A couple of years ago, Victoria published this really great post on how couples manage their finances. She put out a survey, gathered all the responses, and broke the data down into a number of categories to illustrate people’s practices when it comes to money and love. The post was really fun to read–one of my answers actually made it in!–and got me thinking about how I’d manage my money once it made sense to combine (or not to combine) my finances with a significant other.
Today’s post isn’t data-driven at all, but this topic has been increasingly discussed amongst my friends, especially as people start to move in with their partners. Some continue with business as usual–keep all accounts independent of one another and find ways to split everything evenly using Venmo or a similar app–others make some minor adjustments, and some completely overhaul how they balance the books…it’s really interesting! After dating for nearly seven years and living together for about 10 months, J and I have finally figured out what works best for us when it comes to splitting our shared expenses. Again, this is what works for us and it won’t suit everybody, but I’m pretty open when it comes to discussing topics like this because learning how friends + peers manage such real-life challenges not only reminds you that everyone has to deal with this kind of stuff at some point, but it also helps get the wheels turning as you try and figure out what’s the best plan for you!
A reminder that I have no finance background and this isn’t any kind of “official” advice–it’s just my own personal experience!
Until we lived together, J and I [likely unsurprisingly] had completely separate finances. We’d switch off paying for things like meals–he’d generally buy when we went to a restaurant, and I’d pick up the check at fast casual places and the grocery store. It felt like it sort of all evened out at the time, at least enough for the both of us to be happy with the system, and we weren’t Venmo-ing each other for little expenses here or there. We’d been together for so long and kind of adapted the “it all evens out in the wash” mentality and did our best to keep the numbers relatively split with the things we were purchasing together (which was really just meals at the time, aside from the random concert ticket or activity). The exception was if we traveled somewhere together–it’s helpful to purchase plane tickets on the same credit card, one person would pay for a rental car, etc. so in that case, we’d literally just write a check to the person who paid. Neither of us got Venmo until 2015/2016, and even then, it was only because friends forced us into it!
This system worked well for us, and I personally had a really basic Bank of America checking + savings account for my paychecks. A couple of years ago, I started realizing I wanted to “bucket” my savings more and divide them up into certain categories so it was easier to save for specific things. This was mostly prompted by conversations with Katie and my coworkers about how expensive attending peoples’ weddings can be; one day, I literally just opened a “sub” savings account and set an automatic transfer for a small amount each month. Unfortunately BoA didn’t make having multiple savings accounts very user-friendly, so I somewhat recently switched over to a Capital One’s 360 account and really can’t recommend it enough. It’s a lot easier to make and manage multiple savings accounts and I’ve started setting up a few automatic transfers. The best part is that if you need that money in your main checking account at a moment’s notice, the transfer is immediate…which is great! While it was a pain to switch banks, it was well worth the work–if you’re looking to set basic savings goals, the 360 makes it pretty painless. It doesn’t hurt that Capital One won’t try and stick you with random fees for everything, á la BoA :)
So back to how J and I manage things now that we’re under one roof! We started out as avid Splitwise users–basically if one person pays for something, it gets entered and you can determine how it should be split among a certain number of people (in our case, it was split evenly between the two of us). So essentially at all times, we’d have a balance that we were always striving to even out so one person didn’t “owe” much at the end of the month. We logged all our shared expenses in Splitwise. At the end of the month, whoever owed the other person would write them a check to zero out the balance. If you love accruing credit card points as much as we do, you know that pulling money directly out of your checking account is basically painful in a situation like this.
This system was working okay except for two major things. One, we were always trying to get that stupid balance to even out. If I bought our plane tickets on my credit card and J owed me $250 for his portion, it would be tempting for him to pay if we were out shopping and I bought something for $50 so we could get “closer” to that zero (where he wouldn’t have to write me that aforementioned check at the end of the month). Two, the arrangement made it impossible for either of us to keep track of our individual expenses since we were haphazardly paying for each other’s stuff to zero that balance.
This fall, after months of frustration, we sat down and figured out a better system. We ultimately decided to dedicate one credit card to all our shared expenses and aim to use that whenever we buy joint things–pay the cable bill, go to the grocery store, eat a meal out, expenses related to trips we’re taking together, etc. We’re together most of times we have to pay for any of these things and if one of us happens to go grocery shopping without the other person and can’t take “the card,” we’ll just Venmo for half the purchase. Since this happens so infrequently now, we aren’t as worried about missing out on points and making a mess of our shared expenses vs. our personal expenses. This is also a shared bank of credit card points–we used our bonus to book our hotel in Amsterdam over President’s Day weekend!
To pay for said credit card bill, we decided to open a joint bank account and each contribute a set amount per month. We determined this amount by calculating our estimated monthly expenses–which includes rent, all food (groceries + dining out), cable + internet, utilities, and a buffer for some “misc.” stuff like other household purchases. If our expenses are higher one month due to a large purchase, travel, etc., we’ll each add more to the account. We’ve had this system for a few months now and haven’t had this happen, but expect to make adjustments following some upcoming trips. Both of us still have our completely separate bank accounts and plan to keep it that way for the foreseeable future, but having this shared account makes paying for routine expenses so, so much easier. It helps us keep track of how much we spend on joint things, and lets us view and manage our individual, personal expenses separately.
That was kind of a quick overview of a dense topic and obviously is the tip of the iceberg when it comes to saving (I’m not even going to try and intensively discuss retirement accounts + investments over here), but hopefully it was helpful–or at least interesting–to you, whether or not you’re trying to figure out an easy way to manage your own savings goals or how to split expenses with a partner! The 360 account seemed a little intimidating at first, but it’s really quite simple…to be honest, Katie’s experience with LearnVest has me itching to try something more comprehensive down the line.
It’s a sort of personal question, but for those of you who are interested in answering, how do you organize your finances, whether you’ve combined them with a significant other’s or your own? Especially curious on the roommate front, since there are so many bill-splitting apps, etc.!