Help with joint vs. separate accounts

[jd2005]

Moving in with the DG in July. ;D I have read over the years that several out here live happy lives with their significant other, all while having separate accounts.

For those out there that have separate accounts, how do you handle household expenses and bills?

I make about 3x what she does. I was thinking of 2 options:

1) opening up a joint account with her where we could put in a portion of all joint bills (rent, utilities, food, etc.). I would put in 2/3 and she 1/3.

2) I would pay the rent, and she the utilities (which is less than 1/3 of the rent cost), and then split food shopping 50/50.

Thoughts on the above? Anyone do something different?

Thanks for your help!

[Deleted]

Personally, I would never open a joint account with someone unless we were married. I would go with option 2.

[Savoir Faire-Demogague in NJ]

Splitting domestic expenses based on both of your guys incomes is the fairest way to do it, in my judgement.
Come up with a ballpark number for total monthly expenses, then split it up into 2/3 and 1/3.

[Deleted]

May 12, 2011 8:06:51 GMT -5 Savoir Faire-Demogague in NJ said:

Splitting domestic expenses based on both of your guys incomes is the fairest way to do it, in my judgement.
Come up with a ballpark number for total monthly expenses, then split it up into 2/3 and 1/3.

I agree, option 2 is the best one.

Add all the expenss (rent, utilities, groceries, etc) and you pay 2/3 and she paiys 1/3

[Deleted]

May 12, 2011 8:06:51 GMT -5 Savoir Faire-Demogague in NJ said:

Splitting domestic expenses based on both of your guys incomes is the fairest way to do it, in my judgement.
Come up with a ballpark number for total monthly expenses, then split it up into 2/3 and 1/3.

That is what we did when I moved in with my girlfriend. We kept everything separate, though.

[soon2bmomof3]

Why would it be split 2/3 an 1/3 and not 3/4 and 1/4, since you make 3x what she does?

[Gardening Grandma]

I'm with SF. Figure out the domestic expenses and allocate amounts proportinate to earnings.

If you go with option 2' how would you implement splitting the groceries? You both go shopping and each write a check for the sum? You say, "I bought the grocies last time, so now it's your turn"? A community pot for groceries is much simpler.

FWIW, when DH and I lived together, we did not have a joint account. He gave me a check each month for 1/2 the rent (we earned exactly the same income). He paid the utilities and I bought the groceries. At the time, the utilities and groceries were approximately equal. In time, groceries cost more and we had to change methodology. But we had married by then and opened a joint account.

[ruger2506]

May 12, 2011 8:02:21 GMT -5 jd2005 said:

Moving in with the DG in July. ;D I have read over the years that several out here live happy lives with their significant other, all while having separate accounts.

For those out there that have separate accounts, how do you handle household expenses and bills?

I make about 3x what she does. I was thinking of 2 options:

1) opening up a joint account with her where we could put in a portion of all joint bills (rent, utilities, food, etc.). I would put in 2/3 and she 1/3.

2) I would pay the rent, and she the utilities (which is less than 1/3 of the rent cost), and then split food shopping 50/50.

Thoughts on the above? Anyone do something different?

Thanks for your help!

So what if you make more. Is she going to use only 1/3 of the utilities. 50/50 is the only way to fly. Regardless of income.
If you were sharing a place with a buddy it would be 50/50 wouldn't it? So just cause you are doing the dirty with your roomate she get's a break on the bills?

DO NOT get joint accounts or co-sign for her. Keep all monies separate.

[daisylu]

This is not a roommate, it is a relationship. No way would I ever have moved in with a DBF who made 3x's my salary and expected me to pay half the bills.

Depending on mortgage/rent, size of house, and a lot of other factors - she could end up with the short end of the stick financially taking that deal.

[jd2005]

All - thanks for the input.

Soon2 - Split will be equitable...1/3 and 2/3 or 1/4 and 3/4...the split isn't the issue...the how to split is.

Disylu & Ruger - Disylu hit the nail on the head...this is a relationship (with the intent of getting married in the future), not a roommate only situation. I'll be chatting with DG about what she wants to do, but will not treat her simply as a roommate. If she wants to go 50/50, I'm happy with that, but will not push the issue. Again, the split %s aren't the issue, but how to split it.

