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.