There are many ways to split finances when you are part of a couple, it can be tricky to decide how to create your budget and split things up, especially when quite often the two partners have different levels of income. One way that ensures fairness is by having each partner contribute in proportion to their earnings. This is known as a proportional split.
Proportional budgeting helps ensure that both partners contribute to household expenses in a way that reflects their income or financial capacity. For example, if one partner earns more than the other, the higher earner can contribute a larger share, but both would still contribute a fair portion relative to their income. Since the budget is based on percentages, it can be easily adjusted if one partner’s income changes (due to a raise, job change, etc.), or if unexpected expenses arise.
This flexibility helps avoid financial strain while keeping both partners involved. This method can prevent conflict arising, By setting clear guidelines on how money should be allocated, proportional budgeting can help avoid misunderstandings and disagreements about money. Both partners are aware of their responsibilities, reducing potential friction over financial matters.
How To Share Finances As A Couple:
- Calculate combined household income. Add up both of your after tax incomes to get a total household income figure.
- Determine individual contribution ratios. Divide each person’s income by the total household income to get their contribution percentage.
Example:
Partner A earns £3000 per month
Partner B earns £2000 per month.
The total combined income is £5000.
Partner A’s share (£3000/£5000) = 60%
Partner B’s share (£2000/£5000) = 40%
- Apply these ratios to shared expenses. Multiple shared expenses by each partner’s percentage to determine contributions.
Example: (Monthly shared expenses = £2000)
Partner A pays 60% of £2000 = £1200
Partner B pays 40% of £2000 = £800
- Decide which expenses are shared versus individual, e.g shared are rent/bills/food, holidays, and individual are personal shopping, hobbies, subscriptions, debt payments.
- Consider a joint account for shared expenses, each partner can deposit their proportional amount in to cover their share of expenses.
- Adjust for financial goals and lifestyle choices. If one partner has high student loans or childcare costs, you may adjust contributions accordingly. Consider a discretionary spending allowance so both partners have personal money to spend freely.
- Reevaluate regularly. Income levels, expenses and goals change, so check in every few months to ensure the split remains fair and works for both of you.
