Four Ways to Split Expenses at Home

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splitting expensesSplitting expenses is a often a touchy topic when you’re living with a significant other, roommates or family. If everyone doesn’t agree it can get pretty nasty fast.

There are a few ways to split expenses between yourself and those you live with but I’m going to highlight four of the most common ways today.

Splitting expenses really isn’t an issue if you’re living with your significant other, husband or wife and have combined finances.

However, a lot of people keep separate finances when they’re dating (as we do) and some continue this after they get married.

Want to know how my girlfriend and I split our expenses? Make sure you read through to the end of the post.

Split Expenses Equally

Splitting expenses equally is the easiest method to calculate because all you do is simply divide the expense by however many people will be paying for it. While it is easy to calculate, that doesn’t mean it is going to be a popular decision.

This method can work well for items that get equal use such as parking. It seems to work well for spouses or significant others living together because it is simple and doesn’t require a lot of thought.

It doesn’t always work as well for roommates or family living together though because use of the item being paid for is not always equal.

Split Expenses Based on Usage

Splitting expenses based on usage makes a lot of sense from a practical standpoint but it doesn’t always sit well with the people you share living space with. It can also be extremely difficult to calculate.

This method is great when you have roommates. I had two roommates in a three bedroom apartment once and we used this method often. The bedroom sizes in the apartment were not equal so it didn’t make sense to split the rent equally.

Another expense this worked well for was our cable bill. We each had different cable receivers in our bedrooms. The receivers had different costs so we split the cable bill based on each individual roommate’s use.

This didn’t work for food expenses because we couldn’t measure consumption accurately. Instead we all bought our own groceries and asked if we wanted to use some of our roommate’s food.

We couldn’t split the electricity bill based on usage either but I think the only reason we didn’t do this because we couldn’t have individual meters on all of our outlets! 

Split Expenses Based on Income

Splitting expenses based on income seems to be popular among spouses and significant others. Incomes can be very different in some relationships and some people feel it is fair to split expenses based on the ratio of income between the people living together.

For instance, if a boyfriend and girlfriend who lived together made $25,000 and $75,000 respectively then shared expenses would be paid 25% by the boyfriend and 75% by the girlfriend. Bills like rent, utilities, and groceries can all be easily split this way.

This might not make as much sense if you are splitting bills with roommates but could work if you’re living with multiple generations of family.

It could cause some arguments when it comes to expenses that are solely for one person. For instance, if a couple each owns their own cars and drove their car exclusively it might not make much sense to split that expense according to income.

If you use some common sense and only split expenses that are actually shared this might work out for your situation.

Contribute What You Can

The method of contributing what you can is normally what ends up happening when family is forced to live together or a spouse or roommate loses a job.

It takes a very generous person (the person paying the bigger share) and an honest person (the person contributing what they can) to make this work without resentment.

This is rarely a planned method of splitting expenses and it requires a lot of effort by both parties. Normally this works best if you set some ground rules.

If a person is just contributing what they can, any spending that isn’t paid toward shared expenses can cause an argument.

If a person hasn’t contributed to rent but instead purchased a new piece of jewelry arguments could be right around the corner.

How We Split Our Expenses

We have split our expenses a few different ways over the years. We changed our methods based on what made the most sense for us at the time.

When we were dating and both in college I’d pay for our dates (for the most part) and we’d each pay for our own gas to visit each other since we went to different colleges. We split our expenses equally during this time period.

I then graduated from college and was working full time while my girlfriend remained in college. During this time I paid for most of the expenses and my girlfriend would pay for some smaller expenses because she was contributing what she could.

I’d often pay her for her gas money to come visit so it wouldn’t add to her student loans. During this time period we used the contribute what you can method.

Now that we finally are both in the same place and are living together we split our expenses equally. We don’t make the same amount of money but we feel this is the best way to split the expenses at this time.

We have a very low total cost in regards to shared bills, partially thanks to our townhouse we bought on a whim, and can both handle the amount of expense without any financial difficulty.

We keep our finances separate for now, since we aren’t married. Splitting expenses won’t be an issue once we get married because we’ll be combining our finances!

Do you live with roommates, a significant other, or family? How do you split the expenses in your household? What works and what doesn’t? Share as much detail as you feel comfortable doing so we can understand why different methods work for different people and different situations!

photo by: haxney

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About Lance Cothern

Lance Cothern, a Certified Public Accountant (CPA) licensed in the Commonwealth of Virginia, is the founder of Money Manifesto. You can read more about him here or connect with him on Facebook, Twitter, Google+ or Pinterest.

Comments

  1. I’m a big believer in splitting expenses based on usage as all the other options just don’t seem fair to me.

  2. Everything at our house is just put into one pot and then we pay it out of there. And then my sister just pays a flat fee for rent and everything.

  3. With roommates (or anyone not my spouse) I would only consider keeping everything as separate as possible, then splitting by usage, then equally. I’m not interested in subsidizing anyone else’s lifestyle (or having mind subsidized) if there is any way to figure out who uses what. That can be exhausting to figure out though so now I’m glad to be 100% joint with my husband – until next year when I’ll have a roommate again and have to figure out how to price the asymmetrically sized bedrooms in our townhouse!

    • My roommates and I split our rent by sq ft of the bedroom divided by total sq ft of all bedrooms… this might not work out best for you though. I think you just have to come up with a value that you think is appropriate for the space and giving up some freedoms.

  4. Good post… after reading although, it has reinforced Mrs Scot’s and my decision to have combined finances. :)

  5. The only time I ever split expenses was when my adult son moved home to finish his last year of law school. We agreed to have him reimburse us just for the incremental increase due to his stay. He paid for the increase in utilities, food and cleaning. He had very cheap “rent” and I broke even!

