Let’s face it – handling finances can be complicated and stressful. That’s why money is in the top three reasons for divorce! Budgeting for unmarried couples can be just important as budgeting when you’re married – and there are so many ways to do it!
No matter the approach, it is crucial that you sit down and discuss what counts as a joint expense! It’s easiest to have that conversation if you’ve already put together your own budget. To get started, you can reference my post on budgeting here.
Something else you might want to discuss with your darling is about savings goals. If you’ve read through my budgeting post, you should have an idea of what you’re working toward with your money. Share that vision with your partner! It will help them understand you better, and they could be an accountability buddy to help you toward your goals.
Once you’ve discussed what your expenses actually are and which ones are going to be shared, you have to figure out how to split them. Here are three different ways you could manage your finances separately – without merging them completely:
Split Expenses Evenly
The main point of this model is that the expenses are split right down the middle, even-steven, 50/50. Everything leftover is discretionary funds!
For simplicity, one of the couple is often responsible for paying the bills and the other pays their part directly to their partner. Alternatively, the couple could open a joint checking account and deposit their portion of the expenses into the account.
This is probably the most intuitive way to split expenses, but there are definitely some drawbacks!
Pros:
- Each half of the partnership contributes evenly to the partnership.
- Predictable – on a month-to-month basis, each part of the partnership’s expenses will be fairly constant.
Cons:
- Tracking can be difficult.
- Can be hard if one partner makes much more than the other. For example, the lower earner might not be able to participate in as many leisure activities. Or, fun activities like date night could rest solely on the higher earner’s shoulders.
- If you two have different budgets for expenses in mind (ahem, does your apartment NEED in-unit laundry?), it can force the more *~extra~* partner to make sacrifices they didn’t want to make, or stretch the frugal partner’s budget beyond where they wanted.
Proportional Expenses
In this model, each half of the couple pays for an amount of the joint expenses in proportion to their earnings. So if one couple makes $25k and another makes $75k, the lower earner would pay 25% and the higher earner would pay 75%.
This is a great way to comfortably allow for differences in budgets. As an example, springing for an apartment in a building with an elevator might not break the bank for a partner who can’t or doesn’t want to afford the luxury if the expense is split proportionally.
It might seem nerve-wracking to share what you earn with your partner, but this is a great opportunity to have a conversation about it! Unmarried couples budgeting together get good practice for other serious conversation later in the relationship.
Some couples put together a hybrid model of the 50/50 split and the proportional expenses, especially for variable expenses. For example, if one of you is a paleo bodybuilder and the other is a meal planning vegetarian, it might make sense to split your grocery expenses proportionally (have you SEEN how expensive meat can get?).
This model solves some of the issues that can come with the 50/50 split, but it’s certainly not a perfect fit for everyone.
Pros:
- Evens out the financial burden that comes with uneven earning in a couple.
- Allows for different spending priorities within a couple.
- Creates an opportunity for financial transparency between a couple.
Cons:
- This method is complicated because working out proportions (especially for variable expenses) can be annoying.
Responsibility-Based Split
I call this one the “I Pay This, You Pay That” method. Unmarried couples budget by divvying up the separate bills in an approximately-even fashion and call it good.
If you’re not too concerned about splitting everything perfectly, this method might be the easiest for you. Also, this reduces the number of bills you have to worry about!
One thing to watch out for with this one: make sure you’re checking in with each other every now and then (every 6 months to a year) to ensure that the balance of payments is staying pretty even. Heaven knows internet bills tend to acquire extra charges over time…
Oh, and if your bills don’t split evenly, you can always alternate a bill or two to make it more even!
Pros
- This one is a pretty simple to manage – you’re responsible for your bills, your partner is responsible for theirs.
Cons
- Risk of payments losing balance over time due to signup rates expiring and added costs over time.
- Not a perfect split (or, would rarely be. If you happen to have bills that split perfectly evenly, please let me know. I want to witness the magic!)
Augmented Budget
This is a way to manage disparate budgets without having to pull out the calculator for proportional expenses. In this one, the partner with a desire to spend more – be it for an apartment, grocery budget, or internet speed – covers the cost of the upgrade in addition to their half.
Rather than being an overall budgeting tactic, this is a technique to reconcile any difference that neither party want to or can compromise on. It’s also useful if life circumstances require one partner to have an unavoidable expense – needing to live in an apartment building with an available parking spot, for example.
Pros
- This is flexible and individualized. You don’t have to pull out the calculator any time circumstances change a little.
- For unmarried couples, budgeting like this lets you have slightly different priorities.
Cons
- Tracking which expenses are augmented vs. split in another way can get complicated quickly.
Tracking Tools
No matter what your strategy, when you’re budgeting for unmarried couples, tracking expenses are a good idea. And for some of these techniques, tracking is an absolute must!
To that end, here are a couple tools I’ve used:
Google Sheets – You know Google Sheets, right? It’s online, it’s shareable and collaborative, and it has almost all the functionality of a spreadsheet software.
Splitwise – This is an incredibly helpful phone app. First, you create a group for people who are going to share expenses. Then, everybody logs expenses as they happen. After that, the app does all the math as to who owes how much. I’ve used it to split expenses with my boyfriend, but it also works for group travel and restaurant math!
