The first step to a down payment (or paying off debt, or buying a new car) doesn't start with the first dollar saved. It starts with a clear financial plan to take you to your goal -- aka, a budget.
Sticking to a budget is tough enough when it's just you. But when you're partnered up, it's even more important to be concrete and super-specific, so you don't accidentally undo each other's progress.
Ready to create a working family budget? Use this 5-step blueprint.
1. Make It Shareable
What if you had to whip up a double-chocolate birthday cake, but you weren't allowed to check the recipe?
Budgets work much the same way. They don't do much good if you're not looking at them.
Making a budget that you and your partner can access at any time is essential to savings success. You can use an app like Mint or YNAB. I set up a spreadsheet on Google Drive, since it's open all the time on my computer, and shared it with my husband so it's easy for him to update whenever he's got his phone handy (i.e., always).
2. Plan Long-Term
In the past, I used a similar budgeting method of building spreadsheets, but with one major downside. I created each budget one month at a time.
Even if you copy-paste all the fields from one budget doc or spreadsheet to the next, having to make a new file too often drains energy from following the plan. You want tracking finances to be as simple as possible, eliminating as many bumps as you can, no matter how small.
This time around, we created a year-long family budget, broken down into manageable chunks. You can add as many sheets as you need to in one spreadsheet and tab between them for easier side-by-side comparison.
3. Keep Your Goal at the Forefront
Literally, if possible! The first sheet on our budget lists our combined, after-tax monthly income, our savings goal for the year, and the monthly savings target that will get us there. There's notes about where the savings money will come from, and a reminder that the hard work is going toward a permanent home for our family.
4. Use Categories
Creating categories makes it easier to see at a glance where you're overspending or have a little extra you could throw toward savings. Here's the categories in my budget:
- Mortgage
- Fun
- Gas
- Food
- Bills
- Insurance
- Savings
- Miscellaneous
Some of these categories may look more straightforward than others. Let's get into a little more detail on a few categories:
- "Fun" includes a few kinds of spending. My husband and I each get a monthly personal spending allowance, no questions asked. We can blow it all, or save and roll the balance over to another month for a bigger splurge. There's also a separate subcategory for dates and family outings.
- "Savings," surprisingly, doesn't include a penny of our down payment savings! Our family has multiple savings needs going at any one time. Retirement, our daughter's 529, and the emergency fund shouldn't suffer because we've got our eye on a house. This category holds space for those savings.
- "Miscellaneous" is a slush fund for the extras that seem to pop up all the time. Birthday gifts, clothes for a growing kid, haircuts, things like that. It's not the same as a fund for repairs -- that comes out of excess padded into the car fund, or from first-tier emergency savings.
5. Automate Everything You Can
Obviously, automating things like bill pay or savings transfers keeps money moving where it's supposed to on time. This is about automating the math in your budget so you get the answer (Did we hit our goals this month?) without having to break out a calculator at the end of each month.
It's a crazy simple tip, but worth mentioning because it saves so much headache over not using it. In your spreadsheet, use the "Sum" function in each column to keep a running total of how much you've spent. Put the budgeted amount right below, so it's obvious whether you're over or under. Set the "Sum" function in the row that calculates all those running totals by category so you have an automatically updating total of how much you've spent that month.
If you're using an app, that should also provide easy updates on how much you've got left to spend in a particular category.
Getting on the same page with your partner financially is essential to making a savings plan work. Keep budget-tracking simple, and keep communication open, and you've got a much better chance of success.
