Money can be a major stumbling block in a relationship, so you shouldn’t even think of pooling your assets until you’re satisfied that your own spending and savings styles actually match. You also need to think of feelings.
If one person in a relationship earns more than the other, how does that affect contributions? Do you contribute proportionately, or do you share 50/50 in absolute terms? Will you resent each other if one of you is adding more money or more effort than the other?
Supposing you are married or in a very close relationship with someone you trust, you can both save by sharing expenses in the fairest way possible – proportionately. Married couples get a few extra benefits thanks to the legal status of their relationship. Let’s take a closer look at the details.
This can be an enormous saving. But don’t move in with each other until you’re very sure you’re both in the relationship for the long haul. If you do decide to share digs, you probably won’t need a much larger living space than you each already have, so many couples decide that either his or her place is the best option, giving up the second house or apartment.
It’s not just a saving in rental; it also nearly divides utility costs. When you switch on a light, it’s for the two of you, the geyser and heating system stays warm for both you and dinner is prepared for two.
The first step towards saving is understanding your spending. Calculate a detailed budget that covers all your living expenses from food and clothing to entertainment and hobbies. Decide which items’ costs you will share proportionately, and which ones should be included independently. For example, you may choose to share food costs while each of you is responsible for buying your own clothing.
To calculate the total share of costs, divide them exactly down the middle. To calculate proportionate share, calculate your joint hourly income. The value of any item divided by your joint hourly income represents how many hours you will both work to pay for that item. Use your joint earnings per month to calculate what percentage of each person’s earnings that would represent.
A percentage of your joint income could go into savings for something special the pair of you want to do later on, or as an emergency fund. When you budget, take your savings objectives into account. Whether you’re married or not, you need to determine if saving money goes into personal savings accounts or a joint account.
If you choose the latter, ensure that there are rules in place as to who gets what should you decide to go your separate ways. Unmarried couples will find this harder to do than married couples who will have an antenuptial contract to guide them.
Singles often waste money on fast food. They’d buy fresh ingredients if they could be sure of using them while they’re still fresh. As a couple, actually preparing your meals at home becomes much easier and more worthwhile.
If you share costs, you’ll probably end up spending less on food, and still eat much healthier food. This is a benefit when living with your partner, but if you’ve become used to the single life, home-cooked food can be seen as a challenging new habit. But you know deep inside that is better and cheaper.
Sharing the costs when you buy something means that each of you pays less. But be sure your cohabitation agreement covers what happens to things you bought together during the relationship, or you could end up losing out if it doesn’t last.
Shared finances often make us more frugal
If we have a well-developed sense of responsibility, we’re likely to be even more careful with our spending after we’ve budgeted with our partners. After all, breaking the budget when you’re single only affects you, but if you’re part of a couple, and you’ve made ‘promises’ in the form of budgetary commitments, you’re more likely to stick to them.
It’s also nice to be able to declare an under-budget result at the end of the month. It becomes, even better, when we have someone to report it to and the share benefits with.
Extra financial tips for couples
Find ways to enjoy yourselves without spending money. After all, you enjoy each other already. Who needs the bells and whistles? Talk about your dreams and see if you can find shared goals and ambitions to work towards. Motivation helps us to keep saving. Moving in together should be a conscious choice with all practical issues agreed in advance.
Generate a written agreement that covers your cohabitation. Who owns the furniture? Who does the house or flat actually belong to? Is the car his or hers? Who is responsible for which debts?
If you decide to wed, don’t get into debt to do so. That’s a bad start. Discuss your finances every fortnight or every month.
Being married saves you even more
Obviously, this wouldn’t be the main reason you choose to get married, but married couples have some significant advantages.
- Joint filing often saves tax dollars.
- Insuring more than one car under one insurance policy saves you money.
- The same thing goes for health insurance. One more beneficiary usually costs less than one more insurance policy.
- Take advantage of couples holiday packages and gym memberships (sometimes also available to unmarried couples).
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