A common budget is not so easy to draw up. It is still the best way to know the income and expenses of each partner and to agree on an equitable sharing of common expenses according to the income of each other. What part of your income will be allocated to the common expenses? How much will you spend on personal expenses? How will you split common expenses with your partner?
There are 3 ways to create a common budget:
– the common pot: this model where couples merge all their finances can be a source of conflict if one partner is too wasteful or if they are too big differences in income. Another disadvantage is that the joint bank account can be frozen if one of the partners dies.
– half and half: sharing equally the common expenses is adequate for partners earning the same salary, but doesn’t allow redressing inequalities. The richest partner is getting richer and the poorest partner is getting poorer.
– pro rata basis: common expenses are split proportionally to the income of each other. This model can help the partner earning the least to save money and to reduce his/her financial insecurity. But the partner earning the most could dislike it, even if it is the most equitable model.