How To Split Bills As a Couple Based on Income

Managing money is one of many challenges a couple will face when living together. Studies show that at least half of couples fight about money. Those arguments can and do escalate to the point that many couples eventually split as a result. Still, it has been shown that when couples manage money harmoniously, it creates general wealth.

That’s why it’s critical for couples to discuss how to split expenses early in the relationship. Couples with equal incomes could split everything equally, with each partner paying 50%. However, others can also take a tailored approach where one contributes more than the other, not just financially but also for things like chores.

Key Takeaways

• Couples often face challenges related to money management, and discussing how to fairly split expenses is crucial. Different methods, such as equal, percentage-based, or income-relative splits, can be employed depending on each couple's financial situation and preferences.
• Couples with similar incomes might opt for an equal 50/50 split on expenses. However, a tailored approach, where one partner contributes more by taking care of tasks like cleaning and repairs, can also be considered to address non-financial contributions.

Splitting Bills Fairly as a Couple

Couples can split bills through various methods, including equal, percentage-based, or income-relative splits. The key is open communication and mutual agreement on the chosen approach that best aligns with their financial situation and preferences.

As you’ll discover through this article, there are plenty of ways for a couple to split expenses fairly. For instance, some will prefer an equal, 50/50 split right down the middle of everything. Besides that, other couples with different income levels or contributions will likely prefer a more tailored approach.

As you and your partner figure out what works best for your situation, it’s also important to recognize that there will be challenges. 

Interestingly enough, many of those challenges won’t have anything to do with the numbers directly, like:

• Different ideas of ‘fairness’. First and foremost, couples often disagree on what’s considered to be fair. Even a 50/50 split can feel unfair to one side, perhaps because their smaller income means sacrificing a more significant percentage for expenses.
• Financial independence. Many individuals also prefer maintaining their financial independence and can feel like they’re losing part of it when splitting expenses.
• Incompatible money styles. Lastly, couples can also have conflicting money styles. Simply put, things can get complicated if one is a spender and the other is a saver.

As you can see, figuring out how to split bills based on income isn’t as straightforward as some might assume. That’s why this issue requires plenty of the time, patience, and mutual understanding mentioned earlier.

In the following sections, you’ll learn more about the options you can use to split your expenses in a way that feels fair to both parties.

How To Split Bills When You Both Earn the Same Amount

Let’s suppose that you and your partner are earning just about the same after-tax income. In that case, dividing your expenses should be a lot more straightforward.

The first and easiest option is for you to split everything right up the middle. In other words, each partner pays for half of all necessities, including:

• Groceries
• Utilities (e.g., electric, gas, internet, etc.)
• Appliance purchases, repairs, or replacements
• Any other necessities for your living situation

Still, you might find yourself in a situation where an equal split of expenses isn’t fair despite having similar incomes.

One partner might have more ‘sweat equity’ than the other, which means they contribute more in terms of their time, effort, and energy. Common examples of that include cleaning responsibilities and DIY repairs that end up saving both a lot of money.

If that sounds like your relationship, it might make sense for a more tailored approach. Perhaps one partner can pay less for expenses when they contribute to cleaning, repairs, or other household tasks.

How To Split Bills When Someone Earns Much More

Another common situation for couples is when one earns a much larger income than the other. When that’s the case, a more nuanced approach is definitely better. 

Here are two possible approaches you and your partner can take if your financial situation looks like that:

1. A Percentage-Based Approach

For starters, you could stick to a percentage-based approach where each partner pays a share of all bills. 

However, unlike the 50/50 split described earlier, the higher-earning partner can pay for a larger percentage.

For example, both of you could agree to a 60/40 or 70/30 split. Naturally, you’ll need to devote some time to trial and error to learn first-hand which arrangement works best for you.

An Example of How a 60/40 Split Works

In this scenario, let's consider two individuals, "Sarah" and "John," with respective annual incomes of $42,000 and $63,000, resulting in a combined household income of $105,000.

To understand how they distribute their expenses, we apply a straightforward calculation:

Sarah's Share of Total Household Income: $42,000 / $105,000 = 40%

John's Share of Total Household Income: $63,000 / $105,000 = 60%

So, their income split is 60/40, clear and simple. Now, if their mutual monthly expenses tally up to $2,500:

Sarah's Contribution to Shared Expenses: $2,500 x 40% = $1,000 per month

John's Contribution to Shared Expenses: $2,500 x 60% = $1,500 per month

2. An Itemized Approach

Alternatively, couples can also take an itemized approach. In other words, each partner will pay for specific items based on their financial capabilities.

One partner could take care of utilities and repairs, while the other takes care of groceries and entertainment.

As always, trial and error is necessary to find a comfortable arrangement that works for both sides. So, it’s only normal to make mistakes in the beginning before arriving at something comfortable.

How To Find a Fair Income Percentage

So far, you’ve read about the different approaches you can take as a couple to split expenses. Now comes the tricky part: deciding how to split things fairly based on your separate incomes.

