For Parents: Setting a Budget and Splitting Expenses (2024)

FAQs

How to budget when you split expenses? ›

Make a list of all your combined expenses: housing, taxes, insurance, utilities. Then talk salary. If you make $60,000 and your partner makes $40,000, then you should pay 60 percent of that total toward the shared expenses and your partner 40 percent.

Co-parents generally divide expenses in proportion to each co-parent's ability to contribute. Co-parents with joint custody also consider their specific custody arrangements when deciding how to create an equitable distribution of expenses. Still, incomes can vary over time, and other issues can emerge.

Many couples opt for the 50/50 method, splitting all household expenses in half. While this technique may be the simplest approach, it's only fair if both partners have similar incomes.

Key Points. The 50-30-20 rule is a simple guideline (not a hard-and-fast rule) for building a budget. The plan allocates 50% of your income to necessities, 30% toward entertainment and “fun,” and 20% toward savings and debt reduction.

Try the 50/30/20 rule as a simple budgeting framework. Allow up to 50% of your income for needs, including debt minimums. Leave 30% of your income for wants. Commit 20% of your income to savings and debt repayment beyond minimums.

Blended families can use a joint account for shared expenses like mortgage payments or groceries but maintain separate accounts for personal expenses.

When you're sharing responsibility for finances, a compromise could be the best way to go. You can open a joint account to take care of the bills, but keep your own accounts to pay for the things you individually want. It's a great way to make budgeting easier and keep some independence and privacy.

Agree on a fair splitting method

Equal sharing: This method involves dividing the total bill equally among all participants. It works well when everyone has similar preferences and orders items of roughly equal cost.

What is the 40 30 20 10 rule? ›

The most common way to use the 40-30-20-10 rule is to assign 40% of your income — after taxes — to necessities such as food and housing, 30% to discretionary spending, 20% to savings or paying off debt and 10% to charitable giving or meeting financial goals.

'It's almost not fair to split finances 50-50'

For example, one partner may be saddled with student loan or credit card debt while the other partner is not. The latter may have the financial strength to carry rental or mortgage expenses so the other person can focus on paying down their liabilities, said Daigle.

Some couples pay their household bills from a joint account to which both partners contribute. Others divide the bills, with each partner paying their share from their individual accounts. It's also important to make sure the division of bills is fair and equitable for both partners.

So, here's how to split the bill when… If only one person at your table is drinking, they should offer to cover the cost of their drinks—either by requesting a separate check at the start of the meal or, if one diner in the group is putting their card down, by offering to pay more to cover their share.

For those who don't know, the 50-30-20 budget plan is an American concept that seeks to save money and budget your money smartly. After taxes, your income should be divided into: 50% on essential needs; 30% on wants; and 20% on paying off your debt or setting aside funds in case of an emergency.

The 70-20-10 budget formula divides your after-tax income into three buckets: 70% for living expenses, 20% for savings and debt, and 10% for additional savings and donations. By allocating your available income into these three distinct categories, you can better manage your money on a daily basis.

Put 60% of your income towards your needs (including debts), 20% towards your wants, and 20% towards your savings.