Budgeting with two incomes can be a bit more difficult than budgeting with just one income. It’s not just the income that makes it difficult, but it is the fact that now two people are making all the decisions when it comes to the money, not just one person. But two incomes also creates a trap for some people in their budget – more money equals more expenses. That doesn’t work, and here are some other things to consider when budgeting with two incomes.
Building the Budget
The first step when bringing two incomes together is to build the budget. This can be more challenging because now there are two incomes, but more expenses as well. Plus, chances are there is less of a track record to build on, because each individual’s expenses were most likely different than what it is now. As such, it is important to keep the budget flexible for the first few months until you really get standardized expenses each month.
For example, you may have less housing expenses now, because you are sharing a house, but chances are other expenses that weren’t present before, such as utilities and insurance, and now a part of the equation. Make sure that you are taking this into consideration when putting it together.
Common Stumbling Blocks
However, when working with two incomes, there tends to be more stumbling blocks to building the budget compared to just having one income. The first issue that typically arises is that couples tend to start spending more as the income increases. So, with two incomes, spending has the potential to rise as well. This needs to be avoided at all costs, and a budget can help with that. By focusing the budget on the fixed expenses, and really watching the variable expenses, you can make sure that expenses stay under control even with the two incomes.
The second most common stumbling block is how to keep track of the expenses for the budget when two people are involved. Now, with two incomes, there is also two people spending money as well. This can be challenging, and it can create issues if there isn’t clear communication between the two individuals. There are several ways to address this, but the first is making sure that you are both on the same page when it comes to the budget. Communicate and develop a plan together, and that way, you can make sure that you are on the same page when it comes to spending.
However, you still have to deal with the incidentals, like gas and food. This is where using a shared credit card, and online budgeting software can come in handy. By using the same card, each person can see the full picture of spending, and using online budgeting software like Mint can help automatically categorize everything so that each person can see the full financial picture.
With two incomes, it can make things easier financially, but it can make things harder logistically if you’re not careful. Don’t let it get too complicated and make sure that your budget is simple.