better financial life? I have a simple budget template for you that will help you set up a budget that will be easy to follow and categorize.
All you need is some paper or a google spreadsheet. After you write down your total combined monthly income on the top, there are four simple categories to write down next. Let’s fill this out!
Essential Fixed Expenses
Under this category, write down as many expenses you can think of that are a) essential to your wellbeing as a couple, and b) cost the same amount each month. Examples of essential fixed expenses might be rent/mortgage payment, insurance (all types) payments, and essential utilities if they are the same cost each month.
We decide to put our charitable giving into this category, even though it is not technically essential. We feel it is essential for us to give a percentage of our income, so we put it under this category. You would not have to do the same – just find a category that feels right to you.
Essential Variable Expenses
Expenses that are still essential, but tend to cost differing amounts each month go in this category. Examples would be groceries, utilities like an electric bill, gas, parking, oil changes, and items needed for the house (toothpaste, soap, etc.).
Write out as many “sub-categories” as you can think of (like “household items”) under this label.
We all spend money on things we don’t absolutely need to survive. The goal of this budget, however, is to at least identify which things these are. After filling out this budget and tracking your spending, you’ll be able to get an idea of what percentage of your income you’re spending on non-essential expenses.
If you are tight on cash or you simply have big savings goals, this will probably be the first area that you look at to cut down on.
Examples of non-essential expenses could be eating out, date night, gifts for people, clothes, haircuts, discretionary cash for each spouse, vacation expenses, etc. Don’t hold back. Write down a category for everything.
Investments & Savings
This is the final category, but it is the most important. If you are the type of couple who knows they don’t spend all of their monthly income each month, you could just put whatever is left over (monthly income minus the the total of the first three categories) in this category. However, savings should NOT be viewed as “if we have anything left over, we’ll save.”
Guess what – you should be saving/investing AT LEAST 10% of your post-tax income. This is extremely important to your future life. You’re not going to be able to rely on steady income forever. Your 401k payroll deductions DO NOT count towards this 10% minimum.
I’m talking about after tax income. 10% is a good starting point – the minimum viable option to get ahead of the pack. If you’re not at this point or not even close, just start with something. Save 3% of your income next month, and bump it up by a point or two every month or so.
For many couples, I would suggest writing in your savings amount on your budget first. This way – it doesn’t get the leftover treatment. The rest of your budget has to work around the savings and investing number.
There are plenty of sub-categories you could put under this and allocate your savings. Examples are Roth IRA contributions (great one to start with), debt pay off (yes, this is savings and an investment), house savings fund, emergency fund, car fund, etc. If contributing to this account or fund doesn’t increase your net worth, then it doesn’t count as savings.
Paying your debt off at a faster rate is an investment because you are saving much of the interest you were going to pay on that loan. Also, it decreases the amount of total debt you owe, which in part INCREASES your net worth.
Depending on your interest rate, throwing your savings at paying off debt can be a much better investment than the stock market.
Start your budget
There you have it. Start with those four categories and list out as many things under each category as possible. One of the truly amazing things about filling your budget out this way is that you’ll be able to clearly tell how much money you truly NEED to live on each month. Your essential fixed expenses plus your essential variable expenses is all you technically need to live on.
Creating a budget and sticking to it can free up so much money that you never thought you had. SAVE that money and start dreaming together as a couple. What will you use your savings and investments for down the road? Start today!