It has been stated that couples argue over finances more than any other topic. Regardless of how much money a couple has, prioritizing how to spend money is problematic for many couples. This is due to couples having different financial personalities. Spouses often have different priorities of how to spend money. Individuals tend to fall in the category of either a saver or a spender. A spender tends to live in the moment while a saver tends to plan for the future. When both spouses give valuable input to budgeting, they are more likely to balance each other and stick to a budget. Savers can help spenders stick to a budget while spenders can help savers embrace experiences and view purchases as an investment.
Without a budget, spouses often take on the role of a parent or gatekeeper of the money. Arguments follow as spouses attempt to limit each other’s purchasing power. This can create an imbalance of power in the relationship. I have worked with many couples whose yearly income exceeds a million dollars yet there were disagreements over how to spend their money. Developing a budget together allows the jointly created budget to be the gatekeeper although there should be a little flexibility in the budget. Following a budget avoids the power struggles regarding money and purchases.
The following are recommended percentage ranges of net income for a budget:
Giving 10%; Saving 10%
Food (Groceries and eating out) 10-15%
Utilities 5-10% hav
Housing (Mortgage, Rent, HOA dues, property tax, home insurance) 25-35%
Transportation (car insurance, car maintenance, gas) 10%
Insurance (Disability, health and life) 10-20%
Health (Co-pays, medicine, dental) 5-10%
Recreation (anything fun) 5-10%
Personal (clothing, haircuts, etc.) 5-10%
Miscellaneous (catch all category) 5-10%
While there are various general templates with percentage range guidelines for expense categories found online, couples can tweak the percentages to fit their individual needs. For instance, it is recommended that couples spend between 25-35% net income on housing but if a couple lives in a city where housing is expensive like Washington, D.C. or Los Angeles, CA., a couple may spend as much as 38% or more on housing and less on transportation or another area. It is also recommended that couples have three to six months of cash savings in an emergency fund. This reduces stress in relationships, particularly for individuals with saver financial personalities.
In developing a budget, couples should discuss their short and long- term financial goals, and lifestyle. It is good for couples to have a shared vision on savings and on spending. Dreaming together as a couple about future plans is important as a shared vision can tend to align spenders and savers. Couples can set aside money for future dreams such as owning a camper, a mountain cabin or a lake house or taking vacations abroad. It is recommended to have a monthly marriage financial meeting to evaluate their budget and discuss goals and dreams together.