Claiming responsibility over your own finances is hard enough, but what happens when you start sharing expenses with your significant other?
Whether you’re dating or married, as a couple, it is likely you have quite a few shared expenses. For both of your sake, you will want to ensure you have a joint budget, so you know how you will pay for each bill or expenses as it comes up. This way, no one feels any unnecessary pressure or resentment.
There are a number of ways you can budget money with your significant other. You just have to figure out the method that works best for the both of you. In the meantime, here are four common budgeting techniques for couples.
1) Split Expenses 50/50
One of the most straightforward budgeting techniques is to split every cost 50/50 with your significant other. This way, you each pay an equal amount towards every shared expense, so no one feels cheated.
This works well for individuals that have similar incomes and for those who feel strongly about paying equal. However, it may be difficult for couples if one person makes significant more than the other.
To easily split expenses, or just to keep track of your spending, you can use Tiller. Tiller (daily) pulls in your spend data from your credit cards and bank accounts and puts it in a uniform format.
2) Create a Shared Account
If you desire to share every expense, then a shared account might be the best move for you.
With a shared bank account, you can both transfer income and expenses in and out of your account. Since it’s technically both of your money, you don’t have to spend time figuring out who pays for what.
Joining finances is one of the easiest ways to manage your finances together. However, if you’re not married, this could pose dangerous in the event that you aren’t together in the long-term, since you aren’t legally bound to one another. While this doesn’t bother some couples, it may be an issue for someone who is more protective over their personal finances.
To open a shared account, consider switching to a high-yield online savings account to receive some of the best interest rates available.
3) Split Expenses Based on Income
If you each want to be responsible for a portion of the bills, but each earn a significantly different income, then you may want to consider splitting expenses based on income.
With this method of budgeting, you each decide what portion of the bills each of you is comfortable with paying based on your income.
For example, take a couple who pays $1,000 in rent every month. One person makes $70,000 a year, while the other person makes $30,000 a year. If this couple chose to split expenses evenly at 50/50, so $500 each per month, then the person with the lower salary will be paying a much larger portion of their income towards such expenses. In fact, for the person who makes $30,000 a year, about 20 percent of their income will go towards rent every year. On the other hand, the person who earns the higher salary of $70,000 would only be paying about 9 percent of their salary towards rent.
This budget method ensures that both parties are living within their means so no one feels slighted. You can base your budgets on percentages instead of splitting everything evenly, so you each have the opportunity to meet your other financial goals, such as saving or debt repayment.
4) Take Ownership Over Different Bills
Not so keen on splitting every bill? Then you can each take ownership over bills that equal out to about the same amount.
For instance, instead of splitting the electric bill 50/50, one of you could cover the electric bill while the other covers the water and trash bill.
This works especially well for couples who want to keep their finances separate, but want to be even and keep their finances relatively simple.