Budgeting with your Spouse: Tools for Success

When it comes to establishing a success personal finance program you need to be totally committed. When you are married or have a significant other, that means both of you must be fully engaged. Setting a budget and sticking to it can be one of the most difficult aspects of keeping your finances in order, however it can be even more complicated when two people must agree on an already difficult task.

In this article we’ll discuss how to approach budgeting with your spouse. Money is often cited as the single biggest source of marital frustration and ultimately divorce, but with a few tools in hand you may find that it can be a wellspring of success. Budgeting with your spouse will be something that occurs on an ongoing basis. Any way to make the process smoother or less stressful will pay off each time you engage the topic.

Building Budget ‘Tools’ Now will Payoff

This article is constructed in a way to describe a set of ‘tools.’ Not all of them are useful for each reader. After you have had a chance to go through each one, sit down with your partner and talk about if they make sense for what you are trying to accomplish.

Whatever tools you select now are not necessarily the ones you will ultimately be using weeks, months, or years down the road. However, by conceptualizing your budget journey in terms of specific activities or approaches will help you build the capacity to adapt. Find what works for you, assess your situation down the road and readjust your approach as necessary.

Tool #1: Have a Budget Meeting Monthly

The first tip I recommend for budgeting with your Spouse is to pick a time and location monthly for a budget meeting. The meeting should last between 30 minutes to 1 hour and should be formal. If you have kids, they should be out of the house or otherwise entertained. The meeting should preferably occur on the weekend so that your mind is relieved of normal workday stressors that may impact your emotions.

This meeting should revolve around two priorities:

1: Developing and agreeing to next month’s budget.

2: Looking at the previous month’s budget and talk through successes and failures.

The budget meeting should not be used to talk about the current month. Current month issues should be happening in real time and not delayed for a budget meeting. The focus of this meeting is strategic, not tactical in nature.

When you come to the meeting, you should be on time and in the right attitude. You will be conducting this meeting with your spouse as if you were in a business meeting: with honest but respectful language and intentions. The following information and aids should be present at the monthly budget meeting:

• • Graphic aid such as a computer monitor with a spreadsheet or a whiteboard and markers
    
    
  • Last month’s budget and outflows (if this is your first month doing the meeting then bring all your account statements)
    
    
  • Something to record next month’s budget. This can be paper or software. For an app/software solution I highly recommend YouNeedABudget.com (or YNAB for short). This is what my wife and I have used for over a decade.
    
    
  • The balances for your retirement accounts.
    
    
  • The balances for any debt.
    
    
  • A number that represents the amount of money you expect to earn for the following month.
    
    
  • Your patience.

Since this is a meeting there will also be preplanned agenda items. These are things that need to be addressed by both parties openly. They are:

• • How much debt do we have? When will it be paid off? 
    
    
  • How much do we have in retirement? Is this where we need to be?
    
    
  • A reading of each expected budget category and agreeance this is the totality of the list.
    
    
  • A line-item review of each category’s last month expense and expected amount for next month.
    
    
  • A review of the total budget to ensure it is at or below your income.
    
    
  • A discussion of where to put extra or which category to cut if necessary
    
    
  • A do-over of debts and retirement to ensure that they will continue to move in the right direction.
    
    
  • A hug

That’s a lot of things to accomplish! But they all need to be done monthly. As each month goes on things will get smoother. Your budget categories will have lower variance and unexpected outflows will become less and less of a hot button issue.

Tool #2: Set Aside “Personal Budgets”

There are numerous recommendations from many experts on how to split your income. Some folks keep their expenses and incomes separate… if this is you then you are probably reading the wrong article. If you join your incomes and then split it back up again then consider there are likely two main ways to do this:

• The first way is to combine both incomes and allot discretionary spending proportionally to income earned by each spouse.

Example: Joe earns 10k a month and Jane earns 15k a month. If the budgeting process outputs a discretionary spending amount of 10K, then Joe gets 10/(10+15)x100% = 40% of 10k which is $4,000. Jane would get the rest of the amount which would be $6,000. (I used large numbers for convenience).

The rationale for this method is that if one spouse ‘works harder,’ or ‘sacrifices more,’ then they should be able to spend more. This approach may work for some people; however, I find it inherently distasteful.

Even just considering the gender pay gab for instance, if Jane and Joe had the exact same job it is likely Jane would earn $0.77 for every $1.00 Joe earned. Also, what if Joe was a Nurse and Jane was a doctor? Jane would likely earn way more, but could one say that she works harder than the other?

These are questions you will have to ask for your own personal relationship so be thoughtful when considering using this method to divvy up extra funds.

