You can and should devise a household budget with your partner when you decide to move in together. Here’s how. As a couple, you need to sit down together and come to a mutual understanding of what you think should be covered under household expenses. You should have a small household emergency fund of $1,000 to cover emergency expenses. You will need to agree on the amount of rent you are willing to pay together. Contributing a percentage based on your income is a better way to handle it. That way, you both can contribute to your retirement and cover your other expenses without being crippled by your monthly contribution amounts. Paying bills such as rent, utilities and grocery bills based on the percentage of what you and your partner make, not a flat 50%, makes the most sense when creating a fair cohabitation budget. Then you will pay for the expenses you have included in your household budget from that account. That will protect your other money if your partner makes poor financial decisions, and it will make it easier to divide things up if you split up in the future. Covering all household expenses with this account will prevent you from running up a credit card or dipping into your savings to cover shared expenses. It will be best to have the account at a different bank from your original account. You should also have your own emergency fund of at least six months of your expenses, including what you would contribute to your household account. You should analyze your budget to make sure it is in line with the proper percentages of spending and savings. Follow the normal budgeting rules when you set up this budget, but you should only cover items in this budget from your personal checking account. Make sure you don’t forget common budget categories. You may also want a category set aside for unexpected or irregular expenses like attending a friend’s wedding. Purchasing a home or car together can make splitting up more difficult. If you want to save up for a down payment when you do get married, you can save separately and report your progress. Once you get married, you should rework your budget together and include all of your expenses together. If you have children together but are not married, you should include all childcare costs in the household budget, including formula, food, clothes, medical care, and daycare costs. That will make it easier if you split up due to a job transfer for one partner. It will also allow you to focus on your own budget weaknesses, rather than looking at the way your partner spends money.