[Gardening Grandma]

May 12, 2011 9:19:10 GMT -5 daisylu said:

This is not a roommate, it is a relationship. No way would I ever have moved in with a DBF who made 3x's my salary and expected me to pay half the bills.

Depending on mortgage/rent, size of house, and a lot of other factors - she could end up with the short end of the stick financially taking that deal.

Absolutely. If my SO made three times what I did yet insisted that I share expenses 50/50, I'd consider him a selfish SOB and would seriously reconsider the relationship.

OP, another approach you could take towards groceries is to go on a cash basis. Each of you put $XX into a "grocery" envelope. Funds for food come out of that envelope.... No separate account necessary.

[Anne_in_VA]

DH and I don't have joint accounts at all. It's been this way since we moved in together and it's always worked fine for us although I know it doesn't work well for others.

We split bills and transfer money to the other one's account (usually it's me that is transferring money to him since he pays the rent which is quite a bit more than the other bills).

We earn approximately the same but he does get his military retirement too and that brings him up to about 1/3 more than my earnings.

Since we get paid on opposite weeks, I pay for groceries one week and he pays the next week. Some weeks it's less and some weeks it's more, but it all evens out.

[ruger2506]

May 12, 2011 9:19:10 GMT -5 daisylu said:

This is not a roommate, it is a relationship. No way would I ever have moved in with a DBF who made 3x's my salary and expected me to pay half the bills.

Depending on mortgage/rent, size of house, and a lot of other factors - she could end up with the short end of the stick financially taking that deal.

So what. We are boyfriends, not charities.

In my house (I own the house) I make 2.4X what the DF makes. So I pay the mortgage and INS. However I told DF I expected it to be 50/50 regarding the utilities. Especially since she's always leaving lights on, running the A/C and heat when I don't think we need to, etc.

Now, I do pay for almost 100X of the gas for trips/travel. We alternate who buys when we eat out.

[Gardening Grandma]

ruger, If she's getting free housing, then paying 1/2 the utilities seems very reasonable. What do you do about groceries and eating out? Who pays? Or how are those split?

[ruger2506]

May 12, 2011 9:33:16 GMT -5 Gardening Grandma said:

ruger, If she's getting free housing, then paying 1/2 the utilities seems very reasonable. What do you do about groceries and eating out? Who pays? Or how are those split?

Groceries are split. Eating out is supposed to be split, however I seem to buy 2:1.

[qofcc]

save the joint accounts for a milestone event when you start planning the wedding or get married. As long as both of you are responsible with money and the bills are getting paid, each choosing certain bills to pay is the way to go. If one person in the relationship is not a good money manager, then letting one person handle the bills and the other one writing a check for their share every payday might be the way to go.

As far as the groceries, it depends on who is actually doing the shopping. If you both do it, then taking turns would work. If one of you takes responsibility for shopping and the other takes a different chore, then establishing a cash grocery kitty or writing the other person a check would be the way to go. That comes down to a logistics of how you're going to physically get the groceries and whether you like to pay in cash or by credit or debit card.

[Cookies Galore]

BF and I have been living together almost four years (we've also been dating almost four years, we moved fast). Our system is pretty basic, I think. I take care of everything and he gives me money for his share. It's been working for years, so why change anything?
We do have a joint savings account. But I figure we do take vacations together, we do need to save jointly for apartment deposits (we recently moved into our second place after spending three years in our first), and we do have shared future goals. For us, it just makes sense to save together for certain things.

[daisylu]

May 12, 2011 9:29:36 GMT -5 ruger2506 said:

May 12, 2011 9:19:10 GMT -5 daisylu said:

This is not a roommate, it is a relationship. No way would I ever have moved in with a DBF who made 3x's my salary and expected me to pay half the bills.

Depending on mortgage/rent, size of house, and a lot of other factors - she could end up with the short end of the stick financially taking that deal.

So what. We are boyfriends, not charities.

In my house (I own the house) I make 2.4X what the DF makes. So I pay the mortgage and INS. However I told DF I expected it to be 50/50 regarding the utilities. Especially since she's always leaving lights on, running the A/C and heat when I don't think we need to, etc.

Now, I do pay for almost 100X of the gas for trips/travel. We alternate who buys when we eat out.

Do not put words in my mouth - I do not think that BFs are charities. In your situation, you are paying the ENTIRE mortgage (which is probably the largest bill) and splitting other bills - OP was talking about splitting EVERYTHING, including housing.

