TLDR: Having an explicit conversation about how you want to split expenses is critical, but how you decide to do so is less important. As with most relationship topics, communication is key. Our advice is to talk about it earlier rather than later to avoid any money-driven frustration or resentment.
Tango's Take 🔮
Money is one of the most difficult and most important topics couples must communicate about. Not only does money impact how we live our lives, but it’s also one of the most contentious topics in relationships. So the earlier you cover it, the better.
One of the first money conversations couples will have is about who pays for what. When you don’t live together, that might be dinners, concerts, Ubers, etc. And once you do live together, it covers everything from rent, to utilities, groceries, WiFi, and even toilet paper (fun!).
As for how to go about splitting joint expenses, there’s really no straight answer. But Marsha Barnes, a certified financial therapist with over 20 years of experience in the field of personal finance, shares a few options:
50/50 - 50/50 tends to work best with couples who have similar annual incomes. With 50/50, you can either split every bill, or you can divvy up who pays for what (e.g., one of you pays for WiFi and the other for utilities). With this method, it’s not uncommon for couples to Venmo each other to make up the difference.
Proportional to income - Another common way to split expenses is to do it based on each of your annual incomes. Let’s say you want to spend 25% of your collective income on rent. Simply figure out what that is in dollar amounts for each of you, and voilà. Or if one of you makes 2x the other’s income, then that person could pay 2x the expenses. Splitting expenses based on income is probably the most equitable way to go about things, though it’s not necessarily superior. If frequently having to calculate exact percentages exhausts you, 50/50 could make more sense.
One person pays - This approach is usually saved for extenuating circumstances when a couple’s incomes vary significantly. This could be that one partner is in school, staying home with the kids, or is simply making a lot less than the other. But in this case, it’s important that the partner earning less still feels like they’re contributing, be it by covering lower expenses (like groceries) or contributing in non-monetary ways (like cooking meals). As our friends at Ellevest say, money is power. So you want to be careful about creating a power dynamic in the relationship. Barnes recommends keeping an open channel of communication if you’re pursuing this method to avoid feelings of guilt or superiority.
What if you’ve combined your finances?
Some couples choose to combine all of their finances, so there’s no distinction between your money. This is certainly an option, though with the rise of dual-income households, it’s becoming less common. In 2022, CreditCards.com surveyed over 2,000 American adults in relationships to better understand how they manage their money. Findings showed that 69% of millennials have at least some money in separate accounts. Interestingly, research shows that pooling finances to some degree is actually associated with higher relationship satisfaction because you’re united on a common goal. So maybe you combine when it comes to big things, like saving for a house or annual vacations, but you keep your discretionary spending money separate. In that case, you’ll still want to chat about how to split any expenses that don’t fall into the jurisdiction of the joint account.
So how can you get started? Send your partner today’s poll! Beyond sharing modern relationship advice, Tango’s all about getting you to start talking about key relationship topics proactively. Sooo if you love your partner and you want to stay happy together, get chatting! 💸
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