Do you want to effectively double your income or more without any extra work? Do you want to effectively cut your expenses in half while still having all the material benefits you have now? Do you want to go to grad school without loans even if you don’t have a scholarship? All these benefits can be yours with a careful application of Couples Strategy.
Now, some of this will certainly be easier for a traditional couple, and by that I mean a married couple or two people in a domestic partnership. However, all these strategies are possible without being married.
The Couples Strategy applies to:
- Married couples
- Domestic partners of mixed or the same sex
- Roommates in the traditional sense
- Retired persons
The core of Couples Strategy is to strategically share expenses that were it not for being part of a group (I say couples Strategy, but it can be extended in some areas to multiple people, think of a Co-Op like Costco) you would need to pay the full amount of individually. This is most commonly seen in housing, and why so many people have roommates, because without a roommate to share the cost, you would individually need to pay for space which could be common.
The doctrines of Couples Strategy include:
- Complementary requirements
- The nice to haves compatibilities that will make the level of success greater and easier
- The ideas that make everything operate more smoothly
- What expenses you can share for mutual benefit
Trust is the first and foremost requirement for Couples Strategy to succeed. The agreement that you are entering into is to share the costs and benefits of your shared life. If you’re worried that your partner in this enterprise will run off with your entire joint savings, there may be a problem. If you don’t have a joint savings, you still need to worry about whether your partner will pay the correct bill in the correct amount, and other details. Bill pay software really simplifies the chore. Of course along with trust, you need to be responsible to fulfill you end of the bargain, as does your partner.
Some complementary requirements for the Couples Strategy:
- A complementary outlook on savings – if your partner doesn’t value savings as highly as you do, then keeping it up in the long run could be difficult. See my article on the WAVE method of saving money and reducing debt
- Similar levels of materialistic needs – If you don’t need much beyond the life of a monk, but your partner wants to take trips to the all-inclusive spa in Italy twice a year, there may be a long-term problem for savings. If you’re OK with a slight used car, but your spouse wants a new car lease every other year, again, this will not bode well for long-term savings growth
- Similar spending levels on kids or at least most areas – Related to the above, if you have kids (or even pets), you need to be on the same page with kid spending. Some people are diligent savers, but will buy anything little Billy or Betty wants. This could include school supplies or field trips, sports, musical instruments, new clothes, or the newest iPhone, etc.
- Chemistry and attitude to stay together in the long term. – Divorce, breakups or the ending of friendships are very expensive, both monetarily and in the energy expended. Make sure there is a test-drive period before committing long term to the Couples Strategy
- No resentment about uneven spending levels, or negotiate some type of trade-off – Pretty straight forward. This may mean a monthly allowance for each person to spend (see the ideas to make things go smoothly below) or some type of time trade-off like you can spend on that, but you need to do dishes for the next 3 months
Other “nice to haves” for the Couples Strategy.
These are nice, but again not requirements like the others above:
- Similar saving goals – If you both really would like to travel or build an emergency fund or save for a child’s education, being on the same page certainly helps things. Otherwise you’re going to save more slowly for multiple goals
- Similar lifestyles – Again, the more compatible the better. I’m not saying that if you’re a morning person and you’re a night owl you can’t save, but opposites attract more than they successfully save
- Similar risk tolerances – If one of you wants to invest in a risk real estate venture while another one isn’t comfortable moving out of CDs into an index fund, the process of savings can fraught with problems. There are solutions however. A letting agent in Weybridge can help advise with real estate investments while a personal banker can educate about CDs.
Ideas that make things go smoother:
- Monthly “slush” funds to be spent in any way. These should be a minor part of the budget, however
- Similar incomes – this makes the sharing of expenses and the contribution to various savings accounts much easier. Of course this isn’t something you can change in the short term, but is something that you could affect in the medium term with side businesses, additional hours, or a new job
Areas where shared costs can benefit both parties:
- Housing – many individuals use this, and several can pool resources for a single residence. This is probably the first (and usually only) area that most people even consider
- Health and Medical insurance costs – each additional (legal) person that is added to insurance is usually cheaper than 2 people having individual coverage only
- Home electronics – That bitchin’ stereo and 60 inch TV are much more affordable split 4 ways
- Transportation – Sharing a car, either for different individual trips that don’t overlap or carpooling
- Yard care equipment – Do you really need to mow your lawn each day? What about any given Saturday? Didn’t think so, how about your neighbors and you go in on one?
- Baby-sitting duties & child-care – Trade either weeks or months of child-care with other parents, then you can work part-time or start a side business
- Real estate (such as vacation rentals) – make your own timeshare. You can’t be on vacation every week (at least not yet). You and a bunch of friends buying a place in Hawaii gets you all the benefits of a timeshare with little of the downside. Make sure you contract this carefully though.
- There are so many others, chime in down below in the comments!
In conclusion, Couples Strategy is just an expansion on what college students have been doing for years. There are some real important requirements in order to make this a lasting strategy to save money, but the benefits are vast. It gets easier when everyone is on the same page, and better yet when you use some of the ideas to smooth out the rough spots.
