How to Budget for a Two-Person Household

Budget for a two-person household

Creating a budget for a two-person household is one of the challenges of living together, whether as a married couple or not. You’re no longer just earning and spending for yourself. Now, you and your partner have to take each other’s needs and wants into consideration.

Here’s a helpful guide to help you know how to budget for your household of two.

Budgeting Starts with Tracking Income

You’ll first want to know how much money your new household brings in each month. This determines the amount that you can work with. But you’ll also have to consider whether you’re both earning or not.

If, for instance, your spouse is the only one working, their income has to be enough to support both of you. Otherwise, you may have to get a job, look for alternative income sources, or take out loans to help with the expenses.

You might also have to start cutting costs where you can—you could eat out less often, switch to cheaper brands, or take fewer vacations.

Consider Your Location

Living costs vary depending on the city or county you’re in. You might find that commuting, buying groceries, or paying the average rental fee might be more expensive in one town vs another.

For example, you would need at least $44,344 to comfortably support a two-person household in Amarillo. That’s $3,695 a month. But if you’re in the Dallas Metro Area, the cost of living rises slightly to $49,592, which means you’d need to earn $4,133 monthly.

As such, you and your partner need to make sure your budget can afford to be where you are. If not, you should consider moving to an area with a lower cost of living.

What to Include in Your Budget

Here are some essential expenses to consider for your household. Including these in your budget will have a significant impact on how well you manage your finances.

1. Housing Expenses

Housing expenses refer to more than just your mortgage payments or rental fees. It also includes the following costs:

  • Property taxes
  • Home insurance
  • Utilities (electricity, water, etc.)
  • Maintenance and repairs

The Credit Counselling Society states that your housing budget can take up to 35% of your budget. But again, this can also depend on the location. If we used the Dallas living costs as an example, only about 25% would go to housing.

Also, consider that there are only two of you, which means you likely won’t need a large house yet. It could help you save on utilities and upkeep.

2. Groceries & Other Living Expenses

Though there aren’t any rules on how much to budget for groceries as a couple, you can typically expect to spend around twice the amount that you spent while living alone. You’ll also have to account for your or your partner’s special needs, such as gluten-free foods or certain personal care brands. They could be more expensive than conventional items.

Other types of these expenses usually included are:

  • Transportation: Money used for public transit, fuel, maintenance, and car insurance.
  • Healthcare: How much you spend on medications, medical insurance, or regular appointments.
  • Other utilities and bills: These can include internet connection, mobile service providers, and bank fees.

3. Debt Payments

Including any outstanding debts in your budget will help ensure that you still have money left to pay them off. This way, you can avoid increasing the interest rate and damaging your credit score, in which case you and your partner would then have to make a larger payment next time.

4. Savings/Emergency Funds

If there’s any extra money left in your budget after paying for monthly expenses, you can set it aside and let it accumulate over time. This way, you’ll have cash to spend in case of emergencies such as hospitalizations and car accidents. Even if the money doesn’t cover everything, it will at least help reduce the amount that you might need to borrow.

Your savings will also help you and your partner finance any future goals, such as buying a new house, starting a business, or setting up enough cash for retirement.

By knowing how to budget for a two-person household, you and your partner can have better control over where your finances go. You can even consider it training for when you start a family—you’ll be planning a much more complicated budget once you have kids.