Whilst moving in with your partner is exciting, agreeing on how to split the bills between you can be challenging. With this in mind, we explore how couples handle their finances, to see whether going 50/50 is really best.
According to the UK charity Relate, many adults admit money is placing a strain on their relationships. And deciding whether to have joint or separate finances is a big cause of contention in itself.
This is often because attitudes towards money vary from couple to couple - and sometimes within couples. For a start, some people like to splash the cash, whereas others are avid savers. So when it comes to splitting bills, there’s no ‘one size fits all’.
It’s best to discuss the options with your partner to find a solution that suits you both. Whether that’s splitting bills 50/50, dividing them based on income, or coming to some other agreement.
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How do you split household bills?
- 50/50 all bills
You might decide that 50/50 works best for you as a couple. If you take this approach, you’ll need to add up all of the bills and divide them in half.
It’s a simple plan and you both know where you stand each month. But bear in mind that splitting bills in half is not always the same as dividing them fairly.
Partners rarely earn the same amount as each other, and some people have more personal expenses than others. So, if you are going 50/50, make sure that you both have a reasonable amount of disposable income left over after the bills have been taken care of.
- Divide bills based on income
The alternative is to divide your bills based on your income. Using this system, you calculate your wages as a percentage of your total household income. This could work to the advantage of the lowest-earning partner, as they will pay less than 50% of the bills.
For example, if you earn £20,000 and your partner earns £40,000, you bring in 33% of the total household income, as follows:
£20,000 + £40,000 = £60,000 total household income
£20,000 / £60,000 = 0.33
0.33 X 100 = 33%
Using this plan, say your total household bills come to £1,000 per month, then you would pay £330 (0.33 x £1,000 = £330). Your partner would pay the remaining £670.
Remember both partners need to feel like they are being treated fairly for this to work.
- Keep personal bills separate
One compromise could be to split the household bills using one of the above ways and then pay for personal bills separately (like mobile phone contracts and life insurance). This could be a good idea if someone uses more of one thing (like a TV subscription for example).
This affords you both some financial independence over your disposable income. And it could work out fairer if one person has more personal expenses. For example, do you want to contribute to your other half’s gym subscription or monthly subscription box? If the answer is no, this approach could save some arguments.
Should we combine finances?
Think about how you will you organise payment of the bills between you. Bear in mind that if you connect yourself financially with someone else (e.g. through a rental agreement, mortgage, current account or loan) you become ‘financially associated’.
This can affect your ability to get credit, especially if their rating is poor. So you should both check your credit reports beforehand. You can check this for free as many times as you like without it impacting your credit score.
Which approach you take depends on how you work as a couple, and what you think will lead to the most harmony. Ask yourselves these questions:
- Do you want to set up direct debits from your own separate bank accounts towards your bills? (This can apply whether you are going 50/50 or not).
- Or will you both pay standing orders into a joint bank account and have your direct debits come out of that? (How much you both contribute towards this will depend on how you decide to split the bills).
- Or will just one of you have an account to pay bills from? (This could be suitable for couples where one person has a better credit score than the other. However, it’s better if both people have sight of the finances so there’s complete clarity about the finances).
Also, think about how you’ll organise the payment of ad-hoc bills like food shopping. The amount you spend on food can fluctuate month on month, which can make it difficult to keep tabs.
You could pay for food on an alternating basis with your partner, using your own current accounts. However it can be hard to keep on top of things this way, so you’ll need to keep a record of receipts, or check your bank statement to see how much you’ve both spent. One way of combating this could be to get a bill splitting app, which helps to keep a record of IOUs.
You could also consider loading a set amount of money onto a prepaid card (be aware that some charges can apply).
As mentioned above, you could think about using a joint account, so you can both view the transactions and see how much you are spending overall.
Who is responsible for unpaid bills?
Before taking out a joint account to help pay the bills, you need to assess any potential risk for yourself. If a joint bank account comes with an overdraft, you will both be liable to pay for it, regardless of who runs up the bill. So you’ll need to agree on boundaries and spending limits to make sure it’s fair.
Also, according to the credit reference agency, Equifax, utility bills like gas and electricity can be in the name of just one person who’ll be responsible for the payment. But if it’s clear that they are paying on behalf of someone else as well, the other person could also be liable.
How do you handle finances in a relationship?
To avoid arguments about money further down the line, good communication is key from the start.
Talking about money is still seen as taboo in the UK. If you find it hard to open up, see The Money Advice Service website for tips on how to talk to your partner about money. Make sure you’re both on the same page.
You could also set yourself goals to work towards as a team, like saving for a holiday, or clearing debts. You can unite around these goals and use your budget to find areas you could cut back on to achieve them.
Set aside some time to go through your household budget together. The Citizens Advice Bureau has a handy budgeting tool. This will lay the foundation work for your discussion about who pays for what. Revise your budget from time to time to take any changes into account.
Tip: If you haven’t moved in yet and don’t know how much to expect to pay for different bills, check out this guide by the Money Advice Service. You could use this guide to make a draft budget before you move in together.
Remember, your budget and the way you organise your finances is not set in stone. You might prefer to take elements of the different approaches to come up with your own plan. Perhaps one person is a higher earner, or you might face a change of circumstances further down the line, which means you have to adapt.
Keep communicating with your partner and review your finances together every so often to make sure your plan is still working for both of you.
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