This post is a part of Women’s Money Week 2012. For more posts about Relationships & Money, see womensmoneyweek.com.
Readers, what other areas would work well for shared expenses, what makes things easier, and how would you use and expand on these ideas?
Karl Nygard is the original founder of Cult of Money and created the website to share his ideas on investing, personal finance, and more.
You’ve nailed the only areas I can think of.
I’ve met couples that have shared vacation properties successfully, but as you wrote above, that’s precarious territory. Something that personal could easily end in broken friendships if all parties don’t agree to your earlier points about shared beliefs about money.
Yes indeed, your friends today may or may not be the people you want to hang out with in 10 years. They may have kids, you may have kids and the others may want to continue living the party life. Hard to know.
As a married man I agree with all of your points and honestly I can’t say that I can think of any other areas where two can live as cheaply as one. I would emphasize that the pair should definitely have similar attitudes toward saving or spending, otherwise there is almost certain to be tension in the relationship. Slush funds or monthly allowances can alleviate this to some degree, but not totally.
It is an interesting strategy, but does rely highly on trust like you mentioned. That would be my biggest fear of a joint strategy.
Yes, the trust issue is key, though you can mitigate it in many cases. As WorkSaveLive mentions above, marriage is extremely helpful, and that is really like a form of contracting. You can also minimize the impact by limiting what you include. Are you really worried that the community mower won’t be available? Maybe, but you could use it later in the day or the next day.
I agree with all of your points and I don’t think I could add anything.
I roomed with my brother and another friend for a few years after college. It was EXTREMELY helpful! There would have been no chance I could have made it without splitting everything.
The marriage aspect is also really key. It’s so important to be on the same page with your spouse. We’re generally opposites (spender and a saver) and that makes it really tough for spouses to agree on things.
I’m noticing a lot of these benefits more after breaking up with my girlfriend. While we were living together we saved a lot on things like rent and utilities. Plus it was cheaper only having to buy 1 of everything. Unfortunately we were on a different page financially and it did create some tension.
Sorry once again about your breakup. It’s always hard when those things happen. And yes, buying two of everything really is quite expensive. You really don’t think about it until you move to a new place and realize you need new kitchen appliances (damn, where’s my panini maker!) and things like that.
My husband and I didn’t experience a big realization of “two live more cheaply than one” when we got married – now I see it was because we had each employed the “couples strategy” to some extent with roommates!
My husband and I have just started sharing a car. I would definitely like to trade services with another couple once we have kids, either with childcare or meals.
Just think how much you’ve been saving over the years by splitting costs! Thousands! Just like a college spring break trip, 8 to a room? No problem! It’s only $15 a night each. 🙂
“Monthly “slush” funds to be spent in any way. These should be a minor part of the budget, however”
I cannot agree with you more here. People need to stop trying to control their spouses spending and work with them. Our monthly squirrel has saved our butts so many times!
Yup, same principle as building things. If you make something completely rigid it will break, but if you let something bend and give a bit, it will hold up against much stronger forces. Thus why wood structures do better than stone ones in earthquakes. Of course you then need to be weary of other dangers.
My wife and I are on the same page when it comes to saving money and building wealth. As tight as our budget is, we would be in big trouble otherwise.
Understanding, trust and same view of money is essential in any relationship. You cannot save or build anything together without those essential things.
Trust really is the key for doing much of anything. Heck you don’t even want to live with a roommate if you don’t trust them for some level. Obviously you need a bit lower level of trust to share some hedge-clippers.
Good stuff. My wife and I are pretty much on the same page. Giving each other leeway within budget constraints has helped us a ton.
Having a few bucks each month to buy whatever we want so we don’t feel like we have to give up EVERYTHING but just might have to wait until next month or whatever was a big breakthrough for our budget.
It really is just like a business partnership, if both partners don’t have the same goals for the business, the likelihood of failure is high.
Its very difficult sometimes to be in sync with your partner. For her I am too frugal, and to me see likes spending. Good thing is I get to manage the finances.
Of course there will always be some tension, and I think how you deal the the tension is also a good barometer of how things will work long term. And simple possession being 9/10th of the law also works. 🙂
All good points. My last bf was a huge spender and that drove me nuts. I think it’s essential that you and your significant other agree about money. If I were to start dating again I feel like I’d ask about money right off the bat (I know that’s socially frowned upon), but many marriages end because of financial problems and money (spending it wisely) is definitely something that’s important to me. Luckily, Eric and I agree about 95% of our spending/saving so I feel like we’re in a really good place.
It certainly needs to be something you discuss fairly early. I think the financial aspect is similar to smoking, if you don’t smoke, and the potential other does, it’s hard to overcome for most people.
We have a problem with lack of medical coverage for my BF. He has good work but they provide zero medical plan coverage (small company). My company pays for 100% of medical, dental and vision for me, but if we were to get married (not planned yet :)), the cost of coverage for the spouse is over $400/month on the cheapest plan!! That would hurt our budget a lot but I definitely want him to have coverage. This is one of the priorities I am trying to figure out now. He’s considering finding a part-time job that would give him benefits but we haven’t found anything yet.