How to Mix Money When Moving in Together

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Moving In Together and Mixing Money

Just as openness, honesty and a commitment to figuring things out together are keys to a solid relationship, they’re also important when tackling money issues together. If you and your partner have decided to share your lives and a home, or are figuring out if moving in together is the right choice, make sure your finances figure into the equation.

Have the Money Talk and Lay the Ground Rules

First things first: Have an open and honest discussion with your significant other about how you’d like to approach your finances together and any financial goals that you might like to work toward as a couple. Being in sync on your money early on will guide you when you need to make important financial decisions and will also help you to avoid allowing money to negatively impact your relationship down the road.

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Before you move in together, lay the ground rules for what’s “yours,” “mine” and “ours” to avoid arguments in the future.  This includes answering questions like:

  • What expenses do you consider joint expenses?
  • Who’s responsible for making sure payments are made on time?
  • Will you create and maintain a joint budget to help you keep track of joint expenses?
  • How do you plan to cover unexpected joint expenses?

Figure out the answer to these questions ahead of moving in together so you know how to approach these things before they become problems.

Open a Joint Checking Account for Joint Expenses

Once you’ve laid the ground rules for what’s “yours,” “mine,” and “ours,” you’ll need to figure out the best way to pay for “ours.” For many couples, that means opening a joint checking account that both you and your partner have access to, will contribute to and from which you’ll pay your joint expenses.

How much will each of you contribute? You have two choices: Split expenses 50/50 or contribute an unequal amount based on your salaries. For couples who make about the same amount of income, a 50/50 split may be the best option and one that won’t leave either partner feeling like they’re contributing more or less than what’s fair.

However, for couples who make very different salaries, splitting expenses based on your incomes may be a better scenario that’s not overly taxing on a single person.

Think of it this way: If your combined expenses total $2,000/month, you bring home $2,000/month while your significant other pulls in $3,000/month, a 50/50 split would mean that you’re shelling out 50 percent of your income on expenses, while your partner is contributing one-third – or 33 percent – of his income. Is that really fair?

In the case of unequal salaries, consider splitting the costs based on how much each of you take home every month. Here’s how to do the math:

  1. First, you’ll need to figure out three things: Your monthly take-home income, your total joint expenses and your combined monthly take-home income.
  2. Next, multiply your individual monthly income by your total joint expenses. Using the numbers above, that would be $2,000 x $2,000, which equals $4,000,000.
  3. Finally, divide the amount from #2, by your total combined income. In our scenario, that’s $4,000,000 / $5,000, which equals $800. That’s your monthly contribution to joint expenses.

To figure out how much your partner will contribute, simply subtract your contribution ($800) from your total joint expenses ($2,000). In our example, your significant other will contribute $1,200 ($2,000 – $800 = $1,200).

Next, deposit this amount into your joint checking account to cover your shared expenses. Many employers allow you to direct deposit a certain amount of your paycheck into a special account, while the remainder can be deposited into your individual checking account. You’ll still have to sit down and do your bills together, but with many banks, you can set up bill pay for free to make sure all your joint expenses are paid on time every month.

Keep Some Things Separate

Your decision to move in with your partner may have been prompted by your desire to share your lives, but there are some things that should stay separate – For your own good and the good of the relationship.

First, hang on to your own checking and savings accounts. Different people have different ideas about how to properly manage their finances. In case your money personalities don’t mix, having your own bank accounts can help you avoid unnecessary arguments and even a break-up. Plus, having your own savings account will help you take care of yourself  without burdening your partner in case you lose your job, have an unexpected expense like a car repair or even if you’d like to buy your significant other a special gift without him knowing.

It’s also important to keep at least one of your own credit cards – and that includes not allowing your significant other to become an authorized user on your account. Having your own card will allow you to build and maintain a solid credit history as an individual so in case your relationship doesn’t work out, you’ll be able to move on with your life… At least financially.

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Finally, while you and your partner should talk openly and honestly about money and do your bills together (at least your joint expenses), it’s up to you to make sure you know what’s going on with your money. You never know when a little rain is going to fall in your life – and that includes relationship problems and break-ups – so it’s important to learn how to manage your money as an individual first, and as a couple second.

For more ideas on how to improve your financial health, check out Quizzle.com, where you’ll learn how to achieve your credit potential and get home loan recommendations tailored to your unique situation.

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  • http://www.RealEstateLeadsIn.com Josh

    Perfect article, as I just recently got married in July 09′.

    We do have some joint things we pay on, creating a joint account is a great idea. I’ll do just that.

  • Linda

    Have been in talk with the boyfriend with moving out, and this article made it clear to set boundaries and a joint account to pay for joint bills.

  • Lindsey

    what would be the danglers contribution to the monthly expenses.

