Divide and Conquer Shared Expenses – How to Make a Household Budget

When you move in together, chances are you could be sharing much more than a roof. Whether you’re living with friends or a significant other, having to divide and conquer shared household expenses can add stress to any living situation.

Creating and maintaining a household budget is one way to help keep everyone under your roof financially happy and healthy.  Here are a few tips that you can use to get started on your own household budget.

1. Make a list of expenses you will share

Start by making a comprehensive list of all the expenses you plan to split with your housemate(s). This list can include rent, utilities, shared grocery items, and general household supplies. If you share ownership of a pet, don’t forget that you can include pet care expenses, too!

Estimate an average monthly cost for each expense category and add everything together. Now you have an idea of your total household expenses for each month.

2. Determine each person’s contribution amount

Once you have your estimated monthly expenses total, you have to decide how much each individual should contribute. There are a few different ways to approach this, so take some time to consider which option suits your household best. You can have each person cover an equal amount of the expenses. With a two-person household, this would mean each of you pay 50% of all expenses.

You can also choose to split expenses in a way that compensates for a difference in income. This way, each individual will pay a portion of the total budget based on their personal income. One way to do this is to determine what percentage of the total household income each person contributes, and have each person cover the same percentage of the expenses.

For example, let’s say that you have a monthly income of $6,000 and your housemate has a monthly income of $4,000. The household as a whole then has a total monthly income of $10,000 – 60% of that comes from you and 40% comes from your housemate. So if your total monthly expenses are $1,000, you would pay 60% of $1,000 which is $600 and your housemate would pay 40%, or $400.

3. Consider opening a joint account

Joint accounts are not just for married folks anymore. Having a joint checking account for the household is one way to effectively keep track of your shared budget. It can also help to balance the risks of late fees or debt and allow you to share the responsibility of paying bills.

It might be a good idea to set a specific day of the month that each of you will deposit money into the account so bills can be paid on time. In addition to enough funds to cover your monthly expenses, you might want to deposit some emergency funds into your joint account, too. This can be used if any surprise expenses come up such as house repairs.

If you want to pool together savings for a purchase that benefits the household – for example new patio furniture or an upscale espresso machine – you might want to consider a joint savings account as well. This way you can easily track progress towards your goal – no math required!

4. Keep your personal expenses separate

If you’re living with a significant other (and you’re not married) or with friends, you might want to keep your personal expenses separate. Vehicle expenses, all types of personal insurance, medical bills, and small items such as clothing are typically not part of a shared household budget – and for good reason.

Should you break up, or move out, there is no guarantee you’ll get any financial reimbursement from your former housemate. For this reason, it’s wise to split household expenses (but nothing more) in a way that keeps everyone feeling comfortable and financially secure as an individual.

5. Hold regular budget meetings

And to help maintain a financially healthy and happy household, have budget meetings regularly. These budget meetings can be an informal chat that you have with your housemate every month or every week. You might want to discuss spending, bills, or your progress towards any savings goals. The most important thing is to ensure that everyone in the household is aware of and involved in the shared budget.

Do you manage a shared household budget? We’d love to hear your tips in the comments below!

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