Fair does not mean equal; your contribution should depend on your income and debt.

How to split the money as a couple and be financially fair?

Among couples, money can be the number one reason for stress, unrest, and conflict. It’s a sensitive topic and needs to be navigated carefully. The modern Indian woman is financially independent and plays a key role in budgeting, running the household, paying for the kids’ education, saving, investing, retirement planning, and more. While your relationship is a 50-50 commitment, the question that stumps most couples is how they should split the money to be financially fair.

At the outset, let us accept that fair does not mean equal. One person may be making more than the other, or one partner may have more credit card debt, car loan, student loan, etc. This essentially means there’s no one-size-fits-all solution to this conundrum. Couples have to be honest and transparent about their income and expenses. They need to openly communicate and create a financial plan that works for both of them and helps them meet their shared goals. 

Related: 8 Things To Do On Your Salary Day To Manage Your Money

So, here are some ways couples can ensure fairness in money matters:

1. Create a joint account for expenses

The easiest way to manage money is to maintain individual accounts for both partners and one joint account for expenses. This way, both partners can transfer money into the joint account to take care of common expenses and have control over their personal assets. Studies show that most couples in long, happy marriages are those who keep their money separate. 

2. Split expenses according to income

The first thing is to calculate the extent of your expenses. Factor in everything from rent or home EMI, utilities, groceries, insurance, etc. Then divide them fairly, based on who makes how much. For example, if you make Rs 12 lakh a year and your partner makes Rs 8 lakh, you can look at a 60:40 split. It is crucial to note here that if both partners are paying for an asset such as a house, both their names should be on the deed to avoid strain. 

Related: Do You And Your Partner Disagree Over Money Issues? Here's How You Can Achieve Financial Compatibility In Your Relationship

3. Decide who pays for what

Alternatively, you can allocate expense heads between yourselves. For example, one spouse can pay for the groceries and utilities, and the other can pay for the children’s education and sundry expenses. If one partner has more debt, the other can take on more responsibility and free them to pay off debt sooner.

4. Align your life goals

A couple is a team that works together, so it is very important to have shared life goals. This could include short-term goals such as travel, buying a car, etc., medium-term goals such as creating an emergency fund or saving for a child's education, and long-term goals such as retirement planning. Align your goals and save towards attaining them in the most efficient way possible.

Related: 5 Retirement Planning Tips For Couples

5. Invest prudently

The journey towards safeguarding your future starts with investing wisely. Figure out what your risk tolerances are. There’s every chance that one would be a risk-taker and the other more conservative. You need to develop your investment strategies keeping this in mind. Different risk tolerances work in favour of couples investing together as it helps them diversify and spread their risk. If this is not your strong suit, take the help of a professional financial advisor and discuss your investment goals and timelines. Use their advice to come up with a combined investment strategy that complements both partners’ investing styles.

Last words

Figuring out how to split the expenses is only half the job done. The other half is staying on top of financial matters and ensuring that everything runs like a well-oiled machine. The most efficient way to do this is to appoint one of the partners as the ‘money manager’. This person can track all expenses and keep the other abreast of how much money there is, where it is going, and how it is being leveraged to meet shared life goals.