  • http://yahoo.com Jamie

    My boyfriend and I have been struggling with this. He makes significantly more than I do yet we pay the same. I think we both agree he should pay more, but he also has significant debt tied up in properties right now due to the market. How should we account for past debt when calculating the ratio to make it stay fair?

  • Smug

    Jamie,

    Are you getting the same benefits from the joint expenses as your bf is? (you no doubt are). If so, why on earth should he be paying more than 50%, simply because he makes more?

    • Megan

      It is immpossible to determine what the “right” thing to do is for everyone. Each situation is different and requires a different way of looking at things. Even certain bills like cable tv, may not be split fairly if a 50/50 split is done. Say one person spends all their free time watching tv and can’t live without premium channels which raises the bill to $150/month, while the other flips on the weather channel once or twice a week and rarele ever watches anything else. It would not really be fair to say that each person should pay half of that bill now would it? Same goes for the water bill. If one person showers twice per day, leaves water running while brushing their teeth, flushes a tissue down the toilet everytime they wipe their nose and so on, and the other is very water conscientious, it would not be fair to split that bill either. The only bill that can really be fairly split 50/50 would be the rent or mortgage because both people live there and should be equally responsible for keeping the roof over their head! My opinion is throw all the monthly income into a joint account and figure out what is extra after all the bills are paid and then divide that up accordingly. If one person makes twice what the other does then they can have twice the left over money, but at least both people are guaranteed spending money and no one feels inadequate.

  • Rooks

    Yes, it’s really fair that each contribute 50% of the total if they share the benefits equally. Why should the one making more money be punished because his or her significant other makes less? If exibit A makes 2000 a month, and exibit B only 1000, why should A pay 2/3rd of everything?

    How can you justify that? “He/she makes twice as much money than me, so he/she pays for his own food, and 1/3rd of mine, his/her own rent and also 1/3rd of mine, etc… But I’m independant, really ! I pull my weight, sort of…”

  • Tuan

    1. I totally agree that couples do need to discuss the money issues before cohabitation or marriage.

    2. The above calculation could be explained this way: Person A’s income is $2,000, which is 40% of the total income ($2,000/($2,000 + $3,000)). His or her proportional contribution to the total expense is: $2,000 * 40% = $800. For person B, his/her contribution is the shared expenses less the partner’s contribution, which is $1,200 ($2,000 – $800).

    After contribution, person A has $1,200 left, which is 60% of the take home income ($1,200/$2,000). For B, he/she has $1,800 left, which is also 60% of his/her income ($1,800/$3,000).

    Both people retain 60% of their income after shared expenses. Could this arrangement be considered “fair”?

    Some slightly off the topic thoughts:
    1. In the above example, the difference between a “50/50″ and a “proportional” split is $200 a month, or $6.67 a day. Should couples bicker about a few dollars a day in real life? If they do, what does it really say about their focus and goal, and ultimately where is their relationship heading?

    2. Emotional well being is very important in a couple’s relationship. How can it be factored in this whole benefit-contribution equation so that both can feel as equal partners?

  • Tim

    For those who don’t understand why it should not always be a 50/50 split, consider this:

    Your significant other earns $100,000 per year and you make $25,000. They want to live in a large house and drink $500 bottles of wine with dinner each evening. Though you theoretically get the same use of the house and wine, is it fair for you to end up spending 100% of your check every week because they have expensive tastes?

    If you ever split up, you start over with nothing; you have no savings and haven’t been able to work on your personal credit.

  • Meghan

    My boyfriend and I just moved in together. We did everything listed in this article. We do make very differnt incomes, with him making over double what I make. He does contribute 2/3 or the joint expenses, with me only covering 1/3. We considered a 50/50 split, but that left me no spare income for savings, or the occasional treat (like a pedicure).

    At the end of the day, we decided we didn’t care about the money. We could do it either way, but he felt that a split based on income was fair. The most important thing was we were together, building a future. If you stop looking at your partner as a free ride, and start lookng at them as a partner- then the money doesn’t matter and you make it work however you have to!

    P.S. He moved into (what was) my house which I could afford well before we started dating. He’s actually paying alot less for a 3 bedroom house than he used to for a 1 bedroom apartment- and we’re together. He may pay more of the expenses now, but the benefits far outweigh the costs- and he’s spending less than he used to for something nicer.

  • Lou

    keep what is seperate, seperate like it says I am still recovering from my first marriage where all we had was one joint account for almost nine years, even after my wife cleaned out the account and left automatic monthly payments came out and I was responsible for the bills and overdrafts on the account, having all “our” money gone made for a long recovery and a lot of scrambling around to get things fixed. Always have your own money also.

  • glen

    yes i agree with the 50/50 split even thow i make alot less than she does. In the long run if you truely care about each other, money should not be an issue. However yes i agree that a person should always have thair own account. and be able to have a treat or buy some they had thair eye on. but monthly bills should be a joint responsabilty not just left up to one person to do it all. heck may as well be sigal then right??. glen h.