One of the biggest challenges couples face when moving in together is how to divide household expenses. It is important for both of you to agree on financial matters for the health of your relationship. Money issues are the biggest source of conflict in relationships and a are big culprit in breakups. In a research study published by the Forum for Family and Consumer Issues, finances were the primary source of conflict for 39 percent of couples and the secondary source for 54 percent. The problem is that most couples don't have regular communication about money and expenses. In fact, 57 percent of couples do not discuss money before getting married. Before moving in together, sit down and have a conversation about the contribution each person will make. Take time to understand your partner's view and attitudes towards money and to agree on an arrangement that both of you feel comfortable with.
Creating a Joint Account to Pay for Expenses
Many couples decide to create a joint account to combine both incomes. This setup promotes honesty and transparency in a relationship, but can also lead to arguments about each person's spending habits. Your partner might not be thrilled about the amount of money you spend on shoes while you disagree with how much he spends eating out. This particular arrangement is more successful if both of you earn similar incomes. If one person makes much more than the other does, it can result in resentment toward the other person and their spending. If you choose to create a joint account, it is important to discuss your financial goals. Create a budget of how much money will go into paying the bills and how much is leftover for entertainment, shopping and other nonessential expenses. You can create an individual "allowance" that each person can use at his or her discretion without receiving judgment from the other person. It is important to accept that although you both have ownership of the money in your account, you are now sharing it and working as a team with another person.
The Roommate Plan
Another common way to divide household expenses is by splitting them equally. This arrangement is similar to that of roommates sharing an apartment together. Partners equally divide mortgage, utilities and other shared expenses, such as groceries and home improvement expenses. There is less resentment, sense of entitlement or judgment in this arrangement since both are equal contributors. Each individual can use the money they have leftover at their own discretion and still maintain their privacy. Problems can arise when one of the individuals loses their income. It is important to have a plan in place in case this situation arises. It is also important to find opportunities to work as a team by setting shared financial goals, such as establishing an emergency fund or saving up for a vacation. You can each make an equal monthly contribution that will go toward reaching your shared goals and plans.
Dividing Expenses by Usage
Another common way to divide household expenses is by usage. In this arrangement, determine each person’s contribution by his or her usage of a particular service or item. For example, one of the partners may make a larger contribution to the mortgage and utilities because he or she has a home office and works from home. In this arrangement, it is important for both partners to sit down and agree on what they consider a fair division of expenses. It is also crucial to schedule monthly meetings to talk about the division of new expenses. Some more traditional households follow a similar arrangement where the male will pay for all the household expenses, such as rent and utilities, while the female pays for groceries, entertainment and unforeseen expenses. This method of dividing expenses requires a great deal of communication, understanding and compromise.
Dividing Expenses by Income
Couples that have very unequal salaries often end up dividing their household expenses by income. Each person contributes a certain percentage based on their income or partners divide the bills in a way that the biggest earner pays the most bills. If both parties agree, this method can work well and can be a great stress-reliever for the person that makes less. The problem is that the main earner can feel resentful that they are making a larger contribution to the household. A great way to make this arrangement fairer is by finding some kind of trade-off. For example, the person that pays fewer bills can have more household responsibilities, such as chores, taking care of the home maintenance or mailing bill payments.