How to split money with your partner
Is there an ideal way to save or split money with your partner?
I doubt it.
Personal finance can be personal to partnerships and relationships too.
I’ve seen a few articles over the years that discuss this subject, how to split finances with your significant other, but they often fail to acknowledge the huge factor that teamwork and/or constant commuincation has related to maintaining most financial decisions.
Relationships can be complicated at times. Money makes it more so.
I can’t tell how many times my wife and I have discussed money matters over the years. It’s important we do.
By maintaining an honest relationship about our finances, we try to avoid these types of friction:
- But this person makes more money…
- But this person took this trip…
- But what if I want to buy this and you don’t….
I bet for many couples or partnerships, money is a challenging dinner table subject. I recall divisive discussions about money remain one of the top reasons why relationship fail…
Inspired by a few reader questions to me, on a personal basis too, here are my thoughts on how to split money with your partner.
How to split money with your partner
There is no right or wrong in my list below. Here are some considerations when it comes to how to split money with your partner:
Yup, right down the middle.
Whether my wife makes more money than I do (or not), we don’t care.
This approach pools all income, from all sources, regardless of who makes more or less at any given time and splits expenses evenly. That means, we pay for shelter, food, and transportation expenses jointly. We save for trips, regardless of where the income arrived from, jointly.
In our case, this is what we do. We have a joint chequing and higher-interest joint savings account.
It’s easy. Less bickering (!). It works for us. Your mileage may vary.
2) Your acccount, their account, for joint contribution
Not right down the middle, not regardless of income.
In this method, because each partner earns a different amount of income, they contribute a different contribution to shared expenses.
Let’s see how this could play out:
- Keep your individual bank accounts – open a joint chequing account.
- Add your individual incomes together to get your total household income.
- Calculate the percentage of that total each partner makes, say 60% one, 40% for another.
- Add up all the expenses you’ve agreed to split.
- Use the percentages to see how much each of you are responsible for.
Pros and cons to this method, but I guess it could work for some.
3) Split certain expenses
Just as it sounds.
Just like I take care of certain condo chores (I do, honest!), my wife has other chores in our relationship.
In this money splitting exercise, maybe one partner pays for the cell phone bills and the other partner, close to that dollar amount give or take, has a role to ensure the pet supplies are stocked.
I’ve heard about this “I do, they do” budgeting concept in some relationships but it seems too much nickels vs. dimes for me.
4) Pool the income but keep a “me account”
Beyond 50/50, this might be the most popular.
In this money splitting partnership, you pool your income, you pay your shared expenses, and then you also have a “mine vs. theirs” savings account.
The joint chequing account can promote teamwork but the individual savings/spending accounts can leave room for the discretionary I-can-do-anything-I-want-with-my-money account. If there are different spending habits between partners, I could see this being a huge advantage to avoid conflict.
Mark, what if one person makes more money?
Well, you need to work that out 🙂 I think how you split money with your partner really depends on the trust and the dynamics of your relationship.
Here is a reader question, related to this subject (adapted for the site only slightly):
Thank you for all the work you do and information you provide, you’ve given me renewed energy to figure out where my family and I are at with our finances. I think we’re doing well but there’s a huge difference or gap between what’s under my husbands name for saving and investing versus mine.
First question, does this matter? I’m asking since I was a bit late to start my career and begin to build more savings and investments.
We’re both 35. He’s been saving and investing with his company via a defined contribution plan for about 15 years while I’ve only been contributing to my defined benefit plan for about 3 years. There’s obviously a huge difference.
Luckily, he has managed to max out his TFSA and save a large amount in a non-registered investing account.
Meanwhile, I have an RRSP and TFSA account I invest in and RESP account for our son.
We still have long careers ahead of us and hope to add one more to our family. Although I generally enjoy my job, I’m very interested in working part-time. We don’t currently have any debt and are working on
maxing out my TFSA.
Is our situation more simple than I think?
I feel like the defined benefit plan always has me making things more complicated than they are. Any suggestions on articles to read or ideas to share?
Thank you for your time. I’m enjoying following along your journey.
Thanks very much for following along, glad you enjoy the site!
First question to answer, no, I don’t believe it matters. See list of options above. I think you should find whatever saving and investing partnership approach works for you, as a couple I mean, discuss it and stick to that until you need to change it up.
In terms of your husband’s defined contribution pension plan, that’s great – 15 years in. I would just consider investing in the lowest-cost, most diversified equity investments in that plan to better maximize growth over the years. Just know that high priced funds are wealth-building killers. High fees make other people wealthy, not you!
Kudos for your defined benefit plan. I am very lucky to have one too. I have considered my DB plan a “big bond” for many years now and you might also want to consider the same.
In terms of investing priorities, I can’t tell you enough that maxing out both of your TFSAs over the coming years will likely pay off very BIG. I have and continue to max out my TFSA, first, every year.
If you haven’t already done so, consider investing in these low-cost ETFs for your TFSA should you not be ready nor wish to invest in any individual dividend paying stocks like I do!
And this is a good read, too…
With longer careers ahead of you, once your TFSA is maxed, you can consider maxing out contributions to your RRSP where that makes sense, to lower your taxable income AND participate in long-term tax-deferred growth.
How to split money with your partner summary
There are many ways to save and invest for your financial future, with your partner too!
But regardless if you’re saving and investing on your own or with a partner, I think the basic formula to wealth-building for the average Canadian / average Canadian couple remains the same:
Image source: https://www.finiki.org/wiki/Main_Page
Your personal or partnered savings goals should be the result of a well-thought out decision, related to short-term and longer-term timelines. I believe when you’re able to commit to something, or someone, as part of a goal, that should increase the chances that you’ll realize it. I hope you do 🙂
How do you split money with your partner? What tips or tricks do you use or have for this reader?
Thanks for reading and sharing.