Budgeting for Two: How Unmarried Couples Can Tackle Splitting Bills and Building Savings Accounts Together

budgeting tips for couplesThere comes time in every young person’s life when they have to venture out of Mom and Dad’s house and into the world of autonomy. Unfortunately, as we all find out eventually, being independent is really expensive. That’s why when securing a first apartment, most people need a roommate to split costs and save money on living expenses.

I’ve heard plenty of Craigslist horror stories, and had no interest in taking the chance that my roommate could also be a registered sex offender, when I ventured out on my own not too long ago. So I did what most young women in a committed relationship would do, and moved out with my boyfriend.

However, one of us earns quite a bit more than the other, and at the time, I had no idea what that would mean for our new living arrangement.

Significant Others Are Not Roommates

Moving out with a significant other is completely different than sharing space with a stranger or acquaintance. A roommate splits bills with you 50/50, down to the very last cent. You write your name on food in the fridge so grocery budgets aren’t meddled with. If they don’t pay rent on time, you can kick them out and find someone else.

If this describes your current cohabitation situation, well, plan on being single very soon. For the rest of us, living with a boyfriend or girlfriend doesn’t really work this way. One person buys take-out, the other grabs the DVD rental. I went grocery shopping, he picked up more puppy food. Money just gets messier when you’re romantically involved with the person you live with — but you’re still two single, unmarried people with your own money and financial goals.

So how do you keep order in the household budget without treating your loved one like a roommate?

The Most Effective Budgeting Tip for Couples

When one person in a relationship earns far more than the other, splitting expenses down the middle can leave the lower-income partner financially strained — not to mention, resentful.

Jennifer de Thomas, a CFP in Portland, Oregon, says she has many clients who are unmarried and living together who struggle with the 50/50 concept. An even split is often considered “intuitively fair” — that is, until years later, when the lower earner has no savings and the validity of that intuition comes into question.

She explains, “A percentage of income is much more fair, and reflects more closely how more traditional families handle budgeting.” So, if one person earns 60 percent of the household income, it makes more sense for them to cover 60 percent of household expenses instead of forcing the other person to stretch their income.

Remember that Time Is Money

In addition to putting money toward living expenses, a partner in a relationship can also take on additional tasks to contribute their equal share. For example, I hate doing dishes and my boyfriend is allergic to grocery shopping, so I cover all the supermarket runs and he has dish duty for life. Some may say he came out on top in that deal, but those people don’t know how much I really, truly hate doing dishes.

Taking on chores and other household duties in place of contributing money toward bills may be a compromise couples are willing to make when the income disparity is very large, or when one person spends a greater amount of time away from home than the other because they’re working.

What About Saving Money?

When it comes to saving money rather than spending it, things get even trickier. Certified Financial Planner, Mary Beth Storjohann, says it’s important to determine where the relationship is going before deciding whether to save separately or as a couple. “If this is a forever kind of commitment, consider saving equal amounts into a joint account each month to be utilized for travel, big purchases, or even an eventual happily ever after event,” she recommends.

However, don’t neglect your own needs; if you decide to save jointly, make your personal savings the first priority, so your “own accounts and assets are still being built upon should things not pan out as hoped,” Storjohann points out.

On the other hand, Daniel Larsen, a financial advisor in Austin, Texas, fully advises against a shared savings account before marriage. “Due to the fact that a non-married significant other has no legal claim to the savings of his/her partner, it is usually best to keep saving considerations separate until marriage,” he explains. It’s important for both individuals to save for their own futures, because as Larsen puts it, “relationships can and do end abruptly.”

To ensure your long-term financial goals are met, it’s probably smarter to keep them separate from shared daily living expenses — just in case.

Don’t Let Money Problems Become Relationship Problems

Couples should definitely pay close attention to their finances, even if they’re unmarried, and be transparent with each other. However, if you believe in your relationship, there’s no reason to nickle and dime each other. Anne Nicolai, an editor who is well acquainted with this concept, explains that when she shared expenses while living with a significant other, “The less I worried about the numbers, the better the relationship felt for me. In other words, when I made more than my partner, I paid for more…when I made less, I paid for less.”

She adds, “The problems occurred when one or the other of us started counting. Once you do that, it’s a sign that the relationship is ending.”

Living with a significant other solely for financial reasons isn’t the best idea — if there isn’t anything more substantial than a lack of money holding the two of you together, the relationship won’t last — and will probably end badly. If you’re fair and trusting with each other, the numbers don’t always have to add up perfectly.

Nicolai sums it up perfectly: “The question is not about math; it’s about maturity. If you must keep score, play golf.”

Of course, if you’re unsure about the future of your relationship, it never hurts to be prepared. According to de Thomas, a cohabitation agreement is something unmarried couples who share bills may want to consider. The equivalent of an “unmarried couple’s pre-nup,” putting together a cohabitation agreements forces the couple to address the responsibility each is able — and willing — to shoulder. Keep in mind this can also be expensive, but it is a good form of protection should things not work out.

Image: JanMiddleton

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