If you’re new to the UK, managing your money is one of the first things you’ll need to consider, especially if you share bills with a partner or family members—which can often lead to disagreements. Whether you’re living together or apart, there are ways to make shared finances work better for you.
Here’s Remitly’s guide to the essential factors you need to think about when managing your household expenses.
Money matters: a family affair
For immigrants to the UK, managing money can be complex. Often you’ll have financial commitments both in the UK and in your home country. Depending on your situation, you might well be sharing bills with someone you live with—a partner, spouse, relative or flatmate.
Arguments about money can put a strain on any relationship. Indeed, studies have shown that financial disagreements between married couples are the strongest predictor of divorce. Discrepancies in income, variations in the cost of living in different countries if you’re sending money home, and differing cultural views on who should pay for what can also complicate matters.
Opening your own UK bank account is one of the first things you’ll need to do when arriving in the UK: this will help you manage your income and outgoings, as well as setting up any regular payments for household essentials. Take a look at our guide to the four best banks for non-residents in the UK.
Household budgeting: why and how
Individual or joint account?
If you live with your partner or spouse, you may want to open a joint account. There are both advantages and disadvantages to this: the important factor is that you both agree on how you manage your finances. If you decide to combine your income and pay everything into a joint account, you’ll both have access to this account—and you’ll both be able to see what the other person is spending.
However, some people prefer to keep their finances separate. In this case, you’ll need to agree how you split shared bills such as rent, mortgage, council tax and utility bills, so it’s crucial that you talk to your partner about how you manage these expenses.
If there’s a big difference in your income, you might want to divide up expenses so that the partner who earns less makes a smaller contribution. Having separate accounts can also protect you in the event of divorce or separation.
What’s your family situation?
Bear in mind that if you and your spouse or partner live apart, especially if you’re in different countries, it may be more difficult to open a joint account. Some banks with an international presence will allow this, but managing more than one currency can mean that one of you will lose money on the exchange rate. In this case, maintaining separate accounts and using Remitly’s money transfer service could well be a better option.
It’s estimated that one in three families in the UK is a blended family—where partners live together with a child or children from a previous relationship. As well as the implications for estate planning, living in a blended family can complicate financial management. You may, for example, have to factor in child maintenance payments or even family visa costs if your children are coming to live with you from outside the UK.
Sharing with housemates
If you’ve come to the UK as a student, or you’re just starting out in your career, you’ll probably be living in shared accommodation. This can pose extra problems with splitting bills, especially if you like to socialise together and want to avoid arguments over who pays for the takeaway or the drinks in the pub.
Again, clear communication is key. Talk to your housemates about living costs and clarify exactly what everyone needs to pay and when. You could set up a WhatsApp group or have a regular house meeting.
How to split finances: equally vs equitably
The simplest method is to split all costs equally among the group—or straight down the middle if there are two of you. However, this might not be the fairest way if one person earns considerably more or less than others, or if you’re paying for something that only one person uses, such as a subscription or streaming service.
The alternative to sharing costs equally is the “equitable” approach, where costs are divided according to each person’s financial status.
For example: you earn £30,000 a year and your partner earns £45,000 a year. You have an energy bill of £265.00. To split this bill equitably, you should pay approximately 40% and your partner should pay approximately 60%—so you pay £106.00 and your partner pays £159.00.
Automating household expenses
You can, of course, record your household expenses on a spreadsheet, or even the old-fashioned way on paper—but luckily, these days there are plenty of tools to help you. Pave has a helpful calculator to help you split bills with your partner according to income.
Of course, if you’re splitting bills among several housemates, the calculations can become more complicated. You can use a bill-splitting app like Splitwise to help you calculate percentages and amounts.
Another option is Split the Bills, which is tailored towards students but can be used in any shared household to calculate equal shares of energy, broadband, water and TV licence bills. You can choose to bundle all bills into one payment or set up separate direct debits so everyone pays their share.
Spending and saving: how to keep track
Understanding and tracking your spending can help you plan for the future. Although this is also important for single people, identifying spending patterns can help make financial agreements with partners and housemates easier—and fairer.
The 50-30-20 rule
The 50-30-20 rule recommends putting 50% of your money toward needs, 30% toward wants and 20% toward savings.
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- Needs are things you can’t live without, such as rent or mortgage, utility bills and food shopping.
- Wants are things you spend money on out of choice, such as holidays, hobbies and eating out.
- Savings are money you will need in the future, such as retirement planning, buying a house or supporting your children.
You may find that what you consider to fall into these categories differs from the views of your partner or housemates. Talking openly about money can help to clarify these issues and prevent disagreements. If one person spends considerably more on wants than another, consider discussing this further.
Complex situations and emergencies
It’s always a good idea to have an emergency fund in case of unexpected expenses, such as car repairs or household appliances breaking down. Saving regularly into a dedicated account is an effective way to do this.
Even if you can only save a little, it all helps. If you’re on a low income and receive certain benefits, the UK government’s Help to Save scheme is a practical alternative to a savings account: instead of paying interest, it provides a bonus of 50% of your highest balance after two and four years. You can pay between £1 and £50 a month into this account.
As a general rule, you should have three to six months’ essential outgoings available in an instant access savings account. So if you spend £1,000 a month on essentials, you might aim for £3,000 to £6,000 in emergency savings. If you’re supporting a family, especially if they’re outside the UK, remember to factor in the amount you might need if they were in financial difficulties.
If you have joint debts, pay these off first before you start thinking about savings. The interest you pay on debts can be considerably more than you’ll earn on savings—so by paying off your debts, you’ll be saving more in the long run.
Reviewing and adjusting financial plans
Life doesn’t stay the same, and neither will your finances. The rising cost of living is just one issue that can impact your spending—and strain your family relationships. Major life events such as deciding to have children or buy a home, suffering illness or unemployment will also involve a shake-up of your spending and saving habits.
Most financial experts agree that you should review your financial plan at least once a year. You might want to use the services of a financial adviser, but you can also do this independently as a couple or family. This also gives you a chance to talk openly about your goals and plans for the future.
FAQ
How do I split travel expenses with friends and family?
Firstly, make sure you plan properly: discuss budget, itinerary and accommodation with your friends or family well in advance of your trip, if possible. You might agree for one person to pay for transport, another for accommodation and so on, or choose to split all costs among the group. Apps like Settle Up, which allows you to track expenses and settle bills in various currencies, are ideal for this.
How can I protect myself financially if my relationship or marriage breaks up?
Having an emergency fund is always a good idea: consider opening a dedicated account in your home country in case you need to move back home due to a divorce or separation.
How can I safely send money to my family back home?
Many people worry about sending money across borders, especially if it’s needed urgently. One way to make this easier and more secure is to use a money transfer service like Remitly. It’s faster and you’ll save on bank charges.
Will I have to pay tax on money I give to my family members?
In the UK, you can give away up to £3,000 per year as gifts without paying tax on this amount. You can give this all to one person or divide it among various recipients. You can carry forward this allowance for one year, so if you haven’t used it in this tax year, you can give away £6,000 next year. If you give away more than your annual exemption, you might have to pay inheritance tax on the gift if you die within seven years.
Spouses are exempt from inheritance tax, so you can gift as much as you like to your spouse or civil partner if they’re a permanent UK resident. If you want to send money to family abroad, there’s no limit on how much you can send, but be aware that the Financial Conduct Authority (FCA) and Her Majesty’s Revenue and Customs (HMRC) may monitor large transfers to avoid money laundering. As different countries have different rules about how much money you can receive tax-free as a gift, the recipient may have to pay tax—so check the legislation of your home country.
