We never fight about money – but we negotiate about it on a regular basis.

One of the most typical topics for relationship arguments is money and that’s why it makes sense to have clear rules about it. This time we wanted to share our way of dealing with household budget negotiations. The negotiations are done in two phases: in phase 1 you agree which expenses are allowed to be paid from the joint account and in phase 2 you negotiate how joint costs are shared between you two.

Phase 1 – Agreeing on a joint budget

Phase 1 is typically the simpler phase of the negotiations. It’s easy to agree that for example rent and other apartment-related costs, such as electricity, water and internet, are paid from the joint account. You might need to negotiate a bit more e.g. on the size of the grocery budget depending on both of your eating habits. We both appreciate good food so we were  both willing to invest a bit more in it. In addition we decided to reserve 150-200 euros a month for a dating fund which can be used to pay for fun dates together. (more on this in another post)

Phase 2 – Deciding how to divide the costs

Everyone has their opinion on what is a good way to split the costs. The most important thing isn’t whether you split everything 50-50 or 100-0, but rather that you both agree on the split and it feels fair for both of you.

Although based on our educational background one might think we are strict capitalists, our system represents more a type of Nordic socialism, in which each person pays according to their economic capability. This means that we sum up our net income and each person pays the percentage that he or she is earning of the total net income. Sonja managed to negotiate also a so-called female reduction to her net income: 200 euros is deducted from her net income before the total net income is calculated. The argument for this was that it’s much more expensive to be a woman as you need more money for things like going to the hairdresser’s and cosmetics.

We have – of course – in Google Drive a shared excel which helps us calculate easily the monthly payment for each person. The excel has ready-made formulas so you only have to insert both of your income, tax rates and joint costs and ta-da: the excel calculates your payment automatically 🙂 If you want a model excel, you can download it here: Budget negotiations 2018.  The excel also helps you calculate the effects of increasing the dating fund or food budget with 100 euros would mean for both of your payment levels. This excel is based on the Finnish tax system and takes into account unemployment and pensions payments in 2018. If you live in another country, adjust the formulas for net income calculations accordingly.

Now that the budget has been negotiated, both of you simply need to create a recurring monthly payment to the joint account, after which you can forget about it – until there is a change in either your joint costs or one of your income level, after which the negotiations are repeated.