Is that the jingly jangly sound of U-haul keys I hear? Well, congrats, cowgurl, you and your partner(s) have decided to cohabitate. Remember to lift with your knees!
Now that you are done combining your varied assortment of goods and furniture, it’s time to take a look at your household finances. In a platonic roommate situation, expenses are usually split evenly among all housemates. This can work for your family finances, too, but there are other ways that might work better. Here are some ideas on how to pay your bills and set up your household budget now that you are a live-in family unit!
The All-In Joint Checking Account
Many folks opt for this simple option. Put all of your moneys in one account. Now pay your expenses out of that account. Tada! There’s nothing inherently wrong with the all-in joint account, but I personally believe there are better ways. In the very worst case scenario, if your relationship becomes unhealthy or abusive, having your own separate account means your partner will be less able to control you financially. It will be easier to keep your money if you choose to leave. Even if you just have a regular ol’ break up, it can be painful and messy to separate out who gets how much out of the joint account. Or to rush to close it before one partner withdraws all the funds or buys a spite Dyson or something.
One Wage Earner Household
If there is only one wage-earner in your relationship, a joint account is not a bad idea, so that everyone has access to household funds. It’s very important, however, especially when one person earns wages and the other(s) does oft under-appreciated and unpaid work like raising kids, cleaning the house, etc, that there is mutual respect for the value of every person’s work. The stay-at-home partner(s) shouldn’t feel like they are asking for an allowance from the wage-earner, nor should the wage-earner think they have the final say in financial matters.
Multiple Wage Earner Household
If you do decide to go with a single joint account and you are all putting your income into it, make sure that you respect each other’s contributions to the relationship evenly. In most cases, one person is going to be generating more income. That does not make them the queen or king of the household budget castle. Everyone who contributed to the household should get an equal say. So, if your partner is the one making less than you, they shouldn’t feel like they’re unworthy of that fancy hair oil they covet while you are out buying all the Autostraddle merchandise for yourself. That is unfair and it will lead to fights. This is why I think the all-in joint account is often not the best option, though it’s what a lot of people seem to default to. It can work well as long as everyone is treated fairly.
The Joint + Individual Account
I believe having your own personal account is the best, if you have a two-income (or more) family. My partner and I do the joint + individual account. We both have our own checking accounts and we are free to spend our extra income any way we want. We have a plan to pay for our bills and we have savings goals that we both contribute to, but if I feel like picking up Thai food on my way home and my partner wants to buy a new shirt, we don’t have to check in with each other. We can pay with the money we earned and feel rightfully entitled to. I’m not saying we don’t fight about money ever, but it helps that we are the masters of our own financial domains. We do have joint accounts that we use for specific purposes. Here are some ways you can make a joint + individual plan work for you.
Joint Evenly Spaced Bills Account
This is a great idea, but you’ll have to get some seed money first. If you’re getting a significant tax return, this could be a great way to use it. You could also start putting away a little money at a time until you have enough for this. My partner’s sister and her boyfriend do this and it works for them.
So how this works is that you use your joint checking account just for paying your monthly bills. You add up all your monthly household bills: rent/mortgage, utilities, Netflix, internet, porn subscriptions. The necessities. Then, you look at both of your incomes and figure out how much you would both need to contribute, per month, to pay for all those bills. You could split the amount evenly among you. Or you can weight it by how much you make. For example, let’s say one person makes $40,000 a year and their partner makes $20,000 and your total bills are $600 (That’s obviously way low, but I’m bad at math, so I picked an easy number to work with. Stay with me). So your total bills are $600 and one person makes twice as much as the other, so the higher earner would be responsible for $400/month and the lower earner would be responsible for $200/month. Get it?
