Top Tips to Save Money as a Young Couple

Oh, to once again be young and newly joined in the bond of financial security. For a couple just starting out, knowing how to discuss, combine, and plan their finances can be a challenge. But, working together, a couple can more effectively save for big long-term investments, like a home or retirement, or set budgets for upcoming expenses like a wedding or a vacation. Plus, the collaborative effort involved when two people figure out how to save money as a couple is good for their relationship.

Research shows that opening up – and continuing to communicate openly – about finances helps couples build trust. The tips and suggestions discussed below offer couples strategies to make sure their savings accounts grow – and also can help ensure that couples grow old together.

“It’s all about communication” is a common relationship refrain and it holds just as true when applied to a couple’s finances. For young couples, in fact, it has become increasingly more important, as newly married couples are twice as likely to start off with debt as the previous generation, according to a survey of over 1,000 adults.¹

With online banking, it’s easier than ever to have an open line of financial communication. Traditionally, couples open joint bank accounts, but expense-tracking and mobile payment apps fill a similar role for many couples today, as they reimburse each other with a single click. Regardless of how your finances are tracked, openness is key. The study mentioned above also found that 87% of “great” marriages openly discussed their financial goals together, compared with 41% of “okay” or “in-crisis” marriages.

Many couples schedule weekly or monthly “money dates” to discuss recent spending and saving, upcoming purchases/projects, short- and long-term goal progress, and more. Such regular check-ins can get both partners actively involved in reaching goals and holding themselves and their partner accountable, as well as identify ways to help each other. For example, if there’s a big gap between two partners’ credit scores, adding the partner with the lower score as an additional card member to the other’s credit card account can help rebuild that lower credit score. Many banks and credit card issuers offer services that provide free credit scores and credit reports online.

Budgeting is usually the required first step before couples begin saving together. Especially for a first budget, many couples create it from the ground up, starting at $0 and justifying every dollar spent. This is known as “zero-based budgeting,” and can help ensure that needs are met before couples add discretionary spending. More established couples may already have a good idea of their recurring bills, like rent/mortgage, utilities, and groceries, and can build on that foundation.

The Consumer Financial Protection Board (CFPB) suggests that budgets should adhere to the 50/30/20 rule, with 50% of income going to needs, 30% for “wants,” and 20% into savings and paying off debt.² Using the U.S. Census Bureau’s median 2020 income for a two-person household of around $74,000 a year, and allowing for typical taxes, a couple could likely expect a monthly take-home pay of roughly $4,750. Following the 50/30/20 model, that couple could plan $2,375 for necessary bills, put $950 into savings or debt repayment, and use the remaining $1,425 for “other” categories – in other words, the fun stuff.

But that’s a general outline, and every couple draws different lines between “wants” and “needs.” Since both partners rarely agree perfectly on the amount of “fun stuff” they want in their lives, striking a balance that keeps both parties happy can be essential to a healthy relationship. Regular check-ins and adjustments can help prevent one or both partners from building up a perception of unfairness or of overlooking important expenses in the monthly budget.

While general budgeting rules can always be applied, specific goals should have specific budgets. If a couple is saving for a wedding, they may create a special account to fund it, with its own timeline and milestones. The timelines and milestones would be different, though, for savings plans aimed at a down payment for a house or a newborn’s college fund, for example. When setting savings goals, a useful way to categorize them is to distinguish among emergencies, short-term plans, and long-term goals:

• Emergency fund. It’s smart to have a rainy-day fund that generally covers between three and six months of your income, stashed in an immediately accessible account. This can be used in the event of unexpected circumstances, like loss of a job, illness, or a major housing repair.
  
  
• Short-term goals. Short-term savings goals could be ones earmarked for a future vacation, an upcoming down payment, a wedding, or other “soon” events. These funds are usually kept in shorter-term accounts that yield more interest than standard bank savings, like a high-yield savings account (HYSA) or CD.
  
  
• Long-term goals. For savings goals like retirement, it’s typically best to have specialized accounts, like a 401(k) or Individual Retirement Arrangement (IRA). Consider automatic deposits that allow a couple to “set it and forget it.” It can be difficult to plan for something that will take place decades from now when urgent bills keep piling up, but starting life insurance policies and retirement funds early often reduces monthly payments and yields higher returns, thanks to the effects of compound interest.

Saving can be difficult, especially in tough economic times, but coming together as a couple to set up a saving plan can have many benefits. Collaborations can lead to more ideas, and sharing complex steps, like researching and opening accounts, can help a couple start saving quicker and smarter than someone saving alone. Whether it’s meant to “divide and conquer” a savings to-do list or to support each other through the process, two heads are often better than one.