Money for Couples

The topic of how couples should handle money is full of land mines.

There are a lot of people with a lot of very strong feelings about the “right” way to handle money as a couple.

Some people say that if you aren’t entirely joined in every aspect, then you aren’t in a true marriage.

Some say that if you aren’t entirely separated in your finances then you aren’t truly protecting yourself from the realities of the modern world.

I don’t have a single method that I want to prescribe to you today. But my wife and I have gone through a bunch of different ways of handling money as a couple, and I’ve got some lessons that may be useful.

Step One to Staying Married

First off, regardless of the logistics, the most important thing about handling money as a couple is to be open and honest.

Money discussions are uncomfortable. They can be especially so if you are not used to having them.

Sometimes it feels easier to avoid having discussions about money. Maybe these discussions make you tense. Maybe they start fights. Why would you want to voluntarily go through that?

Money issues are the top cause of divorce in America. It stands to reason that working through your money differences and staying on the same page can be your best tool for avoiding divorce.

With that in mind, some short term discomfort seems worth it.

Going Off the Deep End

On the other hand, try not to talk about money too much.

This is not a warning that most people need, but if you are a money nerd like me it can certainly be tempting.

When I first dove into the world of personal finance and financial independence, I talked about money all the time. It drove my wife crazy and made her less likely to want to have productive money discussions with me. It was too overwhelming.

My finance infatuation was well-intentioned. I listened to a lot of money podcasts and read a lot of money books and blogs and wanted to discuss the interesting things that I heard and read.

However, its easy for this to feel overwhelming for a partner that does not spend the same amount of time in the money world.

Now we have a money discussion scheduled for the first weekend of every month in our shared google calendar. This has been a much better balance for both of us.

Some months we don’t have anything to discuss – everything is chugging along as it has been and we don’t need any course corrections. It’s important, though, to have that check in to make sure things aren’t getting away from us.

Avoid Judgment

When approaching these discussions, it is of the utmost importance to make sure they are non-confrontational and non-judgmental.

The reason is that these discussions cannot be something that either of you dreads. Talking about money is hard enough for most people. We don’t want to make it any harder.

You are not there to berate the other person for spending too much.

You are not there to judge what the other person spent money on.

You are there to make a plan for how best to move forward as a team.

Whatever has happened in the past is over. Being judgmental can only lead to your spouse wanting to avoid these discussions or even to hide spending from you. Don’t let that happen.

Separate Finances

With that out of the way, let’s move onto the logistics of managing money.

The first option we’ll look at today is having fully separate finances.

This is pretty much what it sounds like. You each have fully separate bank accounts and credit cards.

With regards to expenditures that benefit both of you, maybe you each take responsibility for different bills or maybe you just square up at the end of each month.

When my wife and I first moved in together we were not married and kept totally separate finances. We had a spreadsheet where we would each list our expenditures that were for both of us – rent, utilities, groceries, etc. At the end of each month, whoever had paid less wrote a check to whoever had paid more to make up the difference.

This is a bit more effort than having joint accounts, but made sense for us at the time and worked really well.

Mostly Separate Finances

The next option is having mostly separate accounts. This is what my wife and I did right after getting married.

In this scenario, you each contribute an agreed amount into a joint bank account and have a joint credit card (paid in full each month out of the joint bank account) for joint expenditures.

You can either each contribute the same dollar value to the account or you can determine some other arrangement if you have different income levels. The amount that the two of you contribute should be enough to cover all of your joint expenses.

My wife and I each had a set amount from each paycheck distributed into the joint account and whatever was left would go into our individual accounts.

As our expenses rose, we increased the amount of money going into the joint account. On the other hand, when our salaries rose the increase went into our individual accounts.

When unexpected large expenses arise in this setup you can either pull from a joint savings account if you have one or you can each contribute from your individual accounts to cover it. My wife and I had a small emergency fund in the joint savings account, but each had a larger emergency fund in our individual accounts.

