This weekend marks one year of marriage for Brandon and me. One year of sharing a last name and one year of sharing a bank account.
It probably doesn’t surprise you to know that Brandon and I talked about how we’d manage our money as a married couple long before we actually were a married couple. Just as we talked about our future goals and plans, we also talked about our future finances.
When couples decide to spend their lives together, the discussion of how they’ll manage their money together is often an afterthought. Most people don’t find it quite exciting as the other big talks.
But it’s actually one of the most important conversations you’ll have.
In this post, you’ll learn about the different ways you and your partner can manage your money together as a couple, along with the pros and cons of each method. Plus, I’ll share a few bonus tips at the end for tackling finances in your marriage.
Joint vs. separate finances for couples
One of the biggest financial topics you and your partner will have to tackle after getting married is deciding how you’ll organize your finances. Will you combine all of your bank accounts and have joint finances? Or would you rather keep things separate?
MANAGE YOUR MONEY WITH JOINT ACCOUNTS
The first way that you and your partner can manage your joint finances is to go all-in and combine all of your bank accounts. With this money management style, the two of you have joint checking and savings accounts. All money flows into and out of the same accounts.
This is the method Brandon and I decided to go with when we got married, and a year later, we have no regrets. However, that doesn’t mean it’s right for everyone.
- Pros: I find this to be the easiest way to manage money as a couple. There’s no arguing about who owes who money or worrying about which account a specific bill comes out of. Everything comes into and goes out of the same account. You’re tackling all of your expenses as a team. What’s yours is mine, and what’s mine is yours.
- Cons: If there’s a huge income discrepancy, this method could lead to conflict. There can be discomfort and resentment on both sides if one of you makes most of the money. It also might make one or both of you feel like the other is checking up on you. You’ve worked hard for your money and want to be able to spend it how you like. Joint finances = joint decisions. Joint finances may also not work if one of you has children from a previous relationship that you’re financially responsible for.
MANAGE YOUR MONEY WITH SEPARATE ACCOUNTS
Another method you can use to manage your finances is to maintain fully separate accounts. This is how all couples start out. When you begin dating someone, you each have your own finances. And often, this is the case for years, even when you’re living together.
This method has some more logistical pain points to work out. First, you have to decide how the bills will be divided up.
Will you each pay 50% of the expenses, or will you each pay a share that is proportional to your income? Let’s say you make a combined $100,000 per year. One of you makes $40,000, or 40%, while the other makes $60,000, or 60%.
You could decide to split the bills 50/50. But you could instead have the person making 40% of the income pay 40% of the bills, and the person making 60% of the income pay 60% of the bills.
Another question to answer is how you’ll actually pay for everything. Will one person pay for everything, and the other pay them back for their share each month? Or will each partner be responsible for paying certain bills?
You’ll also want to decide how you’ll handle shared financial goals. Will you each be responsible for saving up half of the amount, or will one of you save more? Will you keep the money for these goals in a separate savings account, or will you open a joint savings account for specific goals?
- Pros: Each partner maintains their independence and doesn’t have to feel as if they’re answering to anyone else for their spending habits or priorities. Plus, neither of you has to be responsible for the other’s debts if you don’t want to. Each of you pays for the debt that you brought into the relationship.
- Cons: This method might prevent you from ever fully feeling like a financial team. This is especially true if one of you would prefer joint finances, but the other is dead set on separate. Another disadvantage of this system is that it’s just logistically a lot of work. When bills aren’t being paid out of a joint account, you have to decide who will be in charge of paying for what. Finally, this method may cause conflict if one of you significantly outearns the other or one stays home to care for children. One partner will could up with lots of spending money while the other is struggling to make ends meet.
MANAGE YOUR MONEY WITH BOTH JOINT AND SEPARATE ACCOUNTS
The final method of managing money with your partner is a bit of a hybrid of the two previous methods and involves having both joint and separate bank accounts. I love that this strategy gives you the best of both worlds.
First, you’d have a joint checking account that you use to pay your bills. This is likely where your paychecks are deposited each month. You’d also have joint savings accounts for any financial goals you’re saving for together.
But in addition to the joint bank accounts, you would each have your own individual checking an/or savings accounts as well. It’s this account that you’d use for any personal spending money. You and your partner can decide ahead of time how much spending money you’ll each get per month and then transfer it into these accounts.
- Pros: This method has the advantages of both of the others. It’s easy to share expenses because all bills are being paid out of the same account. You and your partner are approaching your finances as a team. But you each still have the independence that comes with your own spending money.
- Cons: A potential downside with this system could occur if one partner makes a lot of money while the other only makes enough to cover their portion of the bills. Depending on how you fund the personal spending accounts, you could end up with a situation where one partner has spending money but not the other.
Tips for managing your money as a couple
DECIDE WHO MANAGES WHAT
Financial decisions should be made 50/50 with your partner, but it’s likely that one of you will be doing more of the hands-on managing of the money.
Brandon and I are both active participants when it comes to our money, but I’m the one who keeps up with the budget throughout the week and handles all of the bill-paying.
In your relationship, you can decide to divvy up the financial tasks in a way unique to your relationship — The important thing is that it’s clear who is responsible for what tasks. This helps to ensure nothing slips through the cracks.
TALK OPENLY ABOUT YOUR FINANCES
Honesty is important in all areas of your relationship. But this advice especially applies to your finances. And even though you may not both be tackling all of the financial tasks, it’s still important to talk about your finances openly.
Fighting about money is one of the leading causes of divorce, largely as a result of financial infidelity. Talking about money isn’t a cure-all for everything in your marriage. But you can bet that not talking about money is an easy way to make things go south quickly.
My favorite way to keep communication open is by having regular money dates. This is how Brandon and I have our money conversations.
MAKE A GAME PLAN FOR YOUR DEBT
These days, most millennial couples say “I do” with one or both partners bringing some debt into the relationship. Debt can be a huge emotional burden on couples. I know that for Brandon and me, making a debt payoff plan took a lot of pressure off our marriage.
When you get married, one of the first things you should do is figure out a plan to tackle your debt together. However, the plan might look different for every couple.
You have a few different options to do this. Many couples treat debt as a joint bill after they get married, while others each pay off their own debts.
SET SHARED FINANCIAL GOALS
I think having financial goals is the absolute best way to make progress with your money, whether you’re single or sharing your finances with someone else.
It’s easy to get stuck in a rut with your finances. You make decent money and pay all of your bills on time but don’t really feel like you’re accomplishing anything. This is what happens when you don’t set financial goals!
Unless you have a goal in mind, you can’t create a game plan to get there. And without a game plan, you’re unlikely to ever start saving.
If you and your partner want to start making real progress in your finances, sit down and set some goals together. Dream about what you want your life to look like one, five, ten, or even twenty years from now, and figure out what you need to do to make that happen.
SET CLEAR GROUND RULES
Regardless of how you decide to manage your joint finances, it’s important to set clear ground rules and boundaries. It’s important that you make financial decisions together while each still maintaining some semblance of independence. It can be a tough line to walk, and every couple has to figure out exactly how to do it for themselves.
One common ground rule people set is about how much each partner can spend on a single item before consulting the other. For example, you and your spouse might decide you can spend up to $100 on a single item without consulting the other. But if the price tag is more than $100, then you’ll talk to your partner about it first.
Deciding to spend your life with someone is a big decision. You’re working through the process of merging every other area of your life. And at the same time, you have to figure out how you’re going to manage your finances as a couple.
There’s no one-size-fits-all approach — each couple has to decide what works best for them and their relationship. Any method can work as long as you’re both on the same team and keep the lines of communication open.