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Collaborating on finances with your partner is a necessary part of life, and while some aspects are straightforward, it's not always easy. In fact, financial issues are one of the top causes of relationship conflicts, according to the American Psychological Association.
If you and your significant other are planning to move in together and want to split rent, there's more than one way to do it. You can split rent with your partner by paying half each or by dividing it up based on income. It's important to work together to determine the right option for your personal and joint financial health. Here's how.
1. Have the Money Talk
The best way to decide how to handle the financial side of moving in together is to talk openly about each of your finances. Have a candid conversation and share your financial situation, including your income, debts and expenses.
It's also the perfect opportunity to discuss each of your lifestyle preferences, financial goals and any concerns about budgeting as a couple. It's helpful to go over which expenses you will share and which you'll keep separate before you move in together. Work through any financial incompatibilities and hammer out logistics; for example, would you rather evenly split all utility bills, or would you prefer that one of you covers cable and internet while the other handles power and water?
2. Decide on a Method to Split Rent
Money management isn't one-size-fits-all, and there are two different paths you can take when it comes to splitting rent. Work together to choose the method that feels most fair—and most financially manageable—for both partners.
Split Rent 50/50
The obvious way to split rent is for each partner to pay exactly half of the bill each month. This can keep it simple, with each person having an even share in housing costs. For example, if you find an apartment that costs $1,800 per month, each partner would contribute $900.
This method works well if you and your partner have a similar income and budget and can afford the payments while also keeping up with other financial obligations. It can feel the most fair and equitable, though it can also cause tension if one partner is stretched thinner financially than the other.
Split Rent by Income
For other couples, it's not possible to evenly split rent payments, especially in high-cost areas. This could be the case if one partner has a lower-paying job or has limited income due to attending school or child-rearing.
In this method, partners don't split rent evenly, but divide it in a way that's proportionate to their income. Let's say you're viewing the same $1,800 apartment. One partner is a teacher and makes $40,000 annually, and $900 per month for rent is a stretch. The other partner works in marketing and makes $60,000 per year, and they could afford a bit more than $900 per month.
Since one partner makes about 33% more than the other, that person could pay 33% more rent rather than splitting 50/50. In this example, it could mean the partner with the lower income would pay approximately $600 and the partner with higher income would pay approximately $1,200 each month.
However, if the partner with lower income has fluctuating income, the pair could work out a formula that accounts for that. For example, the amount the person with fluctuating income pays could always be 20% of their income, rather than a set dollar amount, with the other partner covering the remaining amount.
This strategy of splitting unevenly takes financial pressure off the partner with lower income. However, it's important that partners communicate and check in regularly to ensure there aren't emotional issues or resentments building up due to the uneven contributions.
3. Manage Shared Payments
Regardless of how you plan to split rent, you'll have to figure out how to pay it. For example, will one partner pay the other, and then that person pays rent for the couple? Or will both contribute money to a joint account? Here are some options:
- Get a joint bank account. If you prefer to keep some of your income and budgeting separate, you can retain your own personal account for autonomy and also open a joint account together. You can each transfer your rent money, and perhaps utility payment money, to the shared account before rent is due. Then the landlord can withdraw the total amount from this joint account.
- Use a payment app. If you don't want to open a joint bank account, one option is to send your partner your portion of rent using an app like Venmo or Zelle. Then the receiving partner can pay for rent from their bank account.
- Try a budgeting app. If you and your partner decide to share a number of expenses or you're ready to combine your finances, a budgeting app like You Need a Budget can help the two of you stay on track and avoid surprises.
Communication Always Wins
Because financial issues are a common source of relationship strife, it's vital to be honest with your partner about your financial situation, even if you have a lower credit score that needs help or higher debt than you'd like to admit.
It's also helpful to check in with your partner periodically since finances can change. What happens when one of you gets a large medical bill? What about when one of you wants to cancel a streaming service or gym membership you rarely use but the other wants to keep it? Having an open dialogue and team approach can make living together a much smoother and happier experience.
Keeping track of your credit is also essential to good financial health. To make the process as easy as possible, you can sign up for an Experian membership and get reports on changes to your credit score and credit report so you can stay ahead of the game.
