Making a couple’s budget: Where do you start?

17 November 2023 by National Bank
A couple sitting in front of a computer

The birth of a child, going back to school, losing a job and purchasing property are all big life events for a couple. And change is a good opportunity to make a couple’s budget, an essential tool for sound money management. 

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How do you create a budget for two? 

Creating a couple’s budget follows the same steps as a personal budget, but it’s a two-way street. You need to consider a few things. The first step? Make your personal budget, including all your sources of income, expenses, debts, savings and investments. Encourage your partner to do the same. This will make the exercise easier and give you an overview of your respective financial positions. 

What expenses should you share?

Among the recurring monthly expenses you’ve identified, decide which ones to share with your partner and which ones you’ll continue to pay on your own. 

Shared expenses generally include rent or mortgage payments and utilities such as electricity or internet. Also include anything you pay for together, such as groceries or a car loan. If you have children, don’t forget to include related expenses, such as daycare or school fees and supplies.

How do you save as a couple?

A budget helps you to anticipate how much you’ll need to save: Start by identifying your shared and personal financial goals. Do you want to buy a property together? Perhaps you’d like to adopt a pet, go back to school or take your dream trip? Then determine how much you’d like to spend on these projects and when you’d like to do them. Next, divide this amount between the two of you, and then by the number of months it will take to achieve them. Finally, include this amount in your monthly budget.

Whether it’s a shared or a personal project, savings should be treated as a priority expense item. This method will help you put the money you need aside each month to achieve your dreams without going into debt. And why not use the Government of Canada’s Budget Planner (external link)? It’s a good starting point to help balance your income, expenses, savings and reach your financial goals.  

Which accounts should I use?

You should also know that some accounts are better suited to your needs. For example, an FHSA to plan for buying your first home, an RRSP for going back to school or retirement, or the TFSA for saving for travel, buying a car or doing home renovations. And the RESP is a great tool to save for your children’s post-secondary education.

And don’t forget about the emergency fund. You can build this financial cushion individually and as a couple and use it when the unforeseen happens.

How do I manage debt?

Some debt can be incurred personally. Other debt can apply to a couple, such as a mortgage or a car purchase. The idea is to balance your budget to help you reduce your debt. How do you do this? By developing a repayment strategy to eliminate debt.

The importance of a discretionary budget

Once you’ve established your joint budget, including shared expenses, savings, debts and financial goals, you should be left with a personal amount. What do you want to do with it? Save it, invest it, spoil yourself or pay off your debts? It’s up to you. 

It’s always good to have a discretionary budget. It gives each partner some leeway for personal expenses and it can help reduce a couple’s financial tensions. 

What budgeting method should you use to split expenses? 

Once all expenses have been identified, it’s time to sit down together and decide how to split your joint expenses. We recommend the prorated method in proportion to your salary. This method is more equitable and ensures more sound personal finances over the long term.

What tools should you use to make payments? 

Each couple can choose the tool that suits them best to pay their shared expenses. Here are a few examples: 

The joint account 

With the joint account, each partner transfers the money needed for the couple’s expenses on a bi-weekly or monthly basis, depending on the expense splitting method they’ve chosen. Many couples use it to pay for major joint expenses, such as rent or a mortgage.

Advantage: Pre-authorized payments make it easier to manage bill payments and make sure you don’t forget.

Disadvantage: You always need to make sure that there are enough funds in the account to cover monthly expenses or you could pay extra fees.

Joint credit card

Joint accounts not for you? Here’s another option: the joint credit card. This tool makes it easy to pay for day-to-day expenses like groceries or household items. 

Advantage: This method helps you monitor all your cash outflows, which can be a big help to manage your expenses and your joint budget.

Disadvantage: Although this type of payment can be advantageous, allowing you to enjoy cashback or points rewards, it’s best not to use it for personal expenses. It can complicate your monthly accounting because you’ll have to separate your personal expenses from the couple’s expenses.

Interac e-Transfers or internal bank transfers

If you prefer to retain some degree of independence, you can always make some payments yourself and ask your partner to transfer their contribution amount to you. 

Advantage: Some apps help you calculate the percentage of expenses to split between you and your partner. And that makes everything easier. 

Disadvantage: To avoid any potential financial tensions between you and your partner, good communication is the key.

Trouble deciding which option is right for you? Many couples choose to use a combination of these methods.

How often should you review your couple’s budget?

It’s a good idea to review your budget two or three times a year. This helps you both adjust to the amount allocated to each of the various spending categories and to review each partner’s contribution. It’s really about adapting to each partner’s fluctuating financial ability as life’s big events impact a couple’s finances: the birth of a child, sick leave, a promotion or a job loss.

Remember that a budget is an excellent tool for controlling your spending, gaining independence and keeping better track of your cash outflow, savings, debts and investments.

Didn’t get your budget just right the first time? That’s totally normal. Trying it out, testing its practicality and tweaking it are all part of the process. It’s the best way to see what works for you so you can reach your financial goals.

Once you’ve mastered the budgeting stage, you might want to think about making a joint financial plan. Having a medium- to long-term plan will align your goals and make sure you achieve them the best way for you.

How do you talk about money as a couple?

It’s no secret that money can be a source of tension in a relationship. All the more reason to broach the subject as soon as you can. For good communication, be transparent and create a climate of trust in which each partner feels free to express themself. A good way to achieve this is to take a neutral, open approach. 

Patience and perseverance are also key. If the first discussion gets tense, take a break and try again later. It’s important to respect each partner’s readiness.

Do you find discussion difficult? Why not ask a specialist – your financial advisor, for example – to join the discussion? This could help you take a step back and put your emotions aside.  

Even if they’re not always pleasant, these conversations can help avoid many unsaid words, unspoken expectations and unpleasant surprises. A good way to prevent inequality and conflict is to draw up a cohabitation or marriage contract for money management when dividing the couple’s assets in the event of separation or death.

Would you like to discuss it with us? Contact your National Bank advisor or National Bank Financial wealth advisor. Don’t have a specialist in charge of your file? Make an appointment now.

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Invest in you: dedicated to women’s finances

Discover practical tips and tools designed to help women improve their financial independence.