[ruger2506]

May 12, 2011 10:28:45 GMT -5 daisylu said:

Do not put words in my mouth - I do not think that BFs are charities. In your situation, you are paying the ENTIRE mortgage (which is probably the largest bill) and splitting other bills - OP was talking about splitting EVERYTHING, including housing.

Different scenario.

#1. If she walks (god forbid) it's still my house. I'm out nothing.

#2. I'd be paying the mortgage (investing my money) regardless of her living there or not.

Renting is an entirely different animal when compared to paying a mortgage/owning.

[jd2005]

qofcc - I like the idea of saving the "joint account" moment for a milestone.

Ruger - In my case, I think of the rent like paying my old mortgage. We are not renting something that we can afford only because DG will be putting in a share of the rent. We are renting something that I alone can afford (that is, one income alone is enough).

[Baby Fawkes]

I started with splitting costs with my GF at the time and we worked it out by splitting everything 50/50 except for groceries, which we split 33/66 with me paying more. I've always earned about 4x what she earns but when we first moved in together we were renting and earlier on in a relationship so it made sense. We did it by me paying everything and her giving me a check at the end of each month.

Once we moved on to buying a house, she couldn't afford to cover 50% of the costs and to be honest I couldn't be bothered to track the splits exactly. We also got engaged around the same time. She is the sort of person who doesn't really want to worry about paying all the bills and the finances etc. That works for me, although I make sure she has access to everything and run everything past her regularly. Our situation now is that she keeps a set amount out of every paycheck for her fun money and just gives me everything else. I then pay everything. We're essentially joint finances, but the only actual joint things are the deeds on the house and the mortgage note. She's also an authorized user on my credit card at the moment and uses that to buy everything and I just pay it off at the end of the month.

I don't necessarily recommend this for everyone though, but it can work for some. We plan to have joint accounts for everything once we are married so we've basically just evolved into the current situation. We would be joint except we're just waiting until we're married. She's also proved beyond all doubt that she's not going to run out and spend a fortune on my card etc so I have no concerns at all. I even bought a car for her when hers died after 16 years and it's turned out fine (2 big YM sins there).

I'd recommend leaning to the cautious side initially, but if you're anything like our relationship and both inclined to go joint it may just turn out that it evolves over time if you both trust each other and feel comfortable with it. I know most people are going to tell you to stay separate for most things in order to protect yourself and that's great advice, but don't feel pressure to keep it that way long term if you feel that joint may work. For some people (like us) it's the much nicer situation

[msgumby]

There is a difference between living with a partner and living with a roommate. When you live with a partner, you have shared goals/future plans/priorities, but may not both make enough to reach those individually. For example, if someone makes 3x the income of their partner, they may want to live in a nicer apartment (with a pool or more bedrooms or other amenities). The lower income partner may not be able to afford to pay for half of that apartment - or may be able to while sacrificing significantly. It's a joint decision to choose where to live and it should be a joint decision as to how each partner contributes. If people with large income disparities choose to split the bills in such a way that reflects their income, all that matters is that is what works for them. It normally doesn't feel like charity to the higher income partner, it's just a different way to split bills that feels fair to them.

It also doesn't always end up with the BF supporting the GF - when we were in grad school, there were times that I made a lot more than my husband (then boyfriend). There was even a year where we prioritized paying his tuition over having him contribute anything to our living expenses. It was just a personal choice we made to make our lives easier and less stressful. And I never thought less of my husband for not contributing financially that year because he was contributing to the household in other ways and it never felt like a charity to me. Now he makes more than I do, so it all evens out.

Now on topic - what we did when we were splitting expenses was that I would just pay for everything and at the end of the month we would settle up. I liked keeping it simple, and neither one of us was living paycheck to paycheck so we would only settle up once a month. My husband (then boyfriend) didn't really like handling the finances and I did. I paid all our rent/utilties directly and we charged (paid in full) most of everything else. I would just pay off all the credit card bills, add everything up, and he would transfer over the money.

[nalto]

Eh...this is where it gets sticky. If you're that dedicated, why not joint accounts? If there is any hesitation there, then perhaps 50/50 would be the way to go.

I guess what I'm saying is if you go 2/3rds and it doesn't work out, problems would arise.