As mentioned earlier, the idea of what is or isn’t ‘fair’ will differ between couples and even between partners. That’s why this part of the process requires a lot of honesty, open communication, and patience.

Here are two ways you can go about finding a fair income percentage that works for both partners:

1. Splitting All Bills Based on Income

If a 50/50 split isn’t feasible, here are the steps you can follow to find a fair income percentage:

1. First, calculate both partner’s average income. That should be the after-tax income figure, as each partner might have different tax obligations.
2. Next, discuss what would be an appropriate split that gets each partner to contribute without giving up their personal financial goals and priorities. For example, one partner might only be comfortable paying for 40% of expenses while the other handles the remaining 60%.
3. Then, calculate each partner’s share in dollars and cents. Most regular bills are consistent (e.g. subscription services), while others might change every month (e.g. electricity, water). So, it’s normal for some calculations to be estimates!
4. Finally, allocate money from each partner’s paycheck to pay their share of the bills. Depending on what works for you, that money can be kept in individual accounts or a joint account that both partners can access and monitor.

Remember: this process involves a lot of trial and error, so expect changes along the way. Again, it’s important to be patient and understanding with your partner when sorting out these issues.

2. One Person Pays the Bills

With all this talk about splitting expenses, it’s also important to remember that many couples do things differently.

For example, it’s common for one partner to pay the bills in many relationships. Regardless of gender, it’s normal for arrangements where one person generates an income while the other cares for things at home.

A common example of that is a growing family with very young children. Similarly, that arrangement is also common when one partner has to provide care for an aging parent or a family member with a disability.

Situations like that will require one partner to pay all the bills. In other words, one partner contributes financially, while the other contributes with their efforts at home.

Always Have a Backup Plan

Managing a budget and paying expenses are challenging enough when you’re doing it alone. Yet, things can get especially rough when it happens to a couple learning to split expenses fairly.

Thankfully, you can prevent tensions and conflicts from arising by having a reliable backup plan to call upon. For example, a couple of options you can consider for this purpose are personal and installment loans like the ones provided by Simple Fast Loans.

Both of these options make for a good backup plan because they give you access to quick cash when you need it the most. More importantly, they have a quick and easy application process that helps you get the money you need with as little time and fuss as possible.

So, even if you run into a rough patch when splitting expenses and managing your budget as a couple, you won’t have to wait too long to get the money to smooth things over.

Related: How to split costs with a roommate

Apps That Will Help Couples Split Bills

As you work on your plan to split expenses with your partner, it’s also worth noting that there are many apps available to help you. It’s an excellent idea to use tools like these to reduce friction and make it as hassle-free as possible.

Like many people, you might already be familiar with tools like Cash App and Splitwise. These are general-purpose apps that friends and families use to split anything from food and travel bills.

However, they can also be useful for couples to split expenses, especially if they’re already familiar with the app.

Besides that, apps like HyperJar can also work very well for this purpose. This particular app allows you to divide expenses into different categories according to whatever works for you and your partner.

Figuring out how to split expenses as a couple can be quite awkward to do. While it’s tempting to avoid the subject, you’re better off resolving it sooner rather than later. So, sit down with your partner and have an honest discussion about what works for you both.

Related Frequently Asked Questions

For readers who searched how to split expenses as a couple, here are some other topics they explored:

Should a Couple Have Separate or a Joint Account for Splitting Expenses?

Joint accounts can simplify managing shared expenses like rent, utilities, groceries, and date nights, fostering transparency and mutual trust. In contrast, couples who value financial independence often maintain individual accounts and split expenses proportionally based on their incomes.

This method allows each person to manage their finances while still contributing fairly to shared costs. Ultimately, the decision should align with your mutual goals and financial comfort levels. It's also common for couples to have a combination of joint and separate accounts to handle different aspects of their finances.

How Should a Couple Invest Together?

Investing as a couple can be a rewarding venture that strengthens your financial future. To start, it's crucial to set clear financial goals. Discuss your aspirations and objectives, whether it's buying a home, saving for retirement, or embarking on adventures. Ensure your investment strategy aligns with these goals.

Understanding your risk tolerance is equally important. Assess your risk profiles individually and as a couple to tailor your investment strategy accordingly. Seek advice from a financial advisor to create a well-informed investment plan, focusing on portfolio diversification, asset allocation, and risk management.

Diversify your investments across various asset classes, such as stocks, bonds, and real estate, to manage risk effectively. When it comes to allocating investments, decide how much each person will contribute to the investment portfolio, whether it's equal shares or proportionate to individual incomes.

Regularly review and adjust your investments as needed, considering life changes that may necessitate alterations in your strategy. Open communication is key to success. Discuss investment decisions, share knowledge, and ensure both partners are on the same page. Finally, be mindful of tax implications, as they can vary depending on your income and marital status. Effective investing as a couple requires communication, adaptation to changing circumstances, and professional guidance when necessary.