The recent post on Million Dollar Journey discussing how couples structured their personal finances got me thinking about how we have ours structured. When we were contemplating putting our first bid on a condo we went to a wonderful Greek restaurant to discuss our finances. The first thing we did was calculate a budget. We calculated our fixed expenses which included the mortgage, condo fees, property taxes, cable bill, internet bill, car lease, and car insurance. Then we calculated our variable expenses which includes groceries, a dinning out budget, a “household” budget, and some money for entertainment. Personal expenses like clothes and gifts were left out of the budget. Once we had the total we then included one additional “expense” which was a $1000 towards a savings account for emergencies. The total came within a manageable number for both of us.

We then began discussing how we wanted to divide up the bills. On the surface I make more money than my fiance, however I contribute $500 every two weeks to my RRSP. This is my version of a pension which my fiance has as a teacher. When we take that into account then I only make about $100 more than her so a percentage based system doesn’t really make a difference. We were left with two options: Either have each of us pay different bills or split it 50/50. We went with the fairest solution and one that required less management. We went with the 50/50 system.

In order to implement the 50/50 system we setup a joint chequing and high interest savings account with PC Financial. Every month we transfer our individual portion of the bills into the high interest savings account. We then automated transfers between the savings and chequing to optimize the bank interest.

This system has worked well to date for us though there is some concern. Even though I work in a salaried position I have access to holiday pay and overtime. This means things have been a bit tighter for my fiance and a lot smoother for myself. The additional income isn’t always guaranteed but I get enough that it keeps me worry free.

I have been putting more thought into how we can deal with this. One possible solution could be moving to a percentage based system and calculate it on a cheque by cheque basis. One thing is for certain, we enjoy our individual accounts and the challenge of trying to out save each other so one joint is out of the question.

How do other people account for variable income when it comes to dealing with the bills?

-mfd-