In both my current and previous relationship, my partner and I have kept our banking semi-separated. There are ups and downs to this; the ups are that you maintain a sense of independence, which is healthy. It’s also harder for the financial situation to rely solely on one person, which can backfire if that one person makes a mistake or starts mucking everything up and the other partner isn’t paying attention. It also means that if, (and I hope this doesn’t happen), you separate for some reason, it’s not as difficult to disentangle your financial affairs.
However, it also means that you’ve got both your individual budgets, and your shared budget to think about. Clearly, this is an issue that needs to be addressed with some pretty crafty Microsoft Excel work.
My partner and I have what we called “Shared Expenses”. Basically, we predetermine what % of our cost of living we should each pay. A good rule is that you pay your % of the income between you. Eg. Let’s say I make $2000 a month, and my partner makes $2000 a month. Together we make $4000, and we each contribute 50% of that (so we would split our expenses 50/50).
You both make purchases throughout the month; some of them are just for you, like a coffee from Timmies. Some of them are for both of you – like rent, and tenants insurance. At the end of the month, you would add up all the expenses that are for both of you (or the entire family), and add up each partners’ contribution to the total. So if I paid $800 of those expenses, and my partner paid $200, the total expenses for that month that we share is $1000. However, I paid 80% of it! I’m only supposed to pay 50%!
To even out the % each partner paid, you calculate the difference between what they paid towards those expenses, and how much they SHOULD have paid. I paid $800. But I should have paid $500 (50% of $1000). $800 – $500 = $300. In other words, my partner would have to pay me back their portion of the expense that I covered to make it even.
You don’t have to use 50/50 %, and it’s up to you and your partner to determine which expenses you share. Using the same example, let’s say I’m supposed to pay 75% of the expenses, because my partner earns less than I do. I paid $800 and they paid $200. I should have paid $750 (75% of $1000). $800 – $750 = $50. In this example, they would only owe me $50 to make it “even’.
This system has worked really well for me – but doing these calculations every month by hand on paper was a bit annoying, and made it hard to keep good track. PLUS, that’s only shared expenses! What about my personal purchases? My partner and I still want to know how much we spent on “other” stuff, but I don’t want to have to dig up 3 separate documents to see these numbers. For this reason, I made a “Couples Budget” Excel document. Yours for free, below. It works for us, and is always being improved.