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Yours, Mine, and Ours – Deciding Who Pays the Bills

This is a post by Kathryn about splitting household expenses among spouses.

Before we were married, Brian and I were invited to my supervisor’s house for dinner. Shortly after arriving, her husband came home, briefly greeted us and opened the mail.

“Look at the size of the phone bill!” he complained. “You spend so much time talking to your sisters on the phone and I’m the one who has to pay for the phone bill.”

She retaliated by saying, “Well, I’m the one who pays for the groceries, and you are spending too much of my money on food!”

Talk about awkward. We spent the rest of the evening in pleasant but slightly strained conversation while I couldn’t stop thinking we were eating her food.

After we left, Brian turned to me and said, “If we ever get married, let’s share our money.” I agreed on the spot and we never gave it a second thought.

Twelve years later we still have a joint account. All our money goes into it and all our bills get paid out of it. This is what works for us. The goal is to find out which system will work best for you and your partner.

There are a number of ways couples handle their finances.

Option A – Percentage System

Each person has their own account and each pays a percentage of their income towards the bills, usually into a joint account. For example if one spouse makes $60,000 a year and the other makes $30,000 a year, one would pay for 2/3 of the bills and the other would pay 1/3.  Some people swear by this system. Most of the couples I’ve talked to who use this system figure out the total amount for bills and have a joint account where they each deposit their portion of expenses and bills. The remaining is for each person to spend as they wish.

The advantage to this system is that each pays an equal percentage of their income. The disadvantage comes with what remains. Say the person making $60,000 had $20,000 remaining after household bills and the person making $30,000 had $10,000 remaining. That’s a substantial difference in spending money. How do they then split date nights? Vacations? What happens if one of them decides to stay home with the kids for a few years or work part time to save on childcare? Does the higher income earner simply always have more spending money? Do the figures change every year depending on income? What about a spouse that has a variable income?

Option B – Separate the Bills

In this case, each spouse pays for different bills out of their own account and there is no joint account. He pays the mortgage. She pays for the food and utilities. The advantages of this system are the simplicity of each being responsible for certain bills and only needing to keep track of his or her own account and what they owe. The disadvantages can sometimes crop up at another life stage. It seems to work for many couples. Yet when I’ve met with people who divide their money this way there is often an underlying tension of unfairness.

In many cases, the partner with the variable expenses (food, heat, hydro, electricity, phone bill, etc) feels like they have less control over the budget. This is a system that often starts to fall apart after the arrival of children. Just when one spouse is on parental leave and living on a portion of their income, the child’s expenses are added to the mix. Do they continue to divide the costs of the child? What happens if one spouse stays home as the primary caregiver to the children and has no income at all? Does the higher income earner pay all of the expenses and give the at home spouse an allowance or a salary for childcare and housework? These are some of the issues you and your partner might want to discuss when deciding how to divide and share expenses.

Option C – Split Bills 50/50

In this scenario a couple will divide everything right down the middle. Everything is 50/50. In some cases they split all the bills individually. In other cases they figure out the total number of bills every month and each owes half. I’ve met with couples who use this system and while it may have worked when they first agreed to it, unless their incomes are nearly identical and neither of them decide to go back to school or take a parental leave, it’s a system that falls apart fast.

The advantage is ‘fairness’ which in a surprising number of examples was the reason cited for going this route. The disadvantage is ‘un-fairness’ where the lower income spouse is sacked with a higher percentage of their salary to keep the household running.

Option D – One Joint Account

In this system, there is one joint account for everything. All earned funds go into the account. All bills are paid out of the account. The advantage to this system is its simplicity. There is no yours and mine, only ours. There are also many disadvantages to this system. If one spouse is a saver, and the other a spender, the whole issue of fairness arises again. If either partner has financial control issues, having only a joint account can be a nightmare for the spouse whose every purchase is questioned and scrutinized.

Option E – Joint and Personal Accounts

In this scenario, all earned income goes into a joint account from which household and children’s expenses come out every month. Spouses also have their own personal account. Every month, as a part of the overall budget, an equal set amount gets deposited into each partner’s account from the joint account. Those funds are for all personal expenses including clothes, recreation, sports, hobbies and anything else that isn’t a basic need.

The advantages to this system are that all bills are paid jointly out of a pool of earned income, regardless of who earned it and each spouse gets an equal amount of money to spend or save freely however they like without having to obtain permission to spend money from the joint account. The disadvantages are keeping track of three different accounts. It won’t matter so much if you have a no fee account but the cost would add up quickly if you have three separate accounts each with their own bank fees.

Option F – The Dictator System

I’ve seen this scenario twice. This is where one partner has control over all of the finances and pays the other partner an allowance in cash. In both cases the partner in charge of the money also required a detailed spending with receipts to show where the other partner’s spending money went. In one case, it was a couple in their seventies and she had never had her own bank account. She resented it but didn’t know how to change it. In the other example, it was a young couple with kids. His income was much higher but she was the ‘money manager’ and felt that the only way she could control the finances was to put him on a strict cash budget and scrutinize his every purchase.