• The second way to split incomes would be to just split it down the middle. If $1,000 has been earmarked for personal consumption, then each person would get $500.

Why should each person have a ‘Personal Budget?’ A marriage is a relationship where each person gives up tremendous autonomy but there should be some time and money set aside for personal ventures. Having a personal budget allows an individual to make individual decisions.

Sometimes people would like to splurge in a way that would not please their partner. Having a personal budget allows individuals in a relationship to spend on things that would normally cause a disagreement without fear of resentment.

Another big benefit of having personal budgets is it allows each person to be ‘generous.’ A couple can surprise each other with gifts on the holidays, treat each other with meals or surprises. It’s a small way to bring back some spontaneity into a relationship while also keeping a strong grip on the overall financial situation.

Tool #3: Identify Problem Categories

The next tool for budgeting with your spouse is to identify budget categories that don’t seem to work out. During your monthly budget meeting you set a cap on spending for a certain category and then by the end of the month you’ve completely blown it. Being able to spot this is important so that you can address it.

Spending too much in a category can seem simple on the surface. It can feel like a lack of discipline or that perhaps there was an unexpected expense that drove that month’s spending out of control. But if you routinely overspend in a category such as restaurants or entertainment then it’s time to sit down and think about what is going on.

Write down a list of reasons you think that you overspent. Have your spouse do the same. Do you all agree? Then write down a list of ways that you all can fix it… perhaps it is as simple as finding money in other places of your budget to compensate… sometimes there is more of a psychological fix that needs to occur.

If you are concluding that the reason you overspent is due to some type of ‘lifestyle’ issue vs some type of real need then you may need to dig further.

For example: if you are coming home from work each day, too tired to make dinner thus you find that you are more likely to spend on a dinner out on the town. Looking into why you are so tired may be how to fix your budget in this case. Are you getting enough sleep? Are you exercising enough? Is your commute wearing you out? Fixing the root cause of your spending issue will fix your budget category over-expenditures.

Tool #4: Have an Emergency Fund

Disasters happen. Hurricanes hit. Air conditioners brake. Car accidents that we cause happen. Medical emergencies happen. Job losses and pandemics happen.

Be prepared. Having a significant emergency fund will help smooth out some of life’s craziness. Having 6-9 months’ worth of expenses saved up is crucial to help keep you and your spouse rational during emotional financial roller coasters.

As an example, imagine losing your job suddenly and you had no savings account to turn to. How do you pay the bills or put food on the table? Credit cards? Pay day loans? Petitioning a family member? None of the options are good.

If you don’t have an appropriately funded emergency fund, then now is the time to plan for it. Make it a category in your budget… something that you put money away for each month. Disaster will strike. When it does, don’t let lack of money further compound the crisis.

When you and your partner make saving for an emergency a priority, you will find that the damage caused by life’s ups and downs can be mitigated drastically.

Tool #5: Treat Each Other

As mentioned in tool #2, each person should have access to a personal budget. An amount of money each month that each can spend at a totally individual level. Occassionally, treating each other to days at the spa, restaurants or other fun experiences is a great way to spend that personal money. It allows each person to be able to still ‘give to each other.’  It allows each person to give something unexpected without consequence to the financial budget.

Tool #6: Don’t Blame Each Other

The final tool I have to offer when budgeting with a spouse is to not play the blame game. When a budget category is overspent, or an emergency happens it is easy to point the finger and say, ‘we wouldn’t be here except you did [fill in the blank].’

Whether your partner bought too many drinks at the bar, got into a wreck driving too fast on the interstate, or got cancer… life happens, and we ALL make terrible choices along the way. These choices will have an impact on our budgets but the best we can do is move on.

Not ‘blaming each other,’ doesn’t give license, however, to spend erratically. One off budget snafus are one thing… long term behavioral patterns that lead to financial hardship are another. If your partner has an addiction to spending or some other pattern of behavior that leads to a broken budget over a long period it may be time to consider counseling.

Therapy or counseling is a great way to get to the root cause of an issue. Oftentimes, people compensate for stressors in their life in a way that gets them and their spouses into financial trouble. By talking to a professional it may be possible to peel the onion and figure what’s broke and how to fix it… this will not be something that can be blamed away so don’t try.

Concluding Thoughts

Getting control of your financial life can be a difficult task for an individual and is only compounded when you have two people… but it is not impossible and can truly be a transformative if approached thoughtfully.

Throughout your joint budgeting journey, you will fail. You will miss targets and be forced to weather financial catastrophes. But always remember that your life with your partner is not about money. Money is just an aid to help you achieve certain goals. If you take these tools and use the ones that make sense for you, I believe that you will find a formula for long term success.