A Quick Guide To Managing Shared Bills As A Couple

First of all, the awkward bit. Talking about money. It's crucial that you are both honest and open, going through your individual incomes and outgoings, both shared and individual, and seeing what each person has left. Discuss your financial goals. Do you want to save for something specific? If so, factor this in to ensure it's achievable and you're on the same page.

• How do you calculate shared expenses fairly?
• Budgeting effectively
• Is a joint bank account a good idea?
• Alternatives to opening a joint account
• What happens if we break up?

How do you calculate shared expenses fairly?

Decide how you are going to split things. Is it going to be 50/50? If so, is that fair on both sides? Or could you split the costs based on earnings? Sometimes, there is one partner who earns more than the other in a relationship. The higher earner could contribute a higher percentage to the bills or pay for different things such as groceries. It's essential to have this discussion to get it right and fair from the start to avoid arguments and resentment later.

Budgeting effectively

To budget effectively, you need to look at your total income. Every outgoing you have needs to be accounted for, and at this point, you can also think about a savings pot. If you're spreadsheet savvy, a spreadsheet could be an excellent way to get it all laid out and managed; if not, there are tools such as budgeting calculators and apps that can help you. There are ways to help make budgeting fun to help you create an effective money-tracking method that works for you.

Is a joint bank account a good idea?

When thinking about sharing bills, a joint bank account may be an ideal solution as you will both have access to it. A joint account allows you to pool your money together and pay bills out of one account. With this in mind, it's up to you whether you have your full salary paid into the account or if you still have a separate account for money that is just yours.

It's important to note that when opening an account with someone, they become associated with you on your credit file, so you need to make sure you fully trust them financially. These accounts give full access to each person; both can withdraw cash, make card payments, and have access to manage the joint bank account online.

If you've decided to open an account together, make sure to agree on the following:

• How much each person is paying into the account each month.
• What the funds in the account are for. It seems obvious, but are you paying for groceries out of the account? What about emergency bills?
• If there's any leftover money, what will it be used for?
• Does the account have an overdraft? If so, plan how this would be repaid if used.
• Plan ahead; it might not be a nice thing to discuss, and decide what would happen with the account if you go your separate ways.

Alternatives to opening a joint account

The alternatives to a joint account are to appoint one of you as the money manager, split the bills, and decide who is paying what out of their own budget. If you choose to use the money manager route, that person would manage and pay all the bills from their personal bank account. The other person would send their share when required or by standing order if there is a mutually agreed set amount. It's pretty straightforward – more so for the person just sending the money, and it can be a happy alternative if this is how you are most comfortable doing it.

If you decide to split the bills, someone may pay more than the other; make sure you're both happy with this. Also, discuss the possibility of fluctuating bills and how much things regularly cost so you don't get into any disagreements if the payments should increase; the last thing you want is to miss a payment as this could have a negative effect on your credit report. Take a look at what constitutes a good or bad credit score if you are unsure, it’s good to know how your finances look to banks and lenders.

What happens if we break up?

Not an easy topic to discuss, but make sure that if you hold a joint account, you have a plan for if this does happen. In this instance, the bank cannot side with either joint account holder as it's a civil matter, so it's best to notify them of any dispute and potentially freeze the account until it is settled.

In Summary

Managing bills and expenses isn't fun, but it's essential. Regardless of how you choose to manage your shared bills, keep the conversation open. And if a joint bank account is best for you and your partner, make sure to compare current accounts and look at the available features to find one that is right for you.