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A budget helps you take charge of your money and tell it exactly where you want it to go. Without a budget, your money controls you. With a budget, you control your money.
Knowing how to budget is money management 101.
Here, we’re going to give you a step-by-step guide to create a budget in under 10 minutes. We’ll also give you some tools and additional tips as we go. You may want to bookmark this page and come back to it later!
Here is the basic budget template we’ll be using. You can use this for free and make a copy for yourselves.
1. Break your budget into three areas.
We want to start by staying really broad (think: a 30,000 foot view of your finances), but breaking our budget into three areas:
- Incoming (After Tax). This is the amount you make during a month after taxes… typically your paycheck(s). **Note: We do “after tax” income because this is what actually hits your bank account. You can do “pre-tax” income but it becomes more complicated as you’ll need to remove taxes and other deductions.
- Savings & Investing. This is the amount you’ll set aside for life goals and investments.
- Outgoing. These are your expenses… or, what actually leaves your account.
2. Start with incoming.
Now, we start to zoom in a bit as we create the line items in our budget. We start with incoming because it helps us know exactly how much money we have coming in each month and how much we can save, invest, and spend.
Follow along as we fill out the sample budget together. We’re going to use some fake numbers, but you can use your own as we go.
In this case, let’s pretend you and your partner both make $3,000 per month AFTER TAXES (again, we always use after tax income to keep things simple).
We’re putting $0 for now, but additional income might be things like:
- Consistent dividends from stocks
- Trust fund payments
- Investment returns
- Government assistance (eg, military benefits)
- Or anything else beyond your normal paycheck
Unique Income Situations
➡️ If your income is not consistent from month to month, there are two ways to fill out your budget:
- Take the average amount you typically earn. This may mean you are over or under budget from month to month, but it will all average out at the end of the year.
- Take the least amount you’ve earned. This means you will always be under budget, but will always ensure you have money left over at the end of the month.
➡️ If one of you doesn’t work (like you’re in school, staying at home with kids, unemployed for whatever reason, etc), just write $0 in the paycheck line. All good! We’re looking for honest financial facts in our budget.
3. Then fill out saving/investing.
Based on your income, you now know how much you should save and invest.
We recommend couples try to save 10% of their income ($600 in this case) and invest 15% of their income ($900 in this case).
Please note: these are just recommendations based on what works for us. If you have any concerns or questions, please consult a financial advisor.
Everything else is incremental.
If you’re saving for a down payment on a home, put it here. If you’re saving for a vacation, put it here. If you’re saving for a friend’s wedding, put it here. You get the picture.
Based on this example, you and your spouse are saving and investing a total of $2,000 per month, or roughly 33% of your income. Nice work!
For more guidance on saving and investing, be sure to download The Newlywed Financial Guide.
4. Finally, add your outgoing.
Now, on to expenses. You’ll want to list out all of your outgoing money, starting with giving and housing. Again, please remember that we’re trying to be clear and transparent about where our money is going and where we WANT it to go! Don’t exclude things from this list or try to hide expenses from each other.
This is certainly not an exhaustive list of potential expenses. We tried to list out the most common, but it’s definitely possible you have outgoing money in other areas.
If you’re unsure of where else you might be spending, go look back at your bank statements from the last few months.
5. Get to $0.
At this point, you’ve identified your income is $6,000, you are saving/investing $2,000, and your expenses are $4,000. This means you have $0 left at the end of the month.
That’s exactly what we’re looking for here! All of your money is accounted for and you know exactly where your money is going.
It’s highly unlikely you will hit $0 the first time you go through this exercise. Chances are, you’ll either be a bit over budget (ie, “Amount Left at Month’s End” is negative) or a bit under budget (ie, “Amount Left at Month’s End” is positive).
If you’re over budget:
- Try to cut back on expenses FIRST (be sure to read our blog about 28 money saving tips)
- If you’re as tight as possible on expenses, then you may need to save or invest a bit less.
(You can also try to increase your income but this is obviously more challenging)
If you’re under budget:
- Try to save or invest more.
- Add a bit more to your expenses so you can live more comfortably.
Again, the goal is to get your budget to $0 left at the end of the month.
If you haven’t already, grab a copy of our budget template and fill it out with your partner.
Budget Tools
(These are not associated with or endorsed by us. We’re just passing along tools we’ve seen for managing your budget)
When To Review Your Budget
As a general rule of thumb, you should review and adjust your budget whenever something changes. Maybe that’s a pay increase, an unforeseen expense, a rent hike, etc.
However, if nothing changes (or you don’t notice it changing), it’s smart to review your budget once a quarter or every few months.
Common Budgeting Questions
1. What if one of us is a spender and the other is a saver? How do we balance our budget?
It’s common for couples to have different spending habits, but this doesn’t mean budgeting has to be a source of conflict. The key is open communication and compromise. Start by setting shared financial goals. Discuss what’s important to both of you, such as saving for a house, taking a vacation, or paying off debt. Once you agree on priorities, allocate a portion of your budget for individual discretionary spending. This allows the saver to feel secure and the spender to have freedom, all within agreed-upon limits.
Here are 60 questions about finances for engaged couples so you can make sure you're on the same page before you get married.
2. How do we handle budgeting if one of us has debt and the other doesn’t?
Debt can be a challenging subject in marriage, but it’s important to view it as a team effort (remember, you and your spouse are ONE... which means your debt is ONE as well). First, be transparent about your debts, including how much is owed and the interest rates. Then, together, decide on a repayment strategy. This might include creating a debt snowball (starting with the smallest debt) or debt avalanche (focusing on debts with the highest interest). While tackling the debt, budget for shared goals and savings, so both partners feel equally invested in your financial future.
The Newlywed Financial Guide has an entire section handling debt.
3. Should we combine our finances or keep them separate?
We strongly recommend that couples have a joint account. Combining finances promotes unity, transparency, and trust in marriage. A joint account allows you to manage your money together, work towards shared goals, and avoid potential misunderstandings. While some couples may be tempted to keep separate accounts for personal spending, we believe that full financial integration strengthens the partnership and keeps both spouses accountable.
For a deeper dive into why joint accounts are essential for a strong marriage, check out our blog post here.
4. What should we do if our income isn’t consistent month to month?
When your income fluctuates, budgeting requires a bit more planning. Start by calculating your average monthly income from the past 6–12 months. Use the lowest reliable income figure as your baseline for budgeting. This conservative approach ensures you’ll always be prepared for a leaner month. When you earn more than expected, allocate the surplus to savings, debt repayment, or special goals. Building an emergency fund is also crucial, as it will give you a safety net for unexpected expenses during low-income months.
5. How do we handle unexpected expenses or emergencies without derailing our budget?
Unexpected expenses are inevitable, which is why it’s crucial to have an emergency fund. This fund should cover 3–6 months of living expenses and be kept separate from your regular checking account. To start, aim to set aside $1,000 and gradually build from there. When an emergency arises, use this fund instead of taking on new debt. Additionally, reviewing your budget regularly (at least quarterly) will help you spot areas where you can cut back temporarily to accommodate unexpected costs. We give a bunch of tips for building an emergency fund in The Newlywed Financial Guide.
Conclusion
As you’ve seen, budgeting is essential for building a strong financial foundation in marriage. It helps you stay organized, set goals, and prevent money from becoming a source of tension. By following the steps outlined in this guide, you and your spouse can take control of your finances and feel confident in your money management.
For additional resources and to dive deeper into managing your finances as a couple, be sure to check out The Newlywed Financial Guide. This comprehensive guide will help you navigate the complexities of budgeting, saving, and long-term financial planning as you build your future together!
