Splitting Bills

You've heard me talk about how important it is that you work out how you're going to budget with your mate before you hook up. And y'all know that I believe a proportionate splitting of joint expenses is fairer than a 50/50 split. Here's a question from Renee on the topic:

I am looking for a simple way to calculate the ratios of how to set up a budget for all of our household expenses. My husband makes on average $90,000 per year (fluctuates with overtime) and I make $40,000 per year. I have a total of all our fixed expenses, plus our variable expenses- but I'm trying to figure out how much we each pay. If we split them 50/50- based on my income it's setting me up to fail. Can you help? Thanks! Renee

Renee, you're right, you should not be splitting the bills 50/50. A proportionate split is far fairer. But you've quoted me your income in gross dollars, and since your husband will pay more in taxes, using these numbers isn't fair either. You have to look at how much you each bring home a month — the money that actually goes into the bank account. Then split the bills by that amount.  First add your incomes together. Then divide YOUR income by this figure and multiply by 100. Ditto his income. So it would be like this:

If you make $2,000 a month, and he makes $4000 a month, when you add your incomes together you get $2,000 + $4,000 = 6000

Divide your income by that $6000 and then multiply by 100 to get a percent: $2000 ÷ 6000 x 100 = 33.33%

Do the same for his income: $4000 ÷ 6000 x 100 = 66.66%

This means you'd split the bills related to your joint living expenses with you paying 33.34% and him paying 66.66%. So if you have a mortgage payment of $1800 a month, you would pay:

$1800 x 33.34 ÷ 100 = $600

and he would pay:

$1800 x 66.66 ÷ 100 = $1200

This, of course, only applies to the bills you agree to split. If you've run up a whole bunch of debt he doesn't want to have anything to do with, or vice versa, then you're each on your own.

The same goes for individual expenses. If he chooses to drive a fancy car that costs $600 a month, and you choose a car that costs $200 a month, you should each pay your own car costs.

It is important that partners also talk about what they'll do if there's a change in circumstances that affects the budget. One of you may be out of work temporarily. How will you even up after? And if you decide to have children and one of you stays home, even in the short-term, how will your manage the bills and ensure the non-working partner has some money of his/her own.

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