Finances and money are still a not talked about enough in our society and in many relationships. Many people don't like to talk about these topics for very different reasons. Yet open communication is particularly important in a relationship, especially when it comes to such sensitive and important topics as personal finances.
There are many different models for dealing with money issues in a long-term relationship, ranging from a joint account for all expenses to more systems. In this article, I present the system that my girlfriend and I currently use and that we are happy with so far. However, this system does not replace the private system for saving and investing money that I have already written about. The two systems actually complement each other! In order to keep this article concise, I will only not cover joint financial investments here.
The Two-Account Model
The basic model includes two accounts; my own and my girlfriend's. As we are still students, our only fixed monthly expense is the rent we are paying. We share this expense equally. However, only one person can pay the whole amount from one bank account. Because of this, half the rent is transferred from the other account via an automatic bank transfer a few days earlier, so that the paying partner does not have to advance the rent.
Over the course of the month, we spend money on shared expenses such as food or toiletries. We pay for these things from our own accounts, depending on who is out shopping. We record expenses that we share in the “Splitwise” app. The app adds up the expenses and takes into account who has already paid how much. At the end of the month, the app spits out an amount that you owe the other person (or get back if you have spent more). This means that we don't break down each shared expense individually, but offset all shared expenses at once at the end of the month. This means that one manual bank transfer per month is enough to restore the 50/50 split for shared expenses.
Private expenses or gifts are not affected by this because we do not enter these into “Splitwise.” We therefore pay these types of expenses ourselves.
Advantages and Disadvantages of the System
The most obvious disadvantage of our system is that we have to enter the expenses manually in “Splitwise” and that we have to make a manual bank transfer at the end of the month. In addition, the automatic bank transfer has to be set up once and adjusted if the rent or fixed monthly expenses change.
However, you quickly get used to writing down shared expenses and at the same time, you keep a better overview of your own finances. The system can also be easily linked to a budget plan. The “Splitwise” app also ensures that the division of costs is fair and that deficits can be balanced out with just one bank transfer per month.
Another advantage is that both partners can keep their own accounts, so there is no need to switch accounts or open a new one. At the same time, both partners have a quick overview of how much money they have left each month for private expenses.
Plans for the Future
In the future, a good option is to open a joint account for shared expenses to which both partners have access. Both parties can transfer a certain amount to this account each month. Fixed expenses as well as shared purchases are then paid from the joint account. The relative amount of the bank transfers determines the ratio in which the expenses are split (e.g., 50/50).
Although the system becomes more complex with a third current account and new credit cards, there is no need to enter and manually balance the shared expenses, as these are paid from the joint account. However, a certain starting balance is required for the account so that there is no risk of overdrawing it. In the event of a breakup, it must also be ensured that the remaining balance is divided fairly and the account is closed correctly so that neither party suffers any financial disadvantages.
In order to manage financial matters well and fairly in a relationship, you need to communicate openly with each other, whether it's about your salary, assets or the division of expenses. In the beginning, it takes a little time to get the system up and running, but it pays off in the long run as financial organization is no longer a big issue. Nevertheless, money should be discussed regularly so that emerging challenges can be quickly identified and resolved. Overall, we should all work to ensure that money issues are no longer a taboo by approaching them with openness and rationality – whether in a relationship, with family, friends or colleagues.
 Ratios other than 50/50 can also be implemented with “Splitwise.” If you don't want to use an app, you can also calculate the expenses and ratios in Excel, but this is more time-consuming than a quick entry in an app, so I will not cover this approach in detail in this article.