  6. Did I read that incorrectly or do you two have separate rooms? Sorry…that might be too nosy and inappropriate. :)

    While my wife (fiance at the time) and I were dating, we did the ‘contribute what you can method’ particularly when I was working and she was still in school. I paid for mostly everything as I was making a lot of money and she contributed whenever possible.

    I think learning how to split expenses properly is very important if you’re going to make your relationship work. Saying that, spouses SHOULD NOT split expenses.

    • Haha no we don’t have separate rooms now. There we are couple years where I worked and lived with roommates and she lived at her college 4 hours away. If that doesn’t clear it up let me know what made you think that and I will have to edit the post!

  7. We split stuff like rent but the remaining bills are just each allocated towards one person or the other. For example, Brian pays for groceries but I buy transit passes. Then we part for our own cell phones and have our own spending money.

  8. I’m with Jason, when we were dating, my wife (then GF), just paid when she could. But I’m old school, and paid for everything I possibly could as far as dates, the wedding, etc. But I did NOT pay her debts or bills until we were married. I think it’s a good idea to keep those seperated until the vows have been exchanged :)

  9. Before my wife and I were married, we tried splitting the finances, but it basically just became an informal joint account. I think your point of doing what works would basically sum up what we ended up doing.

  10. I just split everything down the middle with my wife. We both have good paying jobs right now so it works. If the situation changed I’m sure we would not split them up since we would be sharing the same pool of money.

  11. Lance I think it is great that you commented on how things evolve as you move through life. Just because one strategy works today doesn’t mean it will work forever. Although we don’t have combined finances we do look at our living expenses with a combined income and make sure some of the important items like “savings” we each put an equal amount toward retirement. For expenses the income % works best for us.

  12. Since income is very much a market-based decision and so therefore out of individual hands, I see little point in sharing other than by dividing equally unless there is something that is only used by one person. It’s peoples time that counts really, not their money. We pool our resources.

  13. We’re splitting most everything down the middle–I’ll be posting more details sometime soon.

  14. Before Cheryl and I were married, we split expenses equally. The funny thing is that my roommate before Cheryl and I split things according to usage. Both were good for that specific relationship.

  15. My spouse and I always joined our finances together, even before got married.
    For people sharing a space such as roommates, I’d suggest you become the head “leasee” on the rental lease, and take everyone as your tenants. You do not divide up expenses, you just charge them a “room rental”. as an example:If you rent a 4 bedroom apt at $1000 month, with utilies adding $250 month ($1250), I’d rent the rooms out as $450-$500 each, all inclusive, except food. You live free.
    You are also respnsible for any rental short comings if someone vacates.

    • This is a pretty cool idea. I couldn’t do it because my roommates knew exactly what everything cost. The only problems I could see is that if your roommates damage the apartment and you don’t have a sublease signed you would be held liable for the damage even if you didn’t cause it.

      I like the thinking to get free rent though! Make sure you have subleases and you should be set!

      • We are landlords, so can give you some benefit of our experience. The landlord doesn’t care who did the damage, because everyone on the lease is equally responsible, and they will go after whomever they can collect from. If you are the “head leasee” you can still have your roommates/tenants sign a lease of your own.
        Our son rents a room from a ‘head leasee’ in a property we don’t own (different city). He pays for the exclusive use of his room , and the use of the common areas.
        You may not be able to do this with your current roommates, but if you move, it is something I’d suggest. Refer to it as ‘room rental’ and not looking for ‘roommates’

  16. Splitting finances comes down to an emotional intelligence issue. I’m not saying that those who do not split are dumb. Rather, two smart people with reasonably logical minds can simplify their financial lives when they combine resources and expenses so that both are aligned with what’s most important to them. When my wife and I were dating, we bought a house together. Sme would say that’s risky, but it was important to us to have a home together. We put our money into one account to pay for it all. She trusted me. I trusted her. Nothing has changed in 10 years since then, except that we bought a 2nd house and used the same technique. Smart people make smart decisions on splitting… In the end, “go into business” with the right people and these splitting finances fiascos largely go away!

  17. Good post Lance! We’re married and everything has been combined since we got married. I really think it comes down to your personal situation and what everyone is happy with. Splitting based on usage can be a tricky thing to measure and things can change over time…so I think have a flexible mindset is key.

  18. The hubs and I definitely share all expenses now that we’re married, but when we were dating he used to pay for dates and I used to pay for my gas, much like you and your girlfriend back in the day. :)

  19. Having lived with roommates before, I can say that splitting expenses is a pain in the ass.

  20. This is a much debated financial topic when it comes to relationships. I don’t think there is any one way that is “right”, and like you have seemed to do, usually it’s a mesh of different methods. At the end of the day, whatever works for you; if both partners in the relationship are happy and comfortable with the method, you are on the right track.

  21. My roommate and I split our finances right down the middle. We’ve even got a pretty sweet google doc that keeps track so neither one of us ends up owing the other too much at the end of the year. Since we can both log in and check whenever we want, we’ve never had a financial disagreement. It’s great!

  22. caughtx9 says:

    Hi What do you do, as far as splitting cost when one partner, has loads of cash and little income, ABOUT $25k and you have the reverse, bigger income, $90k but little cash. She thinks I should pay 80% of all expenses etc . She owns the house, but I am thinking of buying in at 50%, but she is still insisting that I pay 80% of everything. I know she is earning about $60K on interest alone, yet she wants me to bear the lions share while she watches her cash basically grow. Some how this doesn’t seem very fair. We are both in our early 60’s by the way.

    Any sound advice would be appreciated. I think she is been very selfish here, but need or want opinions. Thanks Jack

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