You will be able to calculate an equal and an income-proportional split and explain the effect of each.
Hui Min and Daniel finished module 2 with a joint account and a standing transfer of S$1,500 each, every month, into it. Splitting it down the middle felt fair the day they set it up. Three months later, Hui Min's personal account runs dry a week before payday and Daniel's keeps creeping up, and neither of them has changed how they spend. The arithmetic is behind it.
There are two common ways to split shared costs, and they feel very different depending on which side of an income gap you are on. This lesson works through both with the same figures, so you can see what each one does before you choose.
An equal split charges each partner the same amount. If shared costs are S$3,000 a month, each of you pays S$1,500.
It is simple, and it feels obviously fair to many people, especially early in a relationship when each person is used to paying their own way. It also needs no discussion about salaries, which some couples prefer.
The problem shows up when incomes differ. The same S$1,500 is a much bigger bite out of a smaller salary. The lower earner ends up with far less money of their own, even though both are paying "the same". Over time, they may feel they cannot keep up with the higher earner's lifestyle, or they quietly fall behind on their own savings.
A proportional split charges each partner according to their share of your combined take-home pay. If one of you brings home 60% of the household's pay, that person pays 60% of the shared costs.
Base it on take-home pay, the amount that reaches your bank account after CPF contributions and other deductions. Gross salary includes money neither of you can spend this month. If a large part of one income is commission or bonus that varies, agree how to treat it: some couples use base pay only, and some use the average of the last twelve months.
All the figures here are examples. Daniel's take-home pay is S$6,000 a month and Hui Min's is S$4,000. Together that is S$10,000. Their shared costs come to S$3,000 a month.
Under an equal split, each pays S$1,500. Daniel keeps S$4,500 and Hui Min keeps S$2,500. Daniel has S$2,000 more of his own each month than Hui Min does.
Under a proportional split, Daniel's share of the combined pay is S$6,000 out of S$10,000, which is 60%, and Hui Min's is 40%. So the shared costs split 60:40. Daniel pays 60% of S$3,000, which is S$1,800, and Hui Min pays 40%, which is S$1,200. That leaves Daniel with S$4,200 and Hui Min with S$2,800. The gap has narrowed from S$2,000 to S$1,400.
Notice what the proportional split does. Each of them now pays the same share of their own pay towards the household, 30%, and each keeps 70%. The equal split takes 25% of Daniel's pay and 37.5% of Hui Min's.
Notice also what it does not do. Daniel still keeps more, because he earns more. A proportional split does not equalise what each person has left. If a couple wanted that, they would need a fully joint model, or an extra transfer on top of the split, which some couples choose and many do not.
Before you choose, put the two results side by side and read the line showing what each person keeps. That is the money each of you lives on, saves from and gives to your own family.
Then ask a few honest questions. Can the lower earner cover their own commitments, such as a loan or a parent's allowance, from what is left under each method? Could they save anything at all? Does the higher earner feel the proportional amount is reasonable, or does it feel like a penalty for earning more? Does either method leave one of you unable to join in the things you do together, like meals out or holidays?
For Hui Min, the equal split leaves S$2,500. From that she pays S$500 to her parents and repays her education loan, which leaves little for savings. Under the proportional split she has S$300 more each month. For Daniel, the proportional split costs S$300 a month more than the equal one, and he has to decide whether that feels fair to him. Whatever each of them feels about it, they are now reacting to real figures, so nobody has to guess what the other is thinking.
Neither method is correct in itself. Some couples on similar incomes split equally and never think about it again. Others choose proportional from the start, or switch to it once the gap widens. Lesson 3.3 will add the contributions that are not in cash.
Now it's your turn with your own figures. Take your actual take-home pay from your last payslips and the shared costs from your payday drawing in lesson 2.3. Those two inputs are all the calculation needs.
Using your own take-home pay, calculate both splits for your shared costs and how much each of you has left.
Junxiong-WFG Organisation is an authorised representative of AIA Financial Advisers Private Limited (Reg. No. 201715016G).