When it comes to couples finances, I’m a socialist at heart

Mouthy Money editor Edmund Greaves ponders how redistributive socialism ended up at the heart of his household budget.

Couples finances are a minefield. From who buys the loo roll, to the best approach to saving for a deposit – it’s pretty easy to come to some spectacular disagreements over money.

Early in my relationship with my now wife Ellyn, I became aware that one of the biggest issues was going to be the discrepancy between what her and I earn.

It’s not a massive gap, but (hopefully she won’t mind me saying) I do earn more than she does. A lot of this has to do with the fact that she’s a woefully underpaid nurse – but that is a story for another day.

If I look back to when our finances began to mesh together as a couple, it was almost certainly when we moved in together.

From that moment, we have saved for holidays together, bought cars, bought a house, got married, got a dog and now have a son. These are all big financial commitments or outlays.

So when our finances merged, my solution to that was to do my favourite thing – make a spreadsheet.

Big enough nerd about money that I am, I created a spreadsheet with a specific algorithm. Here’s how it works.

The spreadsheet is based on the 50/20/30 budgeting method (50% of income goes on fixed costs, 20% on debt or savings and 30% on discretionary spending).

The first step is to input our individual earnings. The algorithm totals this up to a combined figure. It then calculates what each percentage of this overall income our individual earnings represent.

Currently, of our total earnings, I earn 64% and she earns 36% of the total. So what does this mean? Once calculated, it takes into account our fixed costs and apportions how much we each pay towards this, based on our relative earnings.

In other words, I’m on the hook for 64% of the bills and she pays 36%.

Beyond that, individual subscriptions that we don’t share are portioned out, as are debt costs like credit cards etc. We don’t share credit card spending so we’re individually on the hook for what we owe.

Once this is all calculated, we are both roughly left with the same discretionary spending money each month.

It works well because neither of us is left feeling like we’ve been treated unfairly. If we were to split everything 50/50 Ellyn would be in dire financial straits constantly and it simply wouldn’t be fair.

More from Edmund Greaves

Modern couples

This is what struck me in this week’s Mouthy Money podcast – and my co-host Chris Tuite highlighted to me – our finances are, well, redistributive. One might say…socialist! Not something I’m know for, truth be told.

We were having this discussion with Charlie Richardson, one of the co-founders of a money app for couples called Lumio. Do check out the episode.

What I was struck by was two things:

1. Most people are not as fanatical about budgeting as me. Charlie did point this out, and I won’t disagree

2. These kinds of big financial questions for couples tend only to really take effect when big life events such as moving in together or getting married happen.

This is what makes Lumio’s idea compelling – it caters to couples at all stages of their relationships (ok, probably not with the nice person you’ve been on two Tinder dates with, but you get the idea).

Money is capable of derailing even the most budding of romances. How do you manage saving for that first holiday together? What if you want to move in, but you’re worried about how the bills will be split?

These are significant issues, which often we’re not equipped to deal with – especially when you’re in your 20s and you’re probably battling to manage money even just as a single person. Adding in a second just makes it all the more complicated.

So the good news is there’s now an app for that! I’m not being paid to say this, but Lumio seems like it might actually be a decent idea.

If you do happen to try it, let us know – we’d love to hear your experiences. The email to contact us is editors@mouthymoney.co.uk. Good luck out there!

Photo credits: Pexels