Do the math
The first step when budgeting as a couple, after having calculated their income, is to make a list of recurring expenses that will be shared by the partners, as well as personal expenses. Among the shared expenses, you should generally include rent or mortgage-loan payments, as well as services such as electricity, Internet, etc. You should also calculate items that you purchase to share, such as groceries or car payments.
Maude and Jonathan*, a political advisor and self-employed worker, equally split the payments for rent, electricity, Internet and cable, as well as groceries and small purchases for their apartment (kitchen utensils, small appliances, etc.).
Make decisions together
There are many ways for a couple to separate expenses. For couples who do not earn the same salary, it’s often more efficient to divide some bills 50/50 and split other expenses proportionally to each person’s salary.
From the beginning, these two decided to split recurring expenses 50/50. “We divide all the shared expenses equally, and then each pay for our own personal expenses,” explains Jonathan. “The fact that our rent is very affordable (at $680) allows us to divide the expense equally. I can easily afford it, even if I earn almost half [of Maude’s salary].”
When they began to manage their finances together as a couple, Jonathan’s salary was even lower. At that time, he earned around $30,000 a year, while Maude’s income was around $90,000, so Maude furnished their apartment. “She bought the appliances, the sofa, living room and kitchen furniture… almost everything. If it had been me, I would have bought used furniture, but she preferred to pay for more comfort,” continues Jonathan.
Now that his salary is higher, Jonathan can contribute to larger purchases. For example, the couple purchased a new oven and a mattress together. If one day they decide to move to a more expensive apartment, Maude would agree to pay for more than half of the rent.
The couple could then decide to separate expenses according to their salaries. By basing this on a percentage of the total household income earned by each person, it is easy to determine what their contribution is when paying for expenses.
For example, when Maude was making around $90,000 a year and Jonathan, $30,000, their household income came up to $120,000. Maude’s salary made up 75% of their income, while Jonathan’s was 25%. If they paid their monthly $680 rent proportional to their salaries, she would have paid $510 per month and he would have paid $170. This type of calculation can be adapted for all shared expenses and remains a practical method for couples with a salary gap.
Once you’ve established the known recurring expenses and who will pay for what, all that’s left to do is… pay.
Some people opt for a joint account into which each person transfers the money needed for shared expenses. Others prefer to make payments themselves and then ask their partner to transfer their contribution. Many couples choose to use a combination of these two methods.
There are several different scenarios, but for Maude and Jonathan, she takes care of paying the rent, while he pays the electricity bill. The Internet payment is charged to a shared credit card.
In contrast, for many couples, large shared expenses, such as the rent or mortgage, are paid from a joint account, and other expenses, such as groceries, are paid with a shared credit card.
Equip yourself with the right tools
For couples to reimburse each other, cash is always an obvious option, but there are many quick and efficient digital tools that can help you send money and stick to your budget.
Maude and Jonathan regularly use online tools to manage their budget. “We often send Interac e-transfers when the other person has paid for something. If one of us goes to the grocery store, we pay with our shared credit card, and the other reimburses their half with an online transfer.” This allows them to more easily monitor their expenses and split them fairly.
Regardless of the salary gap between two partners, there is always a way to agree on a shared budget. The important thing is that you decide on a way to separate expenses and properly communicate with your partner. Then, simply use the online tools to keep things running smoothly.
*Names have been changed