You’re glowing with bliss. Your partner just asked you to move in with them!
As the relationship moves forward and you discuss the joys of living together, one crucial question should top your list: How to split costs.
Discussing Finances Before Moving In Together
I get that you don’t want to ruin the moment by talking about something as unsexy as money, but if you truly see a future together, you need to deep dive into each other’s finances.
Your first conversations don’t have to concern financial planning or exactly how much money each person has, but you must discuss how you’re going to split costs to ensure your new joint life is fair for everyone.
How to Split Costs in a Relationship
A lot of couples look to their future with stars in their eyes, thinking their significant other will always have their best interests at heart.
“We don’t need to talk about splitting costs right now,” they think. It will all work itself out.
They only realize they have vastly different ideas about money once they get the keys, and reality shatters expectations.
To avoid the shock, talk about how to split costs as soon as you talk about moving in together. These cost-sharing methods work for most couples:
- 50/50 Split
- Proportional Split
- Sharing Everything
The 50/50 Split
A 50/50 split ensures both partners pay their fair share. It’s celebrated as the absolute best method for splitting expenses in a relationship, but I don’t love it.
To be fair, it works well in a few situations. It’s perfect for couples earning similar incomes when they’re living together for the first time. They get to feel out each other’s savings and spending habits and share expenses while not risking much.
It’s also great for roommate or platonic situations, but we’re talking about how to split costs in a relationship, so that’s not really the same.
Why I Dislike 50/50
I hate the 50/50 split for a lot of reasons. It’s transactional, it assumes both parties give 50/50 in all aspects of the relationship (when that’s rarely the case), and it often turns abusive to the partner who earns less.
I can’t tell you how many stories I’ve read of couples where the high earner (usually a man) demands a 50/50 split from his partner (usually a woman), who earns significantly less, then insists on living within his budget rather than hers. She’s scrimping and saving, barely surviving, while he’s thriving. He builds savings and galivants off on adventures while she goes into debt trying to afford his groceries.
In other cases, the 50/50 split only applies to finances. The lady half of the couple finds herself paying half of everything while doing 90% of the household chores. That’s not exactly fair, is it?
It’s sickening.
If you’re going to do a 50/50, make sure it’s 50/50 in everything, and that nobody ends up subsidizing someone else’s life.
The Proportional Split
When both parties work full-time, I’m partial to the proportional split, where each person pays a proportion of the bills based on their income.
If she makes 70% of the household income and he makes 30% of it, they should split bills 70/30. This way, neither partner is living above their means nor taking advantage of the other.
I know what you’re thinking. “That’s not fair to the higher earner!”
Isn’t it, though? They still aren’t paying 100% of their own living expenses, meaning they can still save money. The arrangement allows them to maintain their standard of living, while not forcing the lower earner to subsidize it. In addition, it highlights that both parties want to work together as a team and support one another.
If someone refuses to compromise on this, they may not be relationship material.
Sharing Everything
People who have been married for a long time or couples with a stay-at-home spouse should share everything.
In this split, all the money goes into a joint account, and everything gets paid from there. Nobody keeps track of who paid what or who earned what.
The couple approaches finances as a team and works together to ensure everything gets paid.
The Split I Hate Most: He Who Pays More Does Less
mariakray via Shutterstock.com.
There’s one other way to split costs in a relationship that didn’t make the top three because it’s even worse than 50/50. While splitting costs 50/50 can work in some cases, splitting costs based on other contributions is almost always a bad idea.
I know what you’re thinking. It seems so reasonable on the surface. If one person pays for everything, the other should pick up the slack at home, right?
In theory, sure. But in reality, one of two things will happen. The relationship will become strictly transactional, or the person who earns less ends up doing all the domestic labor while still working 40 hours per week. The higher earner is basically buying free time off their partner’s back – a situation that can’t work for a healthy relationship.
This type of split *might* work in a situation where someone stays home or works fewer hours, but in those cases, it’s usually healthier to share everything.
Tips for Success
Deciding how to split costs in a relationship is only the start. You must also consider account sharing, what counts as “joint bills,” and how to navigate differences in your standard of living.
Here are some tips that will help you successfully split costs.
Keep Your Own Accounts
Even the share-everything couples should have their own bank accounts. I love the idea of having a joint account where everything goes, then sending each person’s “fun”, “savings,” or “bonus” money to their own account.
But when first moving in together, keeping separate accounts is crucial. You don’t yet know whether your partner is a saver or a spender, or whether they enjoy blowing all the money they have access to on stupid stuff.
Protect your money by keeping it separate.
Take Merging Slowly
You may eventually want to become a share-everything couple. Start slowly with a joint account you pay bills out of (after ensuring they know how to pay bills on time!).
Open a joint checking account and transfer your share of money to it each month for the bills. Pay out of that account.
Don’t merge everything until you are married with all the financial protections that come with it.
Consider Personal Bills
When merging finances, you may discover your partner has a mountain of personal debt to pay off.
You don’t have to help them pay it. You don’t have to pay more than your fair share in order to help them pay off debt. Of course, you can if you want (though I highly recommend the protections of marriage first!).
However, you may want to consider this burden when moving in together. Think about whether the debt was from something responsible (like student loan debt) or irresponsible (like massive credit card spending). The conversation might make you reconsider the relationship, and that’s okay.
If you wish to move forward despite the debt, make sure your new living arrangements are affordable for the person making the payments, which brings us to our final tip for successfully splitting bills.
Live Within Each Person’s Means
Please don’t try to live in a high-end neighborhood with a partner who earns minimum wage, unless you’re comfortable paying the majority of the cost.
When splitting costs in a relationship, you must consider how much the other person can afford. Maybe that means finding a cheaper place or paying more – but whatever you do, don’t force someone you claim to love to subsidize your life.
What Will You Do if Circumstances Change?
Ground Picture via Shutterstock.com.
When splitting costs in a relationship, you must also consider what you will do if someone’s circumstances change.
Will you change the proportions if someone gets a hefty promotion? How will you navigate a job loss or surprise bills?
Figuring out how you will react to changes before diving in will help you prepare for any eventuality.
Moving in a Big Step!
Moving in together for the first time is a huge step. Deciding how to split costs before taking the plunge will ensure it goes smoothly.
But that’s not the only thing you need to discuss. Explore all the crucial conversations you must have before living together to get on the same page about sharing your lives.