If my partner and I make difference annual income, what's the best way to split costs?

If my partner and I make difference annual income, what's the best way to split costs?


I’m about to have less income than usual and I am wondering what the best way to share finances with someone else might be. Is there a fair equation for shared expenses based on the amount each person makes?


This is an excellent question. In order to be fair, the person with the highest income should pay more toward expenses. However, it should be divided fairly and equitably. The only way to accomplish this is if each person contributes the same percentage of their monthly income. For example, if the family’s total income is $10,000 the break-down would be as follows:
Monthly Bills: $6,000
Spouse 1: $7,000
Spouse 2: $3,000
In this example, Spouse #1 would pay 70% of the bills ($10,000/$7,000) or $4,200. Spouse #2 would pay 30% of the bills ($10,000/$3,000) or $1,800. The bills should be split 70/30 which allows each person to pay an equal percentage of the bills proportionate to their income. I hope that this helps!


This is such a good question and my compliments to you for asking it. I’ll pose some questions to you for further consideration. First, how do you feel about it and how does the other person feel about the changes? What was the previous expenses arrangement and did you choose consciously or fall into an arrangement? Previous history of these important questions about money will be helpful for this one. You can also decide together which expenses will be shared.
I once knew someone who split everything 50/50 with her longtime partner, although the income ratio was more like 40/60 in his favor. This could lead to resentment and does not seem equitable to me. So a percentage of total household income could be a way to go. If you make $1000 per month and the other person makes $4000 per month, then you have a 25/75 split.
On the other hand, you could go with a percentage split as above, but then add in non-monetary contributions, such as cooking, cleaning etc. One person buys all groceries and the other one cooks (if they enjoy it!). Or you could agree that it’s time for a housekeeper and the person who earns more picks up that expense to accommodate the one going back to school, homeschooling the kids, or being the primary parent.
This is the time to have an open conversation about how you each value time, effort and household contributions. One last point; I think each person should have monthly money they can spend without strings attached or getting permission from the other.


Great question and timely you ask. Many people who’s income decreases end up going into debt because they are afraid to have a serious budgeting conversation with their spouse or significant other, and end up running up credit cards to finance the old lifestyle. So do sit down with your partner and communicate and create a budget together, not just a budget but also expectations! There is no generic right or fair equation, if need a third party hire a fee only planner to help you create a budget. - The Savings Coach


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