The formula I use to avoid (most) money arguments

Cheap, frugal, stingy, tight…I’ve been called a lot of names when it comes to people who know me and my money. I don’t agree with any of this name calling, but I can agree that I am particular about my money and I don’t want anyone messing with it. I value my time, and I value the money I earn for that time.

Before I got married, I lived on my own for 7 years. I paid my own bills, I bought my own things, I was completely in charge of how I used the money I earned. When I got married, my husband and I had to decide how to approach splitting the bills and other household and life expenses. He is 11 years older than me and two kids before me, so he certainly had experience in managing his own expenses. We realized early in the relationship that we both already had personal and established relationships with our own money.

I’ve learned from the older women in my life what a burden it can be to manage money with a partner. I’ve seen women expect receipts from their partner because they’re nickel-and-diming the budget. I’ve seen men and women hide purchases and expenses from their partner because they don’t want to be shamed for how they spend their money. I’ve seen one partner overburdened with household bills because the other spent more than they should.  

If you’ve ever argued with your partner about money, you’re not alone. According to a 2014 American Psychological Association “Stress in America” survey, almost a third of adults with partners reported that money is a major source of conflict in their relationship. I knew early on in my relationship that I wanted to reduce possible money arguments, and I felt fortunate that I had spent years listening to money experts to help me make good money decisions.

Many people approach splitting the bills from specifically a “split” perspective, meaning they take the bill total and split it evenly down the middle so that both partners are paying the same amount of money, or they cover a similar number of bills in an effort to create fairness. Neither of these approaches are fair if you and your partner don’t make the same amount of money. I make more money than my husband, so asking him to split bills down the middle ultimately would mean he is putting a significant amount of his paycheck toward bills. Meanwhile, the joint bill total would be less of an impact to my take-home pay.

Cue, my favorite money-related formula that I learned from famed financial advisor, Suze Orman. She believes (and I agree) that partners should pay an equal percentage of money toward bills together, not an equal amount.

Let’s say your joint monthly expenses together are $3,000. In order to determine the equal percentage you each need to contribute to the joint expenses, you add together both of your monthly take home pay. Let’s say you bring home $7,000 a month and your partner brings home $3,000 a month. Combined together, that’s $10,000. Once you have this total, divide your joint monthly expenses (for our example that’s $3,000) by your combined monthly take home page (for our example that’s $10,000). Our example looks like this: $3,000/$10,000 = .3. Turn your result into a percentage by multiplying by 100.

In our example, .3 x 100 = 30, meaning you each would contribute 30% of your monthly take home pay to the joint expenses. The partner who brings home $7,000 a month contributes $2,100 to joint expenses each month. The partner who brings home $3,000 each month contributes $900 to joint expenses each month. Together, they total the needed $3,000 for joint expenses.  

Suze Orman briefly explains this approach in a quick video with Marlo Thomas, which I’ve linked in case you’d like her explanation.

What I love about this approach is that you don’t have to be married to someone for it to be valuable. It’s a strategy that could work for roommates who share expenses, or any pair who are taking on financial responsibly for something and need to do so in a fair way. My husband loves it too, to the point he has been known to tell friends and coworkers who are having money struggles with a partner.  

If you’re looking to find a new way to manage money as a partnership, I’d recommend you consider this approach. My personal, and possibly unpopular belief, is that if someone isn’t willing to approach money solutions with you in a fair way, then they’re far more interested in themselves than they are in a partnership.