The income and expense conversation is probably one of the most important –or THE most important- conversation you have to have with your partner when you start to consider moving together for the first time.
Sharing expenses in a relationship is not easy but it is essential to do it right in order to preserve the relationship. This is why I want to introduce you the idea of sharing bills based on your income. The split method that will make sure that both of you are contributing with a fair amount of money but also allow you to save money for your individual projects.
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Calculator for splitting bills based on income
If you want to know how to split bills based on income, we created a free calculator that you can use to easily calculate how much each of you should pay. The only thing you have to do is add your income, list all your expenses and you are ready to go!
To use our how to split bills based on income calculator, simply click the link above to see our Google Sheet calculator, then click File > Make a Copy. Now that you have your own copy, you are able to edit the calculator and make necessary adjustments like adding in your own names, incomes, and percentage split
In this article, I am going to share with you the benefits of splitting bills based on your income, teach you all the tips and tricks to do it right and help you to make sharing expenses in a relationship something easy and not a hard talk.
Benefits of splitting bills based on income
The main benefit of splitting bills based on income when you are in a personal relationship is that you can make sure that both of you are paying according to what you can afford.
This financial method makes sure that, after paying your household expenses, you can save money for personal projects.
Imagine that Rebecca earns $8,000 per month and Avery $5,000. If you are renting an apartment for $4,000 per month and split the rent in half, Rebecca will have $6,000 left while Avery will only end up the month with $3,000.
While splitting joint bills in 50/50 is great when you are living with a roommate or a friend since each of you should be able to enjoy the benefits of having better salaries, in a relationship you have to factor other different things such as the commitment with the person you love, the space to let both of you have personal goals and projects, and the long term projects that you can have in common when planning a financial future together.
Now imagine that Rebecca pays $2,480 of the rent and Audrey covers $1,520. At the end of the month, Rebecca will have $5,520, which is still more than her partner, but Audrey will end up with $3,480.
That money difference although it is not huge, will give more independence to Avery and will allow him to have his own money outside and commit with not only personal plans but also with a couple project.
When it comes to expenses, the person who is earning the most will probably want to enjoy the money, whether it is hiring a service such as cleaning help or living in a nicer apartment. Many landlords will use the three times rent rule, which states that the tenants’ income must be 3x greater than the rent of the apartment. Having two incomes is better than one and can help you to find a much better apartment.
While it is not fair that the one who earns a good salary cannot enjoy the perks of having a nice job, it is also unfair to demand the significant other who earn less to commit with a level of expenses that she or he cannot afford. So, what is the solution to this? Divide the bills according to what each member of the couple brings to the table.
How to split bills based on your income
Dividing household expensed based on your income is actually easier than you think. While this method sounds complicated, it doesn’t involve complex math, and can be automated with a simple spreadsheet. In fact, I will share you below one for free that you can use with your partner, but let’s dig first in how to calculate it manually.
Formula to divide bills based on income proportionally
The following formula will show you what percentage of the bills should each member of the relationship pay with this method:
Person A salary + Person B Salary = Total Income
Person A salary / Total Income = 0,XX
XX= the percentage that Person A should pay for each bill
100-XX= the percentage that Person B should pay
Sounds complicated? Not at all! Let’s go back with our Rebecca and Avery example and you will see how easy it is when you put it in practice
$8000 (Rebecca) + $5000 (Avery) = $13000 (Total Income)
$5000 / $13000 = 0,3846
Rebecca should cover 62% of the expenses
Avery is in charge of paying the 38% left of the bills
Tips for couples splitting expenses based on their income
- Don’t count personal expenses as part of the shared ones. You love going to the gym and she takes theater classes after work? Great! Let’s take care of each activity individually.
- Subtract personal debts and student loans from the salary before calculating what percentage you should pay proportionally. While it is not fair to pay for the loans of your significant other, it is also true that these payments can take a substantial amount out of the monthly salary. I recommend you reading Juliet Del Rio’s sad story about how this discussion led her to a breakup at The Financial Diet.
- Consider opening a joint account. It can be easier to simply transfer money from your personal account to the one you share with your partner and use it to pay shared bills.
- Relax about it. After all, you love each other and you should trust that your loved one can watch your back. If your significant other is in charge of paying the 35% of everything and the apartment utilities represent 32% of the whole expenses, choose the easiest way and let him pay that while you pay the apartment rent.
- Talk about this. If you want to build a future together you should be able to talk about hard topics and willing to debate it as long as it takes until both of you are happy with the resolution.
Have you tried to split bills with your couple based on your income? Let us know how did it work for you! If you haven’t, this is the time to start talking about it, you may end up deciding that it is not the best method for you but you can also end up loving it.
FAQ
How do you split bills evenly based on income?
By using our calculator above, you can perfectly split your shared expenses in a proportional way based on both of your incomes. Our income splitting calculator is totally editable once you make a copy, and you can add or remove any expense you’d like!
Should couples split bills based on income?
This is personal preference, but yes we believe that splitting bills based on income can take some of the awkwardness out of relationship finances. If the lower income partner has to pay for half of the rent and other expenses, it can cause resentment in some couples which is totally avoidable. Give it a shot even if it’s just for a month or two to see how it works for you!
How do you split the bills if you make more?
Using our calculator you can split all bills proportionately to keep things fair. The higher income earner will be paying the same percentage as the lower income earner in the house which can be an excellent approach for some couples.
I’m so confused! In your example above you have Rebecca paying 38% of the bills while Avery pays a whopping 62%, despite Rebecca earning $36k a year more than Avery. Who in earth would the spouse with the smaller income be forced to pay nearly two-thirds of their total monthly expenses?
Hello Renee,
You are right, we mixed the amounts but it is now fixed.
Thanks for letting us know!
That’s great for 2 people, was wondering how to do the calculations for 3+ people.