A study has shown that money worries are one of the leading causes of divorce.
When you first start a relationship, it’s not something that many couples talk about. As things get more serious, eventually there comes a time when you need to have that discussion. This is never truer than when you’re planning to move in together.
Deciding how you split expenses is not always an easy thing to do. One of you may earn more than the other. One of you may spend more than the other. Trying to find a solution without causing a row can be tricky.
Read on as we take a look at how to split the expenses in a relationship.
Determine What You’ll Split
The first decision you need to make is what expenses you’re planning on splitting.
If you’re going to move in together, then some of these will be fairly obvious. Rent, utilities, and food are things that both of you are going to have pay for. How you split those payments is another question.
Think about what other costs you incur that you would both be willing to split. You may have other outgoings such as running a shared car or that all-important Netflix subscription. Take a look through your bank statements to ensure there aren’t any payments you’ve forgotten.
Determine What You Won’t Split
As important as it is to decide what you will split, it’s even more important to be clear from the outset about what you won’t split.
If you buy clothes every week and your partner keeps the same wardrobe for months on end, then it would unreasonable to expect to split the clothing costs straight down the middle.
By making clear at the outset what expenses you’re not willing to split, you’ll save a lot of aggravation further down the line.
What Are Your Options?
Once you’ve decided exactly what expenses you’re going to split, you’ll need to decide how it’s going to work in real life.
There are a number of different ways that you can tackle this. Which you choose will depend on your circumstances and what you can both agree to.
Separate Accounts, Split Bills
If you’re not ready to take the leap into getting a joint bank account, then you can stick to the status quo.
Both of you maintain your own personal bank accounts but agree to split the expenses between you. This might be via setting up a joint account that you both pay into a set amount per month.
Or you could agree that one of you pays the bills from their account. The other partner would then set up a direct debit to pay their share directly into their partner’s account each month.
You can make things more simple by setting up a joint account that you both share, although this step takes quite a strong level of commitment.
Once you’ve got a joint account, you can pay the bills directly from your shared account, out of the money that you both put into it. This works really well for shared expenses but could cause some friction if one of you decides to spend more than the other from your shared pool of money.
If you’re going to use this method, make sure you set out the rules in advance about making personal purchases.
Mix and Match
This is a method that works well for some but can be difficult to make completely fair.
You both keep your own accounts and divide up the expenses so that they are roughly equal. For example, one person might pay all of the rent, whilst the other pays all the utilities, grocery bills, and other expenses until your outgoings are roughly the same.
Whilst this sounds simple in theory, it’s not always so easy in practice as your grocery bill is not going to stay the same from week to week. But if you can find a fair split of the expenses then it means you don’t need a shared account or to transfer money back and forth between you.
Proportional to Earnings
This one is slightly controversial.
If one of you earns significantly more than the other, you might decide to split the expenses based on your ability to pay. If the high earner has a taste for an expensive lifestyle, then this might a fairer way to split things.
For the majority, it’s not really fair to punish one of you for earning more than the other.
Top Tips When You Split Expenses
Once you’ve decided how you’re going to split your expenses, there are still a few things you need to bear in mind.
Don’t Risk Your Credit
Your credit rating can be at risk if you link yourself to a partner who has poor credit.
Cosigning for a loan, for example, can devastate your credit if your partner then defaults. If your partner has poor credit and needs a loan, there are options such as payday loans that are available even with a low credit score.
Make a Budget
The best way to ensure that you don’t fall out over money is to make a budget.
Work out how much you have coming in, and divide that up amongst the various outgoings you will have. Ensure that you build in at least some money for entertainment and leisure.
Having a budget in place reduces the risk of one of you spending far too much on things you don’t really need.
Talk to Each Other
The most important thing you can do as a couple when it comes to money is to talk to one another.
If either of you is concerned about money, keeping quiet about it isn’t going to fix anything. Talk things through and try to find a solution together. It will make your relationship stronger.
Looking for More Lifestyle Advice?
Now you’ve figured out how to split expenses with your significant other, you might be on the lookout for more great lifestyle advice.
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