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Each week, we answer money questions from around the web on the NerdWallet app. Here are three of the trending questions from May.
Should my partner and I split expenses evenly?
Does it make sense for the higher earner to fund more of the shared expenses? Should everything be split evenly? Should all income be combined into a single pot without concern for who earned it?
While different couples will answer these questions differently, financial experts recommend some universal rules to keep in mind.
First, talk openly about money with your partner. You might want to start with a brainstorming session about how to split expenses. It could also be worth exploring how each person grew up talking about money, and what they observed about their parents’ financial choices.
Next, some financial experts suggest taking a percentage-based approach. This means each partner contributes an amount proportional to their earnings into a shared expenses account. That method can feel fair, and it’s easy to adjust as incomes fluctuate.
Some couples in long-term committed relationships or marriages opt to combine everything, which can simplify discussions about sharing expenses.
Most importantly, talk through these questions until you land on a solution that works for you. When it comes to shared expenses and different income levels, there’s no one right answer.
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How much emergency savings do I really need?
How much emergency savings do you really need? The short answer: three to six months’ worth of expenses.
But, as you probably guessed, there’s a longer answer.
While that amount is a good goal, it can feel unattainable. If that’s the case for you, aim for a lower amount — because it’s better to start small than to not start at all.
An emergency fund serves as a crucial safety net against life’s unexpected costs. If you suddenly face car repairs or healthcare bills, being able to turn to an emergency fund is invaluable. Otherwise, bills can pile up and snowball into a larger financial burden.
Even setting aside $10 a week will add up over time, especially if you let it grow in a high-yield savings account. If you do withdraw money for an emergency, aim to build it back up again when you can.
If you’re struggling to find money to put into the account, look at your budget to find places to trim. Perhaps you scale back on takeout, personal care or subscriptions while you focus on building up the fund.
I got a bonus. What should I do with it?
Congratulations, you earned a bonus!
A work bonus is different from other types of windfalls — like a lottery win or inheritance — because it’s often expected at a certain time of the year. But it’s not always guaranteed. That means it’s important to have a general plan for what to do with the bonus, without depending on it for essentials.
First, consider using the bonus to build up savings. If you already have an emergency fund, then you can put the money toward general savings for a rainy day, or a specific purpose, such as a vacation. (A portion of your bonus may be automatically distributed to your retirement savings, and you can check your retirement account to confirm.)
Another top priority could be using the bonus to pay off high-interest debt, like credit cards.
You might want to put a portion of your bonus toward some kind of investment in yourself. That could include a new certification, training, gym membership or therapy — anything that helps you achieve your future goals.
Lastly, part of the bonus can go toward a fun splurge — like a new piece of clothing or a weekend getaway.
You might want to think twice before buying something that creates more costs down the road, such as a car or boat, because future bonuses are rarely guaranteed.
