How to Structure Your Finances - Couples
Welcome to my next edition in the financial section of the blog, where we delve into the world of household finances and share a simple yet effective solution to help couples manage their expenses. This excel model is based on the post "How I Structure My Finances" and builds on the concepts defined there. Below is a link to that post and I recommend checking it out before implementing this one.
David Forrester
Who will benefit from this?
This model has been built for couples who would like to split their expenses, while also keeping some autonomy over their personal purchases. The model is based on a few assumptions you have between you and your partner:
- You want to split your expenses based on your net income ratio, not 50:50.
- You keep your personal subscriptions separate.
In my own personal situation, I have found that using this model for splitting expenses and tweaking the saving rate has resulted in a much more even amount of splurge money each month. Prior to this, one of us would end up with a lot more money for splurging, while the other would be squirrelling away everything they could.
Step-by-step guide
Below is a link to the google sheet, once it opens in a new tab you are able to make a copy into your own google sheets or download a version in your preferred excel software.
Step 1: Capture your household expenses
In the first step, you want to capture all the expenses you plan on sharing. The first and largest one would likely be your rent or mortgage repayments. Other items to capture could be bills such as water or electricity, streaming subscriptions that you both use or home internet plans. Align the amount and the cycle with the frequency in which you receive these bills and the table will calculate how much you need to contribute to your household each month.
Step 2: Capture your salary
Step 2 is nice and easy, firstly use the drop-down to select how frequently you and your partner are paid. This will help with the following tables and ensure your outgoing payments line up with your paychecks. Lastly enter the amount you are paid each cycle, after tax and any other deductions.
Step 3: Capture personal expenses
In this step, you and your partner capture all your individual expenses. Examples of these can include a fixed weekly spending amount, mobile phone plans, personal subscriptions, etc.
Notice that the home row is already populated, this is calculated based on a few factors. The amount is your total household expenses divided by the salary ratio between you and your partner. The Per Pay field is calculated based on your pay cycle (If you are paid monthly this value will be the same as the amount).
Step 4: Transferring payments
The final step happens every time you are paid, transferring your salary into the 4 accounts, Subscriptions, Home, Savings and Splurge.
- Subscriptions: This account is the one you use for all your personal routine expenses. From this account, you can also set up a weekly spending amount to transfer into your everyday account.
- Home: A joint account between you and your partner, which you use for all the expenses captured in step 1.
- Savings: This should also be a joint saving or offset account, between you and your partner.
- Splurge: Personal savings account for purchasing anything you would like.
Closing thoughts
In conclusion, the excel model presented in this article aims to provide a simple and effective way for couples to manage their household finances. By capturing household expenses, salary and personal expenses, it provides a clear picture of how much each individual should contribute to the household, while also setting aside money for personal splurges and subscriptions. However, it is important to note that this model is based on certain assumptions and is only intended to be a guide.
The information in this blog is of a general nature. It does not take your specific needs or circumstances into consideration, so you should look at your own financial position, objectives and requirements and seek financial advice before making any financial decisions based on the information in this blog.