There are few advantages to this system other than the simplicity of one account. The disadvantages are numerous. One person is the controller and the other person is controlled. This tends to breed resentment. It also doesn’t give the spouse the opportunity to build their own credit, manage their own accounts, and know how to handle the finances if something were to happen to the other partner.

Conclusions

Research shows money arguments are one of the main contributing factors to divorce. Somewhere between falling in love and choosing dishes for the wedding registry, couples need to sit down and come up with a plan for how they will handle their finances. It doesn’t matter which option couples choose, so long as they both agree and feel comfortable with the plan.

For those of you with wedding bells in the future, you may want to use these possible options as a discussion starter. For those of you already in long term relationships, it may be time to re-evaluate the plan just to be sure it’s still working for you both.

Which system do you use in your household?

Kathryn is a regular contributor on Million Dollar Journey and has a passion for personal finance. She volunteers her time as a money coach meeting with ordinary Canadians, teaching them the basics of budgeting, no fee banking, saving for the future and other basics of personal finance.

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About the author: Kathryn has been a staff writer for MDJ since January 2009. During the day she works in an office. In her off hours, she volunteers as a financial coach helping ordinary Canadians with the basics of money management. Kathryn, along with her husband and two children live in Ontario.

{ 57 comments… add one }

  • Cowtowngal February 22, 2009, 5:28 pm

    Personally, my husband and I use Option A: the percentage system. I know that many extol the Joint Account system and for those for whom this works, I say congratulations. For me, I need to control the money that is left – it’s emotionally tied into my base as an individual. This has worked well for us but we are contemplating a family and the thought of living on an allowance doled out to me by my husband terrifies me. Ah well, small steps.

    I’d like to comment on Option F: the Dictator System. My friends work on a modified Dictator system. In this situation, his salary is substantially lower ($55K to her $95K), and he controls all the money. Rather than have even an allowance, she is admonished not to spend a penny (!). As you say, this leads to deep resentment and she understandably has occasional spending fits where she’ll spend enormous amounts on their children as a proxy to herself. In turn, this leads to enormous levels of disparity: he has a growing collection of high-tech toys; she dresses at Superstore; her daughter at Aritzia.

    I am told that this setup is her way of compensating for being more successful.

    Thanks for the article – well-written and enjoyable.

  • Happily Married February 25, 2009, 12:24 pm

    We use a combination of C & E with our own twist added.

    My husband and I (no kids)- earn approx. the same amount (some years I earn more, some years he does- but it is usually within 10% of each other).

    We each pay for different bills so that it works out to paying 50/50. Then we make a big picture budget (i.e. if our goal is to make extra mortgage payments of 25,000 that year and also to put aside 15,000 for a renovation or travel etc, we build up those accounts based on who has the money first in their account after expenses & RRSP/investment contributions are paid – we both get paid a base salary plus commission and bonuses -paid out at different times of the year which is why we have the first paid, first to contribute rule in our “goal acount” – the goal account doesn’t always work out to be 50/50 in terms of what we each put into it every year but we don’t care since it is a financial goal – not a bill).

    We pay ourselves first so whatever is left once the bills & savings & “goal” funds are paid, is up to us to spend. We do not go over each other’s spending habits.

    We have 1 joint VISA. I pay for what I spend on the Visa and he pays for what he spends (if it was a joint purchase, then we split it).

    We have 2 joint chequing accounts. I am the leader of 1 of the accounts (the one that has my pay cheque going into it) and he leads the other (his pay cheque goes into it). We can both see what the other is spending (so it prevents me from going on a crazy shopping spree- I need the accountability to him- it is not that he doesn’t trust me- he has never questioned my account).

    Another reason we keep the accounts separate is because I personally feel rewarded by sticking to a budget- (as you may have noticed, i was not always good at budgeting and would spend more than I earned), now I know that I have self control.

    We have said that this is a temporary solution. In another year, we are going to only have 1 joint account- it was more about teaching myself control & responsibility. I feel that I am on my way of mastering my finances.

    We are each responsible for investing in our RRSPs- we each use the ETF couch potato strategy so there is no confusion over what to buy in our portfolios or when to buy either.

