Here Are The Best Ways to Budget as a Couple

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H E R E A R E T H E B E S T W A Y S T O B U D G
E T A S A
C O U P L E
B Y L E V E L F I N A N C I N G
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Budgeting as a couple can feel like a daunting
task at first. Thats because both partners must
agree on a shared way to manage their
finances. However, when its done right,
budgeting as a couple can be a very effective
tool to save for future goals, pay off
previously accumulated debt, and generate wealth
in the long term. h It also strengthens the
collaboration spirit, which may be positive for
the health of your relationship too. In this
article, we will focus on the best ways to budget
as a couple and reach every financial goal
together.
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Sitting down with your partner and having an
initial discussion about your finances and goals
is the first step when budgeting together. Money
can bring a lot of stress to your relationship,
so having an open and honest conversation about
it is paramount to avoid starting on the wrong
foot. First, list each component of both
partners income situation, such as paychecks
business revenues side gigs financial
investments real estate investments other
investments gifts from relatives
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Then, its time to list all expenses, both shared
and individual, and divide first into needs
(essential costs like health insurance premiums)
and wants (discretionary costs like a gym
subscription). You should also divide them into
regular costs (e.g., monthly expenses like
renting an apartment) and variable expenses
(e.g., groceries and skincare products).
Subsequently, you should list all your current
debts, such as credit card debts student
debts mortgages car loans personal loans
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After listing all aspects of your personal
finances, its time for the same important
evaluations. Decide which parts of your finances
to keep separate and which you want to combine.
Some couples may decide to integrate every
aspect of their finances, while others may
prefer to keep some things separate. Obviously,
shared expenses (like electricity bills and
rent) should be managed jointly. However,
certain aspects of your personal finances (like
one of the two partners saving for a trip with
friends) may be managed individually. It would
be best if you also discussed opening a joint
bank account or keeping separate ones. The
discussion should consider both your checking
account and savings account. Some couples decide
to both keep their old separate account and open
a new joint one.
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You should also set short-term and long-term
financial goals together. Its essential that
both partners agree on these goals and that they
are realistic. The following list contains
several possible short-term goals. Building up
an emergency fund with three months of living
expenses saved up. Start investing in a
retirement account, like a 401(k)or IRA. Setting
aside money for a vacation or special event
(e.g., wedding or honeymoon). Making sure both
partners have life insurance coverage in case
something happens to either one of
them. Establishing joint savings accounts for
future purchases like buying an hour or a car
together. Taking advantage of tax breaks for
married people.
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Lets now look at a list of potential long-term
goals. Paying off all previously accumulated
debts. Creating an emergency fund with at least
six months of living expenses saved up. Grow
wealth over time by investing in stocks, bonds,
mutual bonds, and other investments. Planning
for college tuition expenses for your children.
Establishing long-term care insurance plans to
cover potential medical costs in old age if
needed. Creating wills and trusts to ensure that
assets are distributed according to the couples
wishes after the death of either partner and
that any dependents are taken care of if
necessary.
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Zero-based budgeting could be a very effective
budgeting method for couples, as it assigns
every dollar a purpose. This method requires you
to create a monthly budget plan and assign every
dollar of income to an expense category or a
savings goal. Envelope budgeting is another
suitable method for couples. It involves
assigning each budget category a certain amount
of money in an envelope and spend only that much
on the corresponding type of expenses. This
method helps to control impulse purchases and
stick to the budget plan. 50/30/20 budgeting is
a very popular budgeting technique. It suggests
assigning 50 of your income to your needs
(essential expenses like housing or groceries(
and 30 to your wants (discretionary expenses
like entertainment and travel). The remaining
20 should go towards savings, investing, or
other financial goals.
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70/20/10 budgeting puts a greater emphasis on
financial goals. 70 of income is spent on
needs, 20 on debt repayments, and 10 on
savings and investments. 80/20 budgeting is more
flexible than the previous two methods, and it
involves assigning 20 of your income to your
savings and then spending the rest freely. The
goal of this budgeting technique is to ensure
that youll set aside a certain amount of money
each month, no matter what. You should also
review your budget method regularly to check
whether its helping you improve your personal
finances or whether another method may be more
effective.
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