Budgeting together: two incomes, two pay cycles

Couples who share bills often run one joint bills account that both pays feed, using the same per-payday maths as a single-income budget. When the two pays arrive on different schedules, the step that holds it together is working out each person's share of the bills as a yearly figure first, then dividing it by the number of times that person is paid. How the bills are split between two people is a separate decision, and this post takes no view on it.

On one income the method is short. Add up the bills, convert each one to a per-payday amount, move that total on payday, spend the rest. A second income mostly keeps it that way. The awkward part arrives when one person is paid every second Thursday and the other on the 15th of the month. Now there are two calendars and only one set of bills.

What are the usual ways couples arrange shared bills?

Three setups come up again and again, and plenty of households run a blend of them.

• Everything joint. Both pays land in one account, the household runs one budget, and there is one leftover figure. It's the single-income method with a bigger income line, and it's how we run our own household.
• A joint bills account, separate everyday accounts. Each person moves a set contribution into a shared bills account on their own payday and keeps the rest in their own account. Most of this post works through this one, because it is where two pay cycles cause trouble.
• Separate, with one person paying. One account carries the household bills and the other person reimburses it, or covers a different set of costs such as groceries.

None of these is more correct. They reflect how two people want to handle money that is partly shared, and that is a conversation for the two people in it rather than for a budgeting method. What the method can do is make the shared part predictable.

How does a joint bills account work with two incomes?

Exactly like a single bills account, with two deposits instead of one. Every household bill is converted to a yearly cost and then to a per-payday figure, and both people contribute toward the total.

Here is a hypothetical household using the bills from the worked example in the payday budgeting method guide, with rent moved into the joint account alongside the others.

If both people were paid fortnightly, that would be the end of it. Each would put their share of $694.69 in on payday and the account would stay funded.

What if one person is paid fortnightly and the other monthly?

Then the per-fortnight figure stops being useful on its own, because one of the two contributions doesn't arrive fortnightly.

Say Sam takes home $2,100 every fortnight and Alex takes home $4,300 once a month, and they've agreed to split the bills evenly. Half of $18,061.88 is $9,030.94 a year each. Sam gets paid 26 times a year. Alex gets paid 12. Each person divides their own yearly share by their own number of paydays. Nothing else changes.

The mistake that creeps in here is skipping the yearly figure. It feels natural for the monthly-paid person to put in two of the other person's fortnights, which is $694.68 a month. Over a year that is $8,336.16 from Alex against a share of $9,030.94, so about $695 short. It is the same gap that catches anyone running a monthly budget on fortnightly pay: a year has 26 fortnights, not 24, and two of them end up unfunded.

Why does the joint account look uneven from month to month?

Because the money doesn't arrive evenly, even when the yearly totals are right.

Most months, the account takes in a little less than the bills average out to. Not by much. Twice a year a month brings Sam's third payday, and the account catches up. Nothing is wrong with that. It's the float doing its job, and across the year the deposits and the bills meet.

It does mean the balance moves around more than a single-income bills account would. A bill that falls just before Alex's payday meets a thinner account than one that falls just after. Some couples keep a small cushion for exactly that, sized the same way as in the post on how big a bills buffer should be.

How do couples decide who puts in what?

By agreement. The method takes no side here. An even split and a split in proportion to income are two arrangements people use, and the arithmetic is the same for both: settle each person's yearly share, then divide by their number of paydays.

Some households split the bills one way and everything else another way. Others put the lot in one pot. Which is fairer for two particular people isn't something a set of sums can answer, and this post won't try. What the sums can do is check that whatever they agree on actually covers the bills.

What happens to the leftover?

With a joint bills account, each person ends up with their own leftover: their pay less their contribution. On the even split that's $1,752.66 a fortnight for Sam and $3,547.42 a month for Alex. Those two numbers look lopsided side by side, but one has to last two weeks and the other a month, so they aren't comparable at a glance.

Shared day-to-day spending is where couples vary most. Groceries might be another line in the joint account, funded per payday like a bill. Or one person covers them, or they take turns. Whichever way it goes, the thinking in how much should be left over each payday applies to each person's figure separately.

Running a two-income budget in the app

I'd rather be plain here about what EachPayday does today and what it doesn't.

The app runs one budget on one pay schedule, and that budget can hold more than one income. The demo's sample household has two, wages and partner wages, so you can open the demo and see a shared budget running on sample data.

Every income is entered as an amount per pay on that one schedule. So on a fortnightly budget, Alex's monthly pay goes in as its fortnightly equivalent: $4,300 x 12 ÷ 26 = $1,984.62. The app doesn't convert a monthly income for you, and it treats that figure as arriving every fortnight, so the month-to-month unevenness above happens in the bank, not on screen.

What it doesn't do today is sync live between two people's phones. Each install keeps its own copy, and the guide to using more than one device describes the simplest pattern for a couple: one shared budget that one person maintains. One licence covers the household.

For the setup itself, the worked example of setting up a payday budget goes from a blank page to a finished set-aside number. Listing the bills and converting them works the same with two incomes as with one.