Problems with budgeting with a partner
I accidentally deleted my previous looong post so I'm writing a shorter version of it. If anything is unclear I'll answer it.
I live with my girlfriend and we share some expenses like groceries and rent for example.
I do most of the shopping so I pay most of the money and then my girlfriend reimburses me later. To avoid having overspending in Groceries category I put more money than I would pay just for my half of groceries. Say we both pay 800 PLN ( we live in Poland) for whole month of groceries, , so individually we contribute 400PLN. I put 800 PLN on my groceries category to avoid overspending.
Sometimes she does the shopping, or she buys cleaning products which go to a different category. We put all expenses into Splitwise to see who owns who ow much.
But the problem is it is difficult to split expenses to different categories when one gives back one to the other. You would have to track every transaction to know in which categories you are given back money and in which you pay the money. It's a lot of mental arithmetic. Because it is so difficult I just put money my girlfriend gives me to Ready to Assign. In that case I have accurate representation of money I actually have but not how much I'm actually spending in all categories.
This situation causes some problems:
I can't see how much money I'm ACTUALLY paying each month for certain categories, because I can't track where all the money is actually going. Just how much is going.
Also I would like to be able to look at YNAB and see how much money we have to spend as a couple when I go shopping. If I go grocery shopping and see I have 400 PLN ( say if I didn't put the additional money into the category) I will not be able to pay for something that I know my girlfriend will give me back. But if I do put the additional money then it turns out I have to put so much money additionally that I can't budget for my personal expenses.
I have a few wishes:
- I would like to know how much money I'm spending individually in shared categories. (say 400PLN for groceries)
- I would like to know when I go shopping how much money we can spend as a couple. For example that we have 600PLN/800PLN for groceries till the end of the month.
- I would like no to put a ton of money for reimbursement category.
- I would like not to have a lot of reimbursement categories for different things(reimbursement groceries, Reimbursement cleaning products etc.)
Can you help me? I've read Budgeting with a partner, reimbursement articles, watched tutorials and read forum entries. I don't know, maybe there is an error in my reasoning . Maybe this process can be simplified. I'm looking forward to your answers :)
Thanks for reading !
Here's how I handle reimbursements.
I have a dummy "Reimbursement" account in YNAB for the other person. It is an on-budget account, not tracking, this is important. The purpose of the dummy account is to represent the portion of my money that is currently in the other person's possession. It can be positive or negative depending on whether I owe them or they owe me.
When I spend money that will be paid back by them, I show it as a transfer to their Reimbursement account. Because it is a transfer between budget accounts, it doesn't get categorised and so doesn't show up in my spending reports.
When they pay me back, I show it as a transfer from their Reimbursement account to my bank account.
If they were to buy something on my behalf, I would enter the transaction in their Reimbursement account categorised to the appropriate category (if they buy me beer, I'd categorise it to Fun Money for example.) This way the Reimbursement account reduces by the amount they've just spent on me and it is correctly categorised.
A few points about it:
- You need to have plenty of cash in your bank account because you're telling YNAB you still have the money in the Reimbursement account but in reality it may take a few days to access that money. If cashflow is an issue, don't use this system.
- The Reimbursement account always shows the balance of what they owe you (or vice versa if negative), so it is easy to settle up whenever necessary.
- This system doesn't get affected by the month rolling over. The account will always show what is owing to you.
- Because all spending done on the other person's behalf is a transfer, you don't need to have any categories to track reimbursements.
- Because the transfers don't get a category, it's a good idea to put notes in the memo field as reminder of what it is.
- You can use split transactions to show that half of a purchase is to be reimbursed by the other person.
- It is simplest if you use just one Reimbursement account for each person you deal with.
Using your situation, this is how it would work. You go shopping and spend $500 on groceries for both of you. You enter it as a split transaction with $250 as a transfer to the Reimbursement account and $250 categorised to Groceries.
The Reimbursement account will now have $250 in it, representing the money your girlfriend owes you for shopping.
Your girlfriend buys you something, maybe you go out for dinner, it costs $100, she pays for all of it but you want to show that you've paid for half of it.
In the Reimbursement account, enter a transaction categorised to Dining Out for $50.
The Reimbursement account will now have $200 in it, representing the $250 your girlfriend owed for shopping less the $50 you owe her for dinner.
Your girlfriend wants to settle up, you look at YNAB and see that she owes you $200. She pays $200 into your bank account. In YNAB show this as a transfer of $200 from the Reimbursement account to your normal bank account. No category because it is a transfer between budget accounts so it doesn't add to RTA.
Your spending reports would show that you spent $250 on groceries (not $500) and that you also spent $50 on dining out.
Thanks for all the answers!
DexterCat I tried this method, but as you have said, you need a lot of money to do that. I'm trying to avoid having negative values in my budget, because there may come a time when that pile of money I used to have is not there any more. This method may be good for me once the pile of money is so big that I can have negative values in my budget and peace of mind.
Marisa Ceeses I've adopted a similar strategy since writing this post, but it may be even better than my approach. I will give it a try. What bothers me is the fact I have to assign a lot of money to the "Splitting" category. In my case it may be so much, that it impacts my budgeting decisions for the future expenses. I would like to have my future expenses accounted for and assigning a big pile of money every month or so to the Splitting category is limiting my ability to do that. But maybe it's the only way.
Thank you very much, for your help. Maybe I will give updates on the progress of this method. :)