Updated: Nov 23, 2022
Ellevest is a robo-advisor investment platform and financial literacy program primarily for women. All quotes credited to Ellevest will be highlighted .
A couple weeks ago our friends at Ellevest dropped a blog that might as well have been about Smoov. We've been holding back on posting this because I needed to spend the appropriate amount of time to digest exactly what drove me so crazy when I read this.
We've boiled it down to three things that we can't get behind.
Going to poke some holes in the article and then give you some shameless Smoov takeaways.
"You did it! You took the leap, got a place together, and two people’s finances are about to become one."
The first point worth making here is directly from their opening paragraph - while moving in together is obviously a big step in the relationship and a pivotal moment for both partners, statistically speaking, couples start splitting their expenses long before they move in together.
"This leads to one of the most common questions we get about money and relationships here at Ellevest: What’s the best way to split expenses with your partner?"
Most common question they get? We're here for it.
Ultimately the challenge with splitting expenses as a couple is three fold...
It's manual & awkward
So let's break these down as it relates to the Ellevest resource.
First and foremost they're offering access to a workbook that is literally still a manual solution.
The current solution with or without their workbook is manual and while it's nice to provide a framework for people who have a hard time with math, another manual solution is not the resource consumers are hoping for. In a world where we can talk to our TVs, have keypads on our doors instead of keys and our phones unlock with a glimpse at our faces... we have learned to hate manual.
"There are a few ways to do it, and there’s no one “right” answer. You could just split everything 50-50 and call it a day."
Totally agree here - no one size fits all solution as every couples respective financial situation is different. Not just because they likely have different incomes. But also because they both definitely have different relationships to money.
What do we mean by someones relationship with money? A few things:
Everyone has a different upbringing surrounding money. Depending first and foremost on their respective upbringing and family dynamics surrounding money. The family they're from, the part of the world they're from and their socio-economic position all impact their initial perspective on money. After that their formal and ongoing education
Spending does not always directly correlate with earning.
Saving early and often ties back to financial literacy. No two individuals will immediately share the same savings philosophy.
We live in a society of advanced consumerism - we don't just want the thing, we want the BEST thing. If that means leveraging BNPL or credit card to get that thing, we will likely go for it. Understanding how debt compounds and interest %'s is key to managing this.
Most Americans do not invest. Even though you should. Knowing where your partner stands on this is key to success.
Key to a successful financial relationship is getting on the same page about what your financial future looks like together.
"Splitting bills based on income: the step-by-step
Here’s how it works: You keep your individual bank accounts, but also open a joint checking account as a couple. You’ll use this joint account to pay your shared bills. Then, the math:"
First and foremost, we all hate math. Hard stop.
Secondly, and we hate to break it to you, Ellevest, but this is NOT the way. Couples are made up of two individual partners and both of them LOVE their financial autonomy. Furthermore, they fell in love with their rewards programs before they fell in love with each other. So for any big ticket purchases like a couch, TV, vacation etc... they're both going to default to getting the points on their respective credit cards.
Not only that but like we mentioned, couples start splitting expenses long before they are living together. Introducing the idea of a shared account too early in the relationship can trigger red flags on either side.
"The example: a 60/40 split
Say “Sam” makes $42,000 a year and “Alex” makes $63,000 a year. That’s a total household income of $105,000. The math:
Sam’s portion of total household income: $42,000 / $105,000 = 40%
Alex’s portion of total household income: $63,000 / $105,000 = 60%
60/40. Easy! Then let’s say their shared monthly expenses add up to $2,500. (We heard that “Lol, in this economy?” snort. Listen, we’re just trying to keep the math simple.)
Sam’s portion of shared expenses: $2,500 x 40% = $1,000 per month
Alex’s portion of shared expenses: $2,500 x 60% = $1,500 per month"
Is it just us or does this look like it was ripped directly out of a high school algebra textbook? Who wants to do this? From our perspective this is still manual, awkward and time consuming.
At Smoov, we're making this process easy and automatic. Keep your loyalty programs, keep sending money back and forth on your phone and we'll do the math.
Connect with the cards you already have - no need to sign up for a new bank account.
Decide on a split % - if you want to do so based on your income, you can use our Financial Harmony Calculator (FREE FOR EVERYONE) at the bottom of our website.
Passively add expenses to your shared view - once you agree upon which expenses you want to share, anytime either partner pays for something, that transaction is automatically pulled into their private view, and they can just tap to add it to the couples shared view - we do the math.
Settle Up - whenever you feel like that Total Damage is high enough to justify settling up, easily send money thru Smoov.
*BONUS* We keep track of everything - you'll have a history of all the past settlements making it easy to go back and see if you already split something.
This is the way. This is what modern couples need. Expense splitting in a relationship is complicated, emotional and confusing. Modern couples value their financial autonomy and freedom, but want to be committed to each other in an equitable and fair way.
Smoov offers a solution that's not manual or awkward, requires no math and provides the independence and transparency couples need.
Smoov meets these needs of modern couples and provides an easy, automatic solution that doesn't require math or signing up for a new card.
Food for thought.
Ultimately we love that Ellevest agrees this is a hot topic.
Our beta is now public, if you want to try Smoov, here's a link to download the beta.
We’re changing the way couples manage their expenses together and Financial Autonomy is at the backbone of our platform.
Tell a friend to tell a friend.
Until next time - take it easy and keep it Smoov.
*Credit Ellevest for the cover art*