Then you take how much you owe per month and figure out how much per pay period you need to contribute. Every pay period, skim that amount into the joint account and your bills will always be covered! You can even set up an automatic transfer or auto-deposit into the account, so you don’t even notice the money being taken our of your check. The nice thing about this is that you know exactly how much money you have to put in every pay period. There isn’t one week with a huge bill and another week with no bills. The downside is, that in order for this to work, you need to put in the total amount of your monthly at the beginning, so you’re always replenishing what is being taken out and never overdraw.
Regular Joint Bills Account
This is the simpler version of the bills account, where the payments into the account are not evenly spaced, but deposited on a bill-by-bill basis. You don’t need seed money for this one, so it’s easier to start right away. You get a bill. You figure out what each person owes. You all transfer or deposit the amount into your joint account. You pay the bill. You repeat this process for every bill, probably making deposits on a weekly basis. So, for example: Rent is due. It’s $1000. You each contribute $500 to the joint account. The bill is paid out of the joint account. Easy peasy.
Joint Transfer Account
In this scenario, you use the joint account for giving money to each other. Assuming you all have the same bank (which makes the joint + individual much easier), you can also use the joint account to quickly and easily transfer money to each other. Instead of dealing with cash or checks, if you need to get your partner $50, you just put the $50 into the joint account and then they withdraw it to their account. If you’re going to use the account this way, just make sure you have unlimited withdrawals. Most checking accounts do, but some savings accounts have a limit on the number of withdrawals you can make per month.
Joint Savings Account
You can also use a joint account just to contribute to household savings for special stuff: home repairs, vacations, a holiday gift fund, concert tickets, A-camp. This is like a virtual piggy bank. You just keep putting money in until you have enough for whatever you are saving for. It’s fun to watch that number go up each week until you have enough to withdraw it in singles and roll around in it like Scrooge McDuck!
If you’re really financially savvy and lucky enough to have some extra funds at the end of the week, you could use this account for emergency savings. In our household budget, we both put a small amount ($20 each) into our joint savings each week for emergencies. We are trying to eliminate a massive amount of credit card debt, so having a small emergency fund means that if one of our cars breaks down, we have a place to get that money from that isn’t a credit card. Financial planning experts recommend having at least three months worth of an emergency fund built up. Personally, I know no one who has that much in their emergency fund. It’s a nice idea, but without a living wage, it’s impossible. Even with a living wage, you have to have quite a bit of discretionary income or a ton of self-control to make that work. Our little emergency fund vacillates between $100-$1000, but we usually end up needing it and it gets dropped back down to $0. I’m glad it’s there when we need it though!
Other Ways to Split the Bills
If you decide not to join your accounts in any way or decide not to pay your bills out of a joint account, you still need to pay your bills. Here’s how that may work for you.
Divide Up the Bills
Write down all the bills and household expenses (groceries, cleaning supplies, toilet paper, etc) you have each month and how much they cost. Divvy up who is paying for what, in a way that seems most fair. For example, if one person is responsible for the phone bill, then their partner can be responsible for the electric bill. In a household of three, if one person pays for transportation costs, another can pay for groceries, and the last pays for cleaning supplies. This way, everyone is responsible for something and, ideally, you end up each paying a fair amount based on what you earn. It may be that one of you is responsible for a really big bill (like rent/mortgage) and has to collect from the other(s) each month. For smaller bills, you trust each other to take care of them and you don’t have to pay each other back-and-forth for every single expense.
Go Even Steven
Of course, you can just divide everything up evenly, like you typically would do with roommates. You can set up an envelope system — one envelope with how much is owed for each bill. You can have one person be in charge of paying all the bills and collecting the appropriate amount from other(s). If one person is really financially savvy, this can work to their skills.
Talking About Money in a Relationship
Money has broken relationships, torn apart families, devastated civilizations. It can get emotional talking about money. You may find you and your partner are on the same page completely or very, very different in your spending and budgeting habits. Most likely, you will find some common ground and some areas you need to negotiate. I want to add here, if it isn’t clear, that I know lots of people don’t have the luxury of saving funds or paying all their bills or even having one checking account. Our communities are disproportionately affected by poverty because we face discrimination in all areas of life, especially in employment and public accommodation. I hope some of these tips can be helpful regardless of whether you are rolling in the dough or scraping by to meet your basic needs. Especially when money is tight, it’s important that conversations about money don’t get swept under the rug in your relationship. Here are some things to think about with your partner.
