Unless you’ve budgeted a yacht into your expenses, there is nothing glamorous about splitting costs with your partner. It can feel awkward to bring up and lead to vulnerable conversations. Yet, deciding how to divide your finances as a couple is an incredible milestone that gives the relationship room to continue growing freely.
When you begin to discuss splitting finances with your partner, remember that you may not have the same outlook. “A thing to consider beyond trying to use some basic guidelines or rules of thumb is that you and your partner likely have different formative experiences with money, and therefore you might approach your finances with different mindsets, values, and priorities,” says Eric Roberge, CFP and founder of Beyond Your Hammock. This difference in opinion may be intimidating at first, but, when respected, it provides an opportunity to look at your finances from various angles and find the best solution.
While it may feel uncomfortable at first, these conversations will make things more seamless moving forward. They also allow you to further connect with your partner as you engage in an open and honest discussion about such a fundamental aspect of your lives. Are you ready to get started? Here’s everything you need to know about splitting your finances up as a couple.
Decide On An Income Split or 50/50
Unless you met your partner because they were your co-worker, odds are the two of you have different salaries. If they’re relatively close to each other, then it may be a non-issue but, if there’s a significant variation between your incomes, then it warrants being part of the splitting finances discussion.
Couples may choose to split costs based on income each person takes in, as Roberge and his wife did before they were married. “We put in a percentage toward shared expenses, like rent, based on how much we each made,” he says. “It felt like the best way to keep things fair and to prevent one person from feeling more financially burdened than the other.” If one person has a mound of debt and the other has few other expenses, that can be another reason not to split bills 50/50. Other couples may choose to cut everything down the middle regardless of outside expenses or salary.
By sharing the financial decision-making, both spouses are vested in all choices, reducing the friction that can come from a single decision-maker.
Gerald Hendrik, Certified Divorce Financial Analyst
As for if you should commingle your accounts, there are a few options. If you plan on making most purchases together, put all your money into a joint account. This is something that shouldn’t be done until there’s a long-term commitment between the two of you.
“When we got married, we combined all of our finances because that made things much simpler for us—but another way to do this is to have ‘ours, mine, and yours’ accounts,” says Roberge. “You might set up a joint checking account that you each contribute a certain amount of money to each month and pay shared expenses from [and also] contribute to jointly-held goals or investment accounts with. Then you each have your own personal checking accounts (where your pay is deposited), and once you make your agreed-upon contribution to the joint account, you can both do whatever you want with the money remaining in your individual accounts.”
Have A Detailed Discussion
Regardless of which method you choose, it should result from a detailed, thoughtful discussion between you and your partner. “Many couples keep their money conversations too high-level because finances are uncomfortable to discuss. But I’d suggest discussing the details about how you want to split expenses early on,” says Sam Schultz, co-founder of Honeyfi. Namely, don’t wait for it to be an issue before engaging in conversation with your partner.
Schultz suggests discussing questions such as, “What expenses will you split? Will you pay each other back every week or once a month? How are you going to keep track of your shared expenses?” Come into the conversation with an open mind so you can land on answers to those questions that make you both comfortable.
Create A Budget
Yes, few things feel as tedious as creating a budget, but having one will save you, and your relationship a lot of heartbreak. “A budget is an exercise for developing a spending and savings plan that is designed to reflect mutually agreed upon priorities,” says Gerald Hendrik Financial Advisor and Certified Divorce Financial Analyst CDFA at ICMC.
Serious or married couples will need to factor each other’s concerns and desired spending caps into most things they buy. In creating a budget, you limit the need to discuss each significant purchase or ongoing ones like groceries and instead can move on with enjoying your lives—as long as you choose a responsible spending cap. “Set the foundation for your financial house—don’t try and keep up with the Joneses,” says Hendrik, reminding couples to “identify assets and debts. Look to begin reducing debts while building your emergency fund.” Having an encompassing idea of your expenses and income will allow you to make a budget that can be maintained.
Update Your Plan Regularly
If you end up with a game plan for splitting your finances that one or both of you doesn’t feel is working, or a budget that is too high (or restrictive!), there’s absolutely no harm in revisiting it. In fact, Schultz recommends revisiting your plan every few months. “You might not pick the perfect system for splitting expenses on your first try, and that’s okay,” he says. “If your system isn’t working, talk about what’s going wrong and experiment with another system that seems like a better fit for your personalities and preferences. Experimenting with different systems will help you stay focused on finding a better solution, rather than building up resentment toward your partner.”
Schultz recommends scheduling a time to speak a month or two after your initial conversation about your budget. In doing this, you create a safe space to discuss what is and isn’t working, and if one or both of you have suggestions for a change. If you notice earlier that the system isn’t working, simply bring it up calmly and open the floor for another collaborative discussion on how it can be improved.
Remember You’re In It Together
As you go over your finances with your partner, remember why you’re doing it: you want to share your life with this person, all of it. “By sharing the financial decision-making, both spouses are vested in all choices, reducing the friction that can come from a single decision-maker,” says Hendrik. “Approach contentious subjects with care and understanding, be honest about money decisions you know your spouse might be upset with, and trust your spouse to be responsible with handling finances.” You get to have these finance conversations with someone you care about deeply and who wants you to be happy. When you think about it that way, it ends up being another milestone the two of you experience together.