WHEN MY WIFE and I started dating, we were both in the habit of budgeting through rough approximation. We made ballpark guesses about the percentage of our income that went toward specific spending categories and goals. But in truth, neither of us had much idea how much we spent on most things, other than obvious fixed costs like rent or car insurance. As a result, our ability to plan for long-term goals was limited.
As we began to commingle our finances—buying groceries together, paying shared rent, taking joint trips—we started to determine our long and short-term spending goals, and realized our approach needed to change. We considered a number of apps to help us be more strategic in our spending, such as Mint and YNAB. We also looked at banks that offered budgeting categories, so people can see spending around specific priorities. One challenge that none of these services truly solved was the interplay between short-term needs (groceries, gas, etc.), mid-term goals (yearly vacation, new laptop) and long-term savings (house down payment). Over time, we realized that we needed a system where we allocated every dollar we earned to one of these broad categories, so we could take care of necessary expenses while still making financial progress.
Now, to help better conceptualize and bucket our family’s different categories, Sarah and I use different accounts and cards, each assigned to different purposes. Her high-interest savings is dedicated to vacations; mine represents our emergency fund. Her brokerage account is for a (someday) vacation home, while mine is for wealth preservation and growth. I also have a savings account linked to my checking that I use for house and car repairs, while her linked savings account is for gifts and weekend fun activities. Our individual checking accounts are then only for daily needs. On top of this, we’ve dedicated a specific credit card to eating out and we set a monthly goal to stay under. This helps us easily know if we’re on track—and decide between three decent restaurants or one really nice one (as well as how many cocktails make sense).
As a couple, we also sat down and set goals for each area, and then automated our transfers directly from our paychecks to ensure each category is (slowly) growing. Big picture: This saves us from constantly having to ask “can we afford this?” We either have the money in the fund so we can do it—or we need to wait until we accumulate it.
Zach Blattner is a former teacher and school leader who now teaches teachers across the Philly/Camden region as a faculty member at Relay GSE. He is a self-taught finance nerd who dispenses advice to his wife, friends, family and anyone else willing to listen.