  • LakeTown February 28, 2009, 3:45 pm

    Our scenario keeps changing. We were both students when we got married, so pretty much split things 50/50. I graduated first so then my husband continued to contribute a fixed amount to the monthly expenses, and I took on any new expenses (car, gas, insurance, entertainment, cell phone, etc.) When I went on maternity leave for a year, hubby continued his fixed contribution, and I handled everything else. Now hubby is stay at home dad making no income, so of course I pay for everything now.
    We have a joint account which the mortage and most of the house bills come out of. Then we both have our own separate accounts which we are free to spend as we please. Even when he is able to contribute, I am always the one who physically pays the bills. He is pretty hands off, every once in a while I show him a budget of what is coming in and out each month as a reminder. The arrangement probably does not make sense to most people, but he knows I will pay the bills, and what little money he has, I don’t care how he spends it. He does not ask, or worry about what I spend because he knows I have the financials under control.
    The one idea I have been toying with is an allowance of sorts. Since he is at home making no income perhaps I should give him a little cash so he does not have to ask me for $ if he wants something. I have not even brought the discussion up yet, just thought it was interesting that it was listed in the above options. I don’t want him to feel as a child waiting for a handout every Friday.
    I realize we are fortunate enough that my income can support our family of 3, so finances are not a stressor in our marriage. Of course we have some interesting discussions about the topic and our views do differ at times. Sometimes when I am feeling grumpy I resent that I have to carry the load, but then I remember that I value my son being able to have that extra time with his father, and I can’t put a price on that. So, we have to make a few cut backs, that is what we agreed to, and hey, I didn’t marry him for the money!

  • Norm March 29, 2009, 1:56 pm

    Kathryn
    I agree with your share it all system. After 47 years together my wife and I have never had a problem with money. All accounts are joint for survivor benefits.
    No arguments about money but I guess we both had a childhood in the 30’s that made us recognize the value of money.

  • ASDF October 12, 2009, 9:34 am

    We are DINKS in our mid-30s and she earns a bit more than me. I pay all the bills (mortgages, bills, credit cards, everything) and am usually left with very little at the end of every month. She is the saver and saves all of her paycheck – so we save just over 50% of our combined income. We use credit cards for everything, and review them to see how our spending is and if we need to slow down spending at all. I even try to squeeze out RRSP and TFSA contributions out of my salary.

    I’ll call this Option I – as in I pay for everything.

    Works really well for us, but we haven’t heard of anyone else doing the same.

  • Sick of the Whining October 2, 2012, 11:44 am

    Option B or C works for me, which we use a combination of both, we take some bills on personally, and we split some bills 50/50. I don’t think that the percentage method or the joint account plus personal account methods are fair to the higher earner. Hear me out. I’m all for sharing my money with my spouse. If my spouse ever needs money from me, I give it up with no question. The problem with the percentage method and the personal/joint account plus equal spending money methods is this…Spouse A is the higher earner who makes $80,000 per year. Spouse B is the lesser earner who makes $60,000 per year. Why does Spouse A earn more money? Spouse A went to college and then grad school, with the hopes of one day earning enough money to not only provide for a family, but also to enjoy some of the luxuries that life has to offer. Spouse B decided nah–grad school is not for me, I’m satisfied with my $60,000 a year income which I can comfortably live off. Why should Spouse A be penalized by paying a larger percentage of the household bills, leaving Spouse A with less money to spend or invest the way Spouse A wants, simply because Spouse A fell in love with and married Spouse B who has no desire to ever earn more money? I see people on here talking about what is fair. That my friends, is totally unfair. Spouse A is limited to living off of the same disposable income as someone who did not work as hard as Spouse A in order to be able to afford to splurge on some things. As long as Spouse A is responsible for the household and puts in his/her part and makes wise investments choices to benefit the future of both spouses, then Spouse A should be allotted a larger portion his/her own money that he or she earned because Spouse A earned it when Spouse A worked hard…Spouse A should be allowed to buy a little more than Spouse B. If Spouse B wants to buy more stuff or wants equal disposable income, then Spouse B needs to implement a plan to go back to school or become more ambitious in seeking a higer paying job. Any other plan is similar to redistribution of wealth, penalized more for making more. Geez.

  • Marsha Poole June 14, 2013, 3:12 pm

    Feel like a roommate instead of a wife

    I wish I could chime in on what my husband and I do together with finances, but we do NOTHING. Been dating off and on for 13 years and recently got married June 2012 with problems starting off the bat due to my sick mother. I have a 13 yr old daughter who’s father stays out of work a lot so child support is not always constant. When it is regular it goes straight to her private school with nothing to spare. I also pay her health insurance. My new husband does not want to put me on anything (checking account, health, car, cell phone, beneficiary, etc.)! I don’t feel like we are even married. I don’t make near as much as he does (my company has not given raises in four years) yet he resents the fact that I can’t contribute as much. I do good to pay all my bills and needs of my daughter. I clean his house and cook, but I am not considered as equal. I live an hour away from work so a lot of the money goes towards gas. I do buy groceries, eats, presents for his family members on birthdays, Christmas, etc., yet it’s not good enough. Don’t even sleep in the same bed due to his sleep apnea and he not wearing his Cpap machine. I feel like a roommate and it’s very hurtful and insulting. I made him my beneficiary immediately and changed my name. He’s done nothing to show he is married. Still no wedding pictures downloaded off disk and it’s been a year since we got married. Sorry, just discouraged.

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