Sharing Finances Can Save Your Relationship
If the relationship is about sharing, isn’t pooling your finances the inevitable final step in a mature relationship? Not at all. According to a recent survey , half of us maintain separate bank accounts from our partners. If you’re always struggling with shared expenses, splitting your finances can be helpful.
The downside of general finance
Good communication and trust are important in a relationship, and this can include a complete reversal of your financial planning if it just doesn’t work. Combining income and expenses has its drawbacks, which include:
- Lack of Financial Independence: Shared checking or credit card account can be as hassle as coordinating between shared accounts, especially if you’re not 100% sympathetic to what’s allowed when it comes to discretionary shopping. Even if you accept a fixed monthly spending budget for each person, the rules will be easier to ignore when the money comes from an undivided pool of income. Some couples prefer separate accounts because they can set a hard cap on individual spending (assuming each party covers the total costs first).
- Junk Checkout Purchases : You might think you’re okay with your partner’s spending habits, but over the years, their dumb impulsive Instagram purchases can get on your nerves. You may also want some level of privacy for holiday gifts, or even, say, buying an acne cream on your buttocks on Amazon.
- Different spending goals: One partner in a partnership may want to pay off a debt faster than another, which can lead to disputes about what might be perceived as unnecessary spending. If you have disagreements about spending priorities and feel like you need a judge, splitting your costs might make sense.
- No backup plan: If your relationship is deteriorating and you are going through a breakup, breaking up your shackled finances can be very stressful . For some people, providing financial autonomy in the event of a controversial breakup provides significant peace of mind.
It is worth noting that if you are married, your finances are already legally merged, which means that your spouse’s income is now effectively yours. However, it’s still worth keeping separate accounts if that means less budget disputes.
Common Ways to Split Finances
Couples often maintain a checking account for general expenses such as rent or utilities, but also maintain separate bank accounts for their personal expenses. Each person can set up automatic payments from their personal accounts to the general account, covering their share of the costs. Expenses with a more variable value, such as food, can be counted at the end of the month and then settled by depositing a deposit in the joint account, or both people can agree to deposit an approximate amount into their joint account and pay off any surplus. later.
When it comes to figuring out how much each person should pay , there are several approaches you can take depending on your respective income level.
Equal distribution: Splitting all expenses in the middle is easy to calculate and ideal when both people make about the same amount of money. Of course, this approach may be much less fair if half of the married couple are in the home caregiver role for the children, or one person is in school and the other is full-time.
Proportional distribution: Couples with income inequality often split their expenses as a percentage of income, so if one breadwinner is 70% of the family’s income, they cover 70% of the cost (for example, if the rent is $ 2,000, they will pay $ 1,400).
Proportional to use: This option accounts for the use of costs so that high-income people do not feel punished by their partner’s sloppy habits. You can keep pro-rataing fixed costs like rent with smaller bills like cable TV or data plans paid by the person who uses them the most. This can also apply to discretionary spending if it exceeds an agreed threshold. This division of finance requires additional negotiation and careful monitoring, but it may also be fairer for all parties.