– We Share But We Split –
So in my first post about financial steps for couples, I discuss the very first financial situation encountered in a couple. Everybody is on their side and pay for themselves. You don’t live together so you don’t have to get implicated too much in the other person’s finance. However, if everything goes well for a while, you will wake up one day with your girlfriend/boyfriend’s toothbrush on your bathroom counter. This is a sign of implication (or intrusion for some 😉 ).
If you decide to live together, you will ultimately need to speak about finance (once you have settled who is sleeping on the right side of the bed and the color of the curtains ;-).
At first, most couple decide to keep their own bank account and split expenses. Therefore, they will split most common expenses such as power, water, rent, etc. It is economically profitable for both of them as long as they have similar lifestyles and income.
Problems may arise if one is making less and have to spend a higher percentage of his income on households’ expenses. He might not be able to follow his spouse to the same restaurant or the same activities.
It is important to have a good discussion about finance and as honest as possible. If you are living with someone else, you are better off telling him about your student loan or your high car payment. If you don’t, your other half might find it difficult that you can’t afford the apartment you are living in. In any cases, he will find out about your debt sooner or later.
It is important to establish a common budget so you keep your independency but you are sharing most expenses equally. You can add a “my own personal expense” category so you still have power over a part of your money without sharing it with anybody else.
For management purposes, I strongly suggest that you create a joint bank account where most couple expenses will come out (i.e. household bills). Each of you deposit an equal part of you pay cheque and all payments are automated.
If you want to save money for a specific project, create another account so yours day-to-day expenses are not influence by your “couple account”.
Here are the advantages of such system:
– Expenses are divided according to the couple’s priority.
– You remain in control of a part of your money.
– You save a lot of money by sharing expenses.
And a few downsides:
– One must not “take a dip” in the couple’s bank account for personal reason.
– It may lead to arguments if one is not 100% honest about his financial obligations.
– This situation is not optimized in term of personal finance and taxation.
This financial step can work for several years. Actually, if the communication is good, you may live your entire life with this money management system. As long as both of you feel it’s fair 😉
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