Maintain a Judgement-Free Zone on Spending Habits
Unless your partner is spending money on things that are actually harmful to them or others, it does no good to make fun of them for what they spend their money on. I joke that my partner is a clothes horse because it is totally true! Seriously, who needs three dressers and a closet and still has overflow clothing?! But I digress. You should actually not make fun of your partner(s), really. In our relationship, I’m the one that is always giving money away. Seriously, I am donating to all the Kickstarters and giving money to people on the street and making donations to this org and this candidate. So we both make decisions about our personal funds and, as long as we are still able to keep up with our household expenses and other financial goals, it’s OK. However, if you are not able to afford food or heat and your partner is still buying another kitchen gadget off an infomercial, it may be time for a talk about spending habits.
Also, it makes sense to set a threshold for when you have to check in with each other on spending. This is especially true if you have an all-in joint account. $50? $100? $500? $1000? At what point do you need to be consulting each other on where your joint money is going? It may be that you feel you don’t need to at all, but the conversation is important.
Make Time to Treat Yourselves
If money is very tight, it’s hard to justify any excess expense, but studies show you are more likely to stick to your budget if you allow yourself some fun splurges now and then. So go out for that date night. Order takeout once in a while. Go out and meet friends for a drink. You can also find low-cost or no-cost ways to treat yourselves to something nice. Take a walk together. Go to a free museum or art exhibit. Make popcorn at home and have a movie night. Talking about money matters is less stressful if you are making time for self-care and fun in your relationship.
Support Each Other in Your Financial Goals
It’s often the case that one person is more financially-minded than the other(s) in a relationship. This is OK. It can be helpful to come up with strategies to stay on track together. For example, if one of you is bad at keeping track of when bills are due, set up a calendar system that reminds them when bills are due each week or each payday. If one of you has a lot of loan debt or credit card debt, support them in coming up with a plan to pay off the debt.
Consult an expert
If you’re at the point in life and in your relationship that you have your basic needs covered and are trying to figure out what to do next, make an appointment with a financial planner. Or, if you are struggling to create a budget for yourself or your household, make an appointment with a financial planner. At your local bank, there’s probably someone who will do a consultation with you for free.
If you have additional tips to share, let us hear ’em in the comments!
The multiple-partner-friendliness of the language in this article gives me the warm fuzzies :3
It’s important to be inclusive! I did my best. Open to feedback if I could have done better, too.
I think there are some specific poly problems around money that didn’t get addressed, especially for those that are in a V or other type of relationship where not every person is involved with each other. That’s not the focus of this article though, so its fine.
What worked for me in that type of living arrangement was roommate-style bills with a shared account for the grocery budget.
We do the individual + joint bills account, and I can highly recommend including food in the joint bills account. No more worrying about who keeps getting groceries, and keeping tabs every time someone gets bread on the way home. It takes a bit more effort to get get started and figure it all out, but it’s super easy once you get going. We review our setup once a year, or if someone’s income changes.
It really is great!
I’ve never quite gotten the whole brouhaha about Pumpkin Spice Lattes. I tasted one, and to me, it wasn’t very good. Well, to each her own, of course. =)
I think they are too sweet. I don’t like them, either. I tried more than once, thinking maybe I had a bad first time or maybe I’d grow into them, but I am just not into it. Blah.
Pumpkin bread, though, I will eat forever.
Thank you for writing this. I enjoy reading about sharing finances. :)
My girlfriend and I divide up our bills because right now we are both trying to build credit (thank god for community college and no student loans). We have talked about a joint savings or checking account for emergency things, but finding the time to set it up with opposite work schedules has been difficult.
