Follow Us on Google
When you are living together but not married, it is not a good idea to combine finances. You do not have the same protection as if you were married. A household budget is designed to only cover the expenses in the household. You can and should do a household budget with your boyfriend or girlfriend when you move in together.
Until you get married, you should keep the majority of your expenses separate to protect yourself in the event that you split up. You do not receive the same protection under the law if you are not married, so you need to provide protection for yourself in case this would happen.
Determine the expenses you will share
First, you need to determine the expenses that you will share as part of the household. Generally, you will need to split the rent, utilities, and basic groceries. If you have pets you may include the pet care in the household budget.
As a couple, you need to sit down together and come to a mutual understanding of what you think should be covered under household expenses. You should have a small household emergency fund of $1,000 to cover emergency expenses. You will need to agree on the amount of rent you are willing to pay together.
Set your contribution amount
Some peoples would say that you should each submit fifty percent of the household expenses to the budget since you are living together and splitting the costs, but this is not the best way to do this.
Often one person makes more than another person, and fifty percent of the expenses may be crippling to the person who makes less money.
Contributing the same percentage of your income is a better way to handle it. This way you both can contribute to your retirement and cover your other expenses without being crippled by your monthly contribution amounts.
Figure out your contribution amount
To determine how much you each contribute you should add together your gross pay amounts and total your household budget. Then divide your gross pay by your household budget.
The percentage that you get is the percentage you should each contribute. For example, if you make $6000 a month and your partner makes $4000 and your household budget amount is $2500 a month, then you will add $6000 and $4000.
You will divide the budget of $2500 by $10000 to get a percentage of twenty-five percent. You will contribute $1500 and your partner will contribute $1000 for a total of $2500.
Open a separate account
You should open a separate checking account just for your household expenses. You should both be signers on the account and have a set date where you make a deposit to that account to cover the monthly bills.
Then you will pay for the expenses you have included in your household budget from that account. This will protect your other money if your partner makes poor financial decisions and make it easier to divide things up if you split up in the future.
Covering all the household expenses with this account will prevent you from running up a credit card or dipping into your savings to cover shared expenses. It will be best to have the account at a different bank from your original account.
Items you are responsible for
You should be responsible for paying for your own car, car insurance, and other expenses. You should purchase your own clothes, cover your haircuts, and personal care items. If you purchase meals out on your own or with friends without your partner you should pay for that with your own money.
Additionally, you need to contribute fifteen percent of your gross income to your retirement. You are solely responsible for any loans or credit cards you have out. You will need to cover your own medical bills and insurance.