This is a good system for when you and your partner have very different spending habits and don’t want to feel nervous or guilty about every purchase that you make. It is also a nice way to ease into joint finances in a lower pressure environment.

Mostly Joint Finances

Next along the spectrum is mostly joint finances.

This is similar to the last set-up, but flipped. You each have a set amount going to your individual accounts and the balance goes to your joint account.

You still have some money privacy and some money that you can do whatever you want with, but the benefits of all raises go to the joint account rather than individual accounts. You also build more savings together, compared to the separate savings in the last scenario.

This is what my wife and I do now.

This made sense for us for a number of reason. We now have a child, which means that we have a lot more joint expenses than we had previously. It also means we have more joint savings goals.

At the same time, our years spent having money conversations while in the mostly separate stage have set us up to feel a lot more comfortable and on the same page with regards to our money.

Most of the spending now is joint, but we each still have separate money for our vices. For example, my wife shouldn’t have to pay for the money that I spend on lunch at work when she is so much better than me about making lunch from the groceries.

This also allows us to buy gifts for each other and have them be surprises that the other person doesn’t see on the credit card statement.

Fully Joint Finances

Finally, couple finances can be fully joint.

This seems to be the one that a lot of people have really strong feelings about. I’ve found this to be especially true in the religious community.

There is surely a symbolism and power behind the idea of complete unity that comes with fully joint finances. However, that only works if you successfully and smoothly join your finances together, which may not be easy for many couples.

I have no experience with this method, but here is a video from my friend Mrs. Picky Pincher explaining why her and her husband prefer fully joint accounts.

I will also add a note of caution here:

Some people recommend this method of handling money because it is easier to have one spouse be in charge of the money. Be very wary of that approach.

There are far too many horror stories out there of the money manager in the relationship passing away first and leaving their partner to flounder and struggle.

If you’re the money guru in the relationship, make sure that your spouse knows enough about the finances to be able to smoothly step in and take over. It’s horrible enough to lose a spouse. There’s no reason to make their life even more precarious.

Loose Ends

Some quick hits on other issues related to couple finances:

  • I have no experience (and no opinion, really) on pre-nuptial agreements. My wife and I had relatively negligible money and assets when we got married. I did have a lot more student loan debt, but I was on a forgiveness track so the payments were not too different. Either way, we paid our student loans out of our individual accounts when we were in our “mostly separate” stage, so we didn’t need to have any major discussions on how to treat debt that we brought into the relationship.
  • I also have no experience with prior marriages, kids with former partners, or any other form of ongoing monetary commitment from one spouse to someone outside of the marriage. I’m sure that dealing with any of these issues would create all sorts of extra complications that I have not had to take into account in the preceding discussion.

Join the Conversation!

As much as people may tell you otherwise, there is no right way to handle money as a couple.

My wife and I have gone through three different methods already and each of them has worked well for us at different stages of our relationship.

The most important thing is to find a method that works best for you and to be open and honest with your spouse in your finances. It’s better to do something that works for you but is frowned upon by society than to force something for others’ approval that causes problems in your marriage.

What have you found in managing money as a couple? What methods have you tried? Do you have a tips, tricks, or advice? Let us know in the comments!

8 thoughts on “Money for Couples”

  1. We’ve used many of the same methods you’ve outlined.

    1st – Living Together & Not Married: Separate finances with a joint account for joint expenses
    2nd – Married: Mostly the same with all of our accounts linked together in Mint so we had a holistic view
    3rd – I got a new job – I realized it was easier to set up direct deposit into our joint account. She still kept her separate accounts. We did not have a laser focus on our personal finances at the time.
    4th – My wife left her job: We closed all the extra accounts and now work in only joint accounts. I find it much easier to manage this way. We have frequent but unscheduled money conversations.
    Jason@WinningPersonalFinance recently posted…Back Off, I’ll Mind My Own Savings RateMy Profile

    1. Nice. Glad