Envelope Budgeting For Couples

Couples often find managing a shared budget challenging.  But to meet your financial goals as a couple it is critical to stay on track.  Is your monthly budget wrecked by a few discretionary spending categories you just can’t seem to get under control?  Then envelope budgeting for couples might just be the key to achieving your financial goals AND marital harmony.

Envelope Budgeting has been around forever.  It is simply the practice of taking your monthly budget for a set category, for example, dining out and placing that amount of cash in an envelope.  Every time you want to spend some money dining out you take the cash from the envelope.  When the envelope is empty, you are done spending money on dining out for the month.  Even if you spend all your money on the first day of the month!  This helps create the discipline and structure necessary to limit your spending in categories you tend to overspend on.

If you are not into carrying cash, there are many digital apps and tools you may use instead of using a physical envelope.  Many of these apps update in real time allowing you and your significant other to coordinate your spending.  Some of the most frequently recommended apps worth checking out are Quicken (and its free version, Mint), YNAB, and Mvelopes.

Psychologists believe spending physical cash causes a pain response in your brain.  This pain impacts your enjoyment of the purchase and limits how much you are willing to spend.  Conversely, using credit cards decouples the act of spending from the item purchased.  There is time between buying the item and paying for it. This makes the cost seem less important.  One study shows shoppers using credit versus cash spend up to 100% more!

This pain response may be mimicked in electronic budgeting applications.  It is important to choose an application that provides immediate feedback that you’ve spent money.  Seeing your available dining out budget decrease by $20 on your app at the end of the meal is just as effective as handing over the physical cash for many people.

It is important for couples living on a shared budget to retain some individual ownership over a set amount of money.   I recommend an “allowance” for couples.  Put aside a set amount of money for each person at the beginning of the month, for example, $50.  You may spend this money on anything you want!  And criticism from your significant other is not permitted.  Is your weakness clothing?  Then spend your allowance on clothes.  Does your partner struggle with an addiction to baseball cards?  That is okay.  As long as you each stick to your budgeted monthly allowance.  I’ve found this technique prevents many arguments over purchases the other partner may consider frivolous.

Are you ready to start using envelope budgeting for couples?  Or is the idea of setting up and living on a budget a totally foreign concept to you?  If you need help getting started, reach out for expert help with budgeting and many other solutions to improve your financial well-being: 800-355-2227 or via online for  free financial analysis and custom action plan.