When things get serious in a relationship, you’ve got to learn to become good at sharing. What starts out with a sweatshirt or a bite of your meal at a restaurant, soon turns into a Netflix account and, eventually, rent, grocery shopping, and your toothbrush….well, hopefully not that last one 🤢
It’s an exciting time, and taking these first steps in joining your two individual lives can bring you closer together. But, if you’re not careful, it can bring plenty of conflict to the table as well.
While there’s no exact right or wrong way to manage shared expenses in a relationship, if you haven’t done it before, it can be tough to know where to start. Cleo’s here to help and offer some ideas on managing shared expenses, and give you some tips on how to split costs, without splitting up 💜
Before you get into the nitty gritty of joint checking accounts, you need to have a discussion with your partner about what fair means to you both. Sound like a dumb question? It doesn’t take more than a passing glance at the news to realize that people can have pretty different ideas on what’s “fair” and what’s not 🤡
When it comes to managing shared finances, this really boils down to one question. Do you want to split everything right down the middle, 50/50? Or do you want to split costs based on your individual capacity to pay?
Some will say that 50% each is the only way to go. Others will say that if one person is earning $70,000 a year, and the other is earning $50,000, then the higher earner should pay a bit more.
Our take? If you want fairness, then contributing based on your income/wealth is the way to go 💁♀️
But, it’s not a straightforward question. Maybe the lower earner also has some family money to fall back on. Or maybe the higher earner has massive student loans. Your relationship is ✨unique ✨ and deciding on how you want to split your expenses is the first thing you need to agree on 🤝
One big tip - approach this as a team. It’s not about who can get away with contributing the least. It’s about working out which is the best approach to make sure you both, as a couple, are setting yourself up for the best financial future possible. If a 50/50 split is going to put the lower earner under major pressure and stress, that’s not going to lead to a happy relationship.
Practical steps for sharing expenses
Right, with the big question out of the way, you can create a system for managing shared expenses. Here are the steps we suggest for your couple expense management:
1. Open a joint checking account
Regardless of how you’ve decided to split expenses, it makes sense to open a joint checking account. It means you don’t have to worry about keeping score if one of you stops in at the store on the way home from work.
Having all of these shared expenses coming out of a single account also makes it much easier to track your budget and monitor your spending. If you want to review things in a few month’s time, you won’t need to trawl through each other's personal transaction lists (who wants to show their partner a week’s worth of Starbucks transactions 💀), you can just pull up the joint account and go through it together.
2. Agree on your split
Now you need to agree on how much you’re each going to contribute. For example, perhaps you decide you’re each going to pay a percentage based on your income. First, you need to create a budget which outlines all of your shared expenses. As we’ve mentioned, this is things like rent, shared streaming service accounts and grocery shopping.
Then, you simply split this by your income proportionately. As an example, imagine we have a couple where (after tax) one is earning $5,000 a month and the other is earning $3,000 a month. That means the higher earner is bringing in 62.5% of their combined income, and the lower earner is bringing in 37.5%
If their joint expenses are $2,000 a month, the higher earner would contribute $1,250 and the lower earner would pay $750.
3. Automate your contributions
Now you have the account set up and you’ve agreed how much you’re each going to contribute, the best thing to do is to set up automatic transactions to make your contributions. Nothing kills the mood, or kick starts arguments, more than having to nag each other about paying their share of the rent this month 🙃
It’s also one less thing you have to remember to do each month, and no last minute anxiety on rent day 🧘♀️
4. Show some love
Just because you’re sharing expenses, doesn’t mean romance totally goes out the window 💔 If you go out for a nice dinner together, have a couple of appies and drinks, and then send a Venmo request right after you sign the check, it’s a bit of a mood killer 😬
Splitting your household bills doesn’t mean you have to split everything. You can still treat each other. You can still pay for dates or buy a surprise gift. Not everything has to be exactly in line with your agreed split. Make sure you’re still leaving room for some ✨spontaneity✨ when it comes to your cash.
5. Be prepared to change
Lastly, the agreement you make now doesn’t have to stay exactly the same forever. Your financial situations will change. You’ll get a promotion, get laid off, build a side hustle or receive an inheritance. Whenever there’s a change around finances for either of you, it’s important to sit down and make sure you’re still on the same page with your shared expenses.
Resolving money conflicts in a relationship
No matter how good your plan is, there’s almost sure to be conflict around money at some point. That’s not a problem, but it’s important to deal with it the right way to ensure you maintain a healthy financial partnership.
Honestly, the answer is pretty simple. Open 👏 and 👏 honest 👏 communication 👏
It’s the number 1, non-negotiable, absolute must do thing to avoid small issues turning into major blow ups 🧨
If you’ve had your hours cut or you’ve made a bad investment or you’ve fallen behind on a credit card payment, you need to tell your partner. Remember, when you’ve joined finances, your money problems can very easily become their money problems too.
If you’re on the other end of this confession, be kind and calm. Lashing out at your partner for making a bad financial decision or having their income cut is only going to make them less likely to be honest with you in the future.
Or maybe it’s nothing like that. Maybe it’s a disagreement on whether you should be buying generic brand groceries or shopping at the fancy grocery store. Or how much one of you is running the AC during summer. Again, the answer is communication. Talk through the concerns, highlight the reasons behind them and make a plan together on how you’re going to compromise to reach a solution.