Love + Money: Budgeting 101

Love + Money: Budgeting 101


Back in November, we published our most popular piece to date: The Conversation You Should Have NOW with Your Significant Other. We shared the importance of discussing money with your partner + how to go about it in the most approachable way! Today, we’re back with our next article in our Love + Money Series, tackling the least sexy topic: budgeting. While it’s never a fun discussion, it’s essential to figure out budgets before taking any big financial steps with your significant other, whether it be buying a house, moving in together or getting married. While the conversations will vary in depth based on the significance of the decision, it’s important to always be on the same page!

Every couple is different + has different needs, but we’re sharing 3 of the most common budgeting methods, as well as their pros + cons, to help you + your S.O. find what will work best for your relationship! We’re also sharing what we, personally, do to keep our relationships financially healthy.

All In

“All In” is probably the most traditional budgeting method for couples, especially for our parents’ generation when many households only had one working partner. If you’re utilizing the “All In” method that means that any income you’re earning is being pooled into a shared account(s). You pay all of your bills, together, from the same account + are extremely transparent in how + why you’re spending your money.

  • Pros: You always know where your partner stands in terms of finances + it can be easier to tackle your goals together and focus on accomplishing goals that will benefit you as a couple. For example, if you + your partner want to buy a home, but one of you has significant student loan debt preventing you from doing so, it can be easier to achieve your goals using the “All In” method. If you focus your combined savings or extra income on paying down the student loan debt, you’ll likely achieve your combined goal of home ownership much earlier than if you left your partner to fend for him/herself.

  • Cons: If you + your partner don’t share the same values in how you spend, it can be tricky. If you’re a saver + they’re a spender, it can lead to a lot of arguments. For example, if your goal is to build an emergency fund, you may be frustrated to see frequent Happy Hour outings from your partner. In addition, another important consideration is the legality of your relationship. If you + your partner are not married, in a civil union, or otherwise legally tied, it can be very risky + complicated if things go south. Without legal contracts in place, splitting money can make an already difficult situation even more challenging.

For our next method, you can implement proportional spending. Proportional spending can be a great method to use if you + your partner earn different amounts. With proportional spending, you are each spending the same percentage of your income on items such as rent, rather than splitting the cost 50/50 + the financial burden is equally felt by each person.

  • For example, let’s say you make $100,000 + your partner makes $50,000. Your monthly rent is $2,500. Instead of each person paying $1,250 every month (~15% of your income + ~30% of their income), you would each opt to pay 20% of your income (~$1,650 for you + ~$850 for them). While it may seem unfair at first for you to pay more than the other person, proportionally it is more fair + by paying your bills proportionally it gives your partner the financial freedom to invest in their future - which is better for you both in the long run. In addition, it gives you the freedom to have more fun in your relationship + allow you both to travel, go on date nights, or whatever keeps the spark alive.

Yours, Mine + Ours

For now, this method is our preferred method in our relationships. In this method, you split all shared outgoing expenses (rent/mortgage, utilities, groceries, etc.), but keep your personal spending + savings separate. Outside of your shared expenses, your money is yours to play with. We, of course, recommend being on the same page as your partner to make sure they’re saving + investing (in retirement, at least!) if possible, but otherwise how + where you spend your money is on you.

  • Pros: If you + your partner have different values for “fun” money, this allows you each to spend freely without guilt. If you have a costly gym membership (looking at you, OrangeTheory), but your partner prefers to run outside, you won’t butt heads over “wasting” money on things the other doesn’t value. With this method, sharing necessary expenses always gives you transparency in the bills that matter the most. You’ll always know you + your partner have made their rent contributions, so you won’t be left with an eviction notice at the end of the month.

  • Cons: With separate personal money, depending on each partner’s income, one person could still have exorbitantly more “fun” money, causing strain on the relationship if you always want to try the latest hot spot, but your partner can only afford Thai takeout. In addition, by separating savings goals, you could run into a situation down the road, where you have been saving diligently, but your partner hasn’t started. When it comes time to getting married or buying a home, are you comfortable spending your entire savings to make up for the lack of theirs?

All By Myself

This method used to be extremely rare, as it was seen as pessimistic, but it can be very practical + keep you safe. You may have heard of a “F*** Off Fund” (more politely referred to as an Emergency Account + we’re big fans of it!!). This is the couple’s budgeting method for those of you referring to your Emergency Account as a F*** Off Fund. With this method you keep everything separate, whether you have shared bills or not. Whether you’re both on the lease or not, one person is sending in a check on the 1st of each month + the other is venmo’ing them their portion. Always 50/50.

  • Pros: If the worst happens + it doesn’t work out, you can walk away relatively easily. You don’t have any money in shared accounts to hold you together. Another pro, is that their negative credit won’t follow you because you won’t have shared accounts. One partner’s negligent spending won’t impact your long-term credit report + financial freedom.

  • Cons: There’s less transparency in your finances. If someone overspends one month + can’t make their portion of the rent/utilities/car payment, it could lead to a lack of communication + poor financial decision making. For example, you decide to use your credit card to pay the electricity, rather than to be open with your partner that you’re living beyond your means.

As your relationship grows + evolves, your approach to managing money together may need to as well. For example. Lauren + her partner spent the first 3 years of their relationship following the “All By Myself” method + splitting everything 50/50. When they decided to move in together, and later buy a home, they evolved to the “Yours, Mine + Ours” method, splitting their shared expenses proportionally, but keeping their personal spending + savings separate, even if that meant one partner had more to spend than the other. Now that they are engaged + planning a wedding, they will continue to reevaluate their budget to fit their relationship and, likely, combine even more post-wedding.

At the end of the day, there is no right or wrong way to manage your money as a couple. The important thing is to, at least, talk about it, be sure that you are on the same page + be open to changing as your relationship does. We loved hearing the success of your money conversations following our first Love + Money post + can’t wait to hear how these ones go as well. So, what are you waiting for!? Send this to your S.O. + take the next step in building your financial future - together!

As always, we’re here to help with all of your budgeting needs! If you’re excited to get on track with your partner, but are unsure of where to start, book a consultation with us to get started!

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January Peer Profile: "Make Changes That Don't Impact Your Happiness...Honesty Is Key."

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