[stl76]

"This is not a roommate, it is a relationship. No way would I ever have moved in with a DBF who made 3x's my salary and expected me to pay half the bills."

Why would anybody think they are entitled to somebody else's earnings? He didn't get to earning 3x because of you, why should he have to support you? When I say you, I don't mean the person who wrote this (just general)... I think it is very selfish of the person who makes the lower income to autmatically think the higher income should pay for more. What if this said BF (in the example above) has other financial obligations (credit cards, etc) that brings his take home down, then what? Do you take that into consideration?? I think it should be 50/50 (not to the extent that the lower income person would have to feel pressure to keep up, upgrading/downgrading should all be mutual decisions, the lower income person should not expect for things to be paid for automatically and the higher income person should be understanding of the fact that the person makes less).

[NomoreDramaQ1015]

DH made a lower income than me and we did the "I pay more, you pay less" thing for fixed expenses and it eventually lead to resentment. The reason being that he had more discretionary income despite his lower pay since he had so little invested in the fixed expenses. So he got to have more play money than I did covering the lion's share of our fixed expenses.

It got really old after awhile and lead to a lot of fights over money.

Not saying this would be the OP, but sometimes the "fair" thing to do in the eyes of others doesn't always make the most sense for the couple. If he really has no problem paying 3/4 of the expenses while she pays 1/4 then go ahead. Just remember that 3/4 of her money is then hers to do with as she pleases while you're only left with 1/4 your income.

Depending on the OP's income 1/4 could be more than enough for him not to feel resentment.

I started getting resentful when he wanted the central air turned down to 65 and I wanted it turned up to 75. Why should I pay 3/4 of the electric bill when he's the one jacking it up? Trying to say "Well I need more for the electric bill since you use more of it" didn't really work for us.

Finally saying we both live in the same house let's just split it 50/50 worked a lot better. We are just not the type of couple to be able to handle splitting things on a percentage of our incomes. A community pot was a lot better for our marriage.

DH and I piss poor communicators, especially in our first few years iving together and sharing expenses. We've gotten better but going to separate pots again isn't in the cards since I know we'll slide right back to square one.

You got to have REALLY good communication skills for separate pots. . .or make enough that you don't care, one of the two.

[midjd]

I think a large consideration when deciding how to split expenses is whether both partners are "upgrading" their lives at the same time, or if the lower-earner is moving in with the higher-earner (or vice versa).

I'd say in general, a couple tends to be more comfortable hovering around the income level of the higher earner rather than the income level of the lower earner. E.g. someone who brings home $200K a year is not going to want to slum it in a $600 apartment. It does go the other way, too.

So it's not really fair to expect the lower-earning partner to put in a much larger proportion of his or her pay because the higher-earning partner doesn't want to downgrade his or her lifestyle. Then again, it's not fair to expect the higher-earning partner to subsidize the lower-earning partner who no longer wants to live at his or her old lifestyle.

OP, are you moving in with her, is she moving in with you, or are you getting a new place together? If she's moving in with you, the you pay rent/she pays utilities/split the groceries method would probably be best. But you may want to just ask her what she thinks would be fair

[sarcasticgirl]

DH and I didn't have joint accounts until we got married (aside from the joint savings we started when we got engaged)

DH makes a bit more than I do so what we do is each contribute the same percentage of our pay to the household acct (which includes rent, utilities, car, groceries and misc) with us both paying the same percentage, the burdon is essentially the same for each of us.

[jd2005]

MidwesternJD - She is moving in with me.

I would not resent having to pay more, as long as there is no abuse. Our communication is great, so I do not anticipate that as a problem.

[daisylu]

May 13, 2011 11:29:33 GMT -5 sarcasticgirl said:

DH and I didn't have joint accounts until we got married (aside from the joint savings we started when we got engaged)

DH makes a bit more than I do so what we do is each contribute the same percentage of our pay to the household acct (which includes rent, utilities, car, groceries and misc) with us both paying the same percentage, the burdon is essentially the same for each of us.

This. We used this approach for our joint savings.

[whoisjohngalt]

I don't think it should matter who makes what, I think it should be split 50/50. It's the same as taxing the "rich" more under the premise that if you make more, you should pay more. Why???

Then again, I am probably the wrong person to ask bc I don't see myself living with anyone unless we are married.

Lena