KaeLyn, I love your practical adult articles (the vacuum one hit me right in the heart). After four months of cohabiting outside of our parents’ homes, it’s nice to get some comprehensive adult advice.
My honey and I are getting married in under two weeks, but have been sharing finances for at least six months. It’s a really weird situation – she owns a business and has weird stuff like savings, I’m still a student and when we met had thousands in debt. I’m terrible at budgeting, money makes me cry. She is so good at it, she actually enjoys bookkeeping, etc.
You would think that we would have the worst fights about money, but we don’t at all. Somehow we have flukily avoided that.
I think it probably has a lot to do with the fact that even though I am bad with money, I want to be like her, so I just do what she reckons!
So yeah, my advice is if your partner is good with money, let them take the lead.
Then she is awesome, and refuses to let me feel bad because I earn less. She insists that it is *our* money.
We have personal accounts and joint accounts, and she figures out how all the big expenses are made. I always know what is going on, but I feel better having her make the decisions. It works well for us, but probably wouldn’t for everyone.
You two sound well-matched!
Great tips here. Thanks KaeLyn
Such a good article! The older generation in my family is spectacularly awful at finances (my parentals never opened bank statements and lived in their overdraft for years with hella amounts of reckless spending, and my aunt has literally never sat down and talked to her long term partner about finances)
When I moved in with my ex we did the whole calculation based on earnings thing because I was working part time in retail and they were older, working full time as a software engineer, earning loads. It was great because I was contributing the exact same as them (percentage wise in relation to my salary) which was important to me in order to feel equal (though might not be for everyone). We didn’t have a joint account though.
Then when I lived with my best friend we opened a joint account and both just put in the same amount every month (keeping our personal accounts for the rest of our earnings) and paid bills and food from it. We always put in slightly too much so that we could jointly treat ourselves from it as well- like go out for dinner or drinks or swimming. This worked crazy well, but I can imagine it’d only work with someone you know and trust a lot. (We also divided the housework to be Her: cleaning. Me: cooking – which we were both SO happy about)
That’s a great idea! I’m going add add $5 extra a week to the joint checking account so we can have a “free” date once a month
Money is definitely the biggest stressor on my relationship. We live together, and we’re both artists who rely on a combination of commissions and more typical day-job stuff to get by. I do earn more than him, but he has more bills than I do (he pays his own insurance while I’m still on my parents’, he has more credit card debt than I do), so I typically just let him deal with everything that isn’t in my name. How we typically do it is he drains his account every month for bills, and then I pay for day-to-day expenses (groceries, eating out, etc). And I cover most if not all of our rent. I have two checking accounts and he has the debit card connected to one of them for daily expenses. Joint checking sounds like an option for us in the near future.
We fight about it because he feel insecure about not earning enough to fully support himself, which is understandable. I detest talking about money and will put off bills until the last minute. He’s more level-headed about it and likes to pay bills way in advance. We talk a little each month about trying to start actually saving, but we’re both impulsive with money and go out too much.
Sound like you have a system for dealing with bills and expenses, but the actual conversation about money, especially planning for beyond your immediate needs, can be stressful.
Saving money is hard, especially when you don’t have a lot left after paying the bills. Have you talked about what you’d like to save for? That can help, having a concrete goal and not just like, “We should save…” Also, if you both have day-job type things where you get paid on a weekly or biweekly basis, you might consider having $5 or $10 or whatever you can afford automatically skimmed into a savings account every week via direct deposit. You will barely notice it isn’t there if it isn’t even deposited into your checking account.
You may have already considered those things and I’m not financial expert. Those are just tips that have worked for me in the past!
It sounds like you are understanding about how your partner is feeling re: not making as much as he would like to pay his bills. That’s really good. I hope he can move past the guilt, especially since you don’t have a problem with it. It’s very common for one person to make more money or even to make most of the money. Especially as artists, it may change over time. Eventually he may make more than you or one of you may be able to quit your day job. Who knows?