Managing finances as a couple

emilyblowers98

Hi everyone!

Me and my partner are hoping to buy a house together within the next year, we don’t live together yet and I was wondering what the best way would be to manage our finances as a couple.

Is a joint current account and savings account the best way to go? What should we pay for together and separately? What is the best way to split expenses (50/50 or by % of our salaries?) and can anyone recommend any bank accounts?

Any tips or advice would be helpful!!!

Thanks, E

tacpot12

A joint current account for paying bills is a good idea. I would recommend that you botth maintain your own savings accounts for household expenses.My partner and I have a household budget where were collect together the ongoings costs of the house and anything else we have agreed to share (we happen to share the costs of running a car together, and we also share all the vets bills associated with our pets). 

Via the budget, we agee who will pay the Council Tax and who will pay the Utility bills. We have found it useful to have some bills paid by one of us and some by the other, so we always have bills in our name that we can use to prove our identity.  Splitting the bills p like this never results in a 50/50 split, so one of us will pay the other a small balancing payment each month by standing order.

We convert annual expenses such as home insurance (and the 10 months  council tax bill) in monthly amounts. So my partner might pay the home insurance as a lump sum, and I will pay them back via the budget. This means I will pick up other bills that are about the same amount.  

We both save for items such as replacing furniture and appliances in our own savings accounts, and discuss how much we will spend on such items.

We have a spreadsheet that we use to track where one of us has paid for something, e.g. If I buy a new sofa on my credit card (e.g. to get the S75 protection), we will record this in the spreadsheet, and the spreadsheet calculates that half of the cost should be paid by my partner. If she buys something for the house, the spreadsheet calculates what I owe her. We settle up every month or so, so that we can pay off credit card bills etc. e.g. If I buy a new sofa for the  house on my credit card, say, costing £600. The spreadsheet will record that my partner owes me £300. If we have had no other shared expenss in the month, she will pay me £300 at the end of the month, and I will draw £300 from my savings where I have been saving for household items so that I can pay off my credit card bill in full.

This works well for us, but there are other ways you might fairly spread the cost.

We both have similar levels of income, so we split every house/car/pet expense 50/50. If you are earning radically different amount, you perhaps can't afford to do this, so need to agree an unequal split. Ideally each of you should still be left with some spare money at the end of the month that it your to do with as you please.

emilyblowers98

tacpot12 said:

A joint current account for paying bills is a good idea. I would recommend that you botth maintain your own savings accounts for household expenses.My partner and I have a household budget where were collect together the ongoings costs of the house and anything else we have agreed to share (we happen to share the costs of running a car together, and we also share all the vets bills associated with our pets). 

Via the budget, we agee who will pay the Council Tax and who will pay the Utility bills. We have found it useful to have some bills paid by one of us and some by the other, so we always have bills in our name that we can use to prove our identity.  Splitting the bills p like this never results in a 50/50 split, so one of us will pay the other a small balancing payment each month by standing order.

We convert annual expenses such as home insurance (and the 10 months  council tax bill) in monthly amounts. So my partner might pay the home insurance as a lump sum, and I will pay them back via the budget. This means I will pick up other bills that are about the same amount.  

We both save for items such as replacing furniture and appliances in our own savings accounts, and discuss how much we will spend on such items.

We have a spreadsheet that we use to track where one of us has paid for something, e.g. If I buy a new sofa on my credit card (e.g. to get the S75 protection), we will record this in the spreadsheet, and the spreadsheet calculates that half of the cost should be paid by my partner. If she buys something for the house, the spreadsheet calculates what I owe her. We settle up every month or so, so that we can pay off credit card bills etc. e.g. If I buy a new sofa for the  house on my credit card, say, costing £600. The spreadsheet will record that my partner owes me £300. If we have had no other shared expenss in the month, she will pay me £300 at the end of the month, and I will draw £300 from my savings where I have been saving for household items so that I can pay off my credit card bill in full.

This works well for us, but there are other ways you might fairly spread the cost.

We both have similar levels of income, so we split every house/car/pet expense 50/50. If you are earning radically different amount, you perhaps can't afford to do this, so need to agree an unequal split. Ideally each of you should still be left with some spare money at the end of the month that it your to do with as you please.

Thank you so much, this is so helpful!!

Our salaries are only a few grand different so sounds like 50/50 may be the way to go. 

Daliah

emilyblowers98 said:

Our salaries are only a few grand different so sounds like 50/50 may be the way to go. 

You could argue the other way round - as it's only a grand difference, the one with the higher income doesn't have to pay a great deal more if you split your costs by the actual percentage of total household income. But the basic question for me would always be: why should the one with the lower income pay proportionally more than the higher earner? 

blue.peter

Daliah said:

emilyblowers98 said:

Our salaries are only a few grand different so sounds like 50/50 may be the way to go. 

You could argue the other way round - as it's only a grand difference, the one with the higher income doesn't have to pay a great deal more if you split your costs by the actual percentage of total household income. But the basic question for me would always be: why should the one with the lower income pay proportionally more than the higher earner? 

Yes, quite. You also might want to think whether the difference in income will change in the future. Is it possible that one of you will, for example, get promoted faster than the other?

If you haven't already read this thread, you might find it helpful to do so now. It was started by someone who appears to be a bit further down the road, and illustrates the way that things could go.

Rob5342

A joint account for bills is a good idea, you can both pay imto that at the beginning of each month and can then forget about it knowing all the direct debits are covered until you next get paid. How you split it and the proportions you pay is a very personal thing and what works for one couple won't work for another. When I moved in with my wife we split things in proprtion to our earnings to start witj, but after a while we decided it was a bit pointless maintaing a split as we were sharing anything anyway. For example I'd buy a TV for £500 and she'd give me £200 towards it, but we'd both watch it together, so we thought why didn't we just put the money together before we bought it? If your salaries are similar I'd suggest doing a 50/50 split to start with, and then just see how it works for you and ajdust if if necessary.

I'd recommend either Monzo or Starling for a bank account as they have lots of useful budgeting features.

Daliah

Rob5342 said:

 after a while we decided it was a bit pointless maintaing a split as we were sharing anything anyway. For example I'd buy a TV for £500 and she'd give me £200 towards it, but we'd both watch it together, so we thought why didn't we just put the money together before we bought it? 

As you say, it's for each couple to decide what works best for them. Nonetheless, in the example you give, your wife would proportionally pay more than you do. With all the talk about gender pay gap and pension pay gap this is increasingly  considered unfair and unjust, and lots of women are up in arms over it if they ever end up on their own, for whatever reason. Sadly, it is still the case in many relationship that the partner with the lower income, usually the female, is financially disadvantaged on many levels. Some don't even realise this is the case until it is too late to do anything about it.

anotheruser

We have a joint account (we're married).

We both pay in the same amount per month and use that for everything that is shared, food, bills, DIY stuff for the house.
Any money left over from our salaries is ours to do with whatever we want.  We generally buy clothes, shoes, jewelry and personal stuff from our own account.  Shampoo and conditioner (the latter which I personally have no requirement for) comes from the joint account as part of grocery shopping.  It's swings and roundabouts as I may buy myself some beer that my wife won't drink.  She eats more salad, but I have more ice cream for example.

If one of us wants to buy a new phone, that's personal spend (unless we're both getting the same phone).  Our mobile accounts are the same sim only contract at the same price anyway, so that comes out the bills account.  Not fair if one person wants a good phone and pays £50 a month while the other person pays less than £10 a month.

Glasses are personal accounts, but medication is always joint account.
You will get to know what account should be used to to purchase what.



Our in laws do it the other way.
Both pay their salaries into their joint account and take out a set £200 a month for personal spending.


There are advantages and disadvantages to both.
Be cautious before intertwining finances as once done, it's difficult to un-do.
But also be aware that being too separate is also a splinter that could turn into a big wedge between both people in the relationship.  Relationships are about trust and dependence.  If you're not trusting each other and not depending on each other, what are you doing...

SeagullFTB

anotheruser said:

Our in laws do it the other way.
Both pay their salaries into their joint account and take out a set £200 a month for personal spending.

This is the way me and my wife do it. Both our earnings go into our joint account, all household expenses are paid from that account and e get £250 each transferred to our personal accounts for whatever we like. Any balance in the joint account at the end of the month is moved to our joint savings account for the future.

We're happy doing it this way. I'm the higher earner, but I see us as a unit and equal in every way. We intend to start a family within the year, which is also a factor, as my wifes earnings will drop (maternity leave etc...) but that doesn't make us any less equal.

But as everyone keeps saying, it's a personal decision that you and your partner but agree on. There isn't a one size fits all approach.

Rob5342

Daliah said:

Rob5342 said:

 after a while we decided it was a bit pointless maintaing a split as we were sharing anything anyway. For example I'd buy a TV for £500 and she'd give me £200 towards it, but we'd both watch it together, so we thought why didn't we just put the money together before we bought it? 

As you say, it's for each couple to decide what works best for them. Nonetheless, in the example you give, your wife would proportionally pay more than you do. With all the talk about gender pay gap and pension pay gap this is increasingly  considered unfair and unjust, and lots of women are up in arms over it if they ever end up on their own, for whatever reason. Sadly, it is still the case in many relationship that the partner with the lower income, usually the female, is financially disadvantaged on many levels. Some don't even realise this is the case until it is too late to do anything about it.

I don't remember the exact number, that was just an example of why we decided to do it together. We just earn what we can and spend based on our wants and needs. Our definition of fair is that we can both buy what we want or need, but without worrying about the exact split which will change each month. Our income split is about 17:I but I spend virtually nothing on myself normally and she probably spends more than she earns each month on herself.  

kaMelo

In all honesty it's an impossible question to answer as there are so many variables. As a newish couple setting up home together It makes sense to keep things separate to a point, the only debate is on who pays what towards bills. If incomes are similar then split down the middle, trying to work out fractions of percentages on a spreadsheet just seems unnecessary.

Ten years further down the line and you're now married with two kids, I don't see any other logical solution than one big family pot. At that stage in life it shouldn't matter who puts in in there, only that there is enough going in it. I'll never understand couples in that scenario still talking about "my money" rather than "our money" The most bizarre one I heard was a woman wondering whether to still go on holiday alone as her husband of many years hasn't saved enough to pay his half. I just thought .. really?
Certainly not my idea of married life but if it works for them who am I to criticise.