A joint approach to budgeting is best

How should a couple organise their finances? An interesting question to which everyone will have their own answer. Of course, one size doesn’t fit all, but in reality the 50:50 method is especially popular.

With this approach, joint expenditure is covered jointly. In practice, each half of the couple pays the same amount into a joint account, together deciding if contributions need adjusting in line with ongoing expenditure and shared projects. This is a workable and efficient solution.

Proportionality is a good guide

Of course, there’s also the question of what is a fair split. How should costs be shared? Who should pay what? What contribution can each party make to the household budget? To answer this question, each couple must decide between themselves what should be done. If one half of the couple stays at home to look after the children, the 50:50 principle clearly isn’t going to work. You can make the same argument for two people with very different earnings levels. In such cases it isn’t possible for one partner to contribute the same as the other, or it certainly wouldn’t feel fair. For this reason, many couples manage their finances on the basis of proportionality. This means that each contributes in accordance with their means. If one half of the couple earns double what the other earns, they also contribute double the amount to household expenses, i.e. 66.7% of the household budget.

Neither side should feel left out.

In many couples, one person pays for everything and decides on all day-to-day finance issues alone. That’s not a problem as long as their other half isn’t excluded from decision-making. Looking after the finances in order to take the heat off your partner is one thing, wanting total control over the money can lead to frustration and tension. To prevent this many couples work on a case-by-case basis. They don’t have any hard and fast rules and adjust their approach to the type of expenditure. This is a flexible solution and can result in a good balance. Of course, an open dialogue is key with nothing left unsaid.

Accommodation costs money

One half of a couple will often move in with the other, and should then start paying rent. One option is to agree to separate the costs of accommodation from other ongoing costs. If this is the case, it’s reasonable to assume that the costs associated with accommodation represent around half of the joint costs of the household. The person staying in their home is responsible for the rent or repaying the mortgage, while the other pays for all other household expenses. The couple will then have to decide together on how to meet the cost of any unexpected expenditure or new projects.

The community of property regime can make life a lot easier.

The “easiest” solution

One solution, which won’t suit everyone and for good reasons, but which will solve any issues on how to split expenses, is to pool your assets and finances. The principle of the community of property regime is quite straightforward: “Anything that belongs to you also belongs to me. And vice versa”.

There are no questions about proportionality, fairness or how to share the burden, as everything belongs to the couple. Wages are paid into a joint account which is used to meet both joint and personal expenditure. In some respects, this means that the couple is a distinct entity, which cannot be separated into the two individuals belonging to it. Of course, this requires full trust in your partner and their relationship to money. It’s risky to consider this solution in the first weeks after meeting someone. Yet it is a solution that makes managing your finances easier.

There’s a broad spectrum of options: 50/50, proportionality, pooling your property, or one half of the couple taking over specific costs. And what suits one couple won’t necessarily suit the next. Even in the same couple, the solutions may evolve depending on what stage in your lives you are at and the professional decisions you take. So it’s very important to talk about this in a relaxed manner to ensure that neither partner feels disadvantaged by any decisions taken.

It all comes down to a question of trust.

Household expenses are a delicate subject, but are often important to the long-term stability of a couple. Of course, money isn’t the key to happiness, but many things are easier if you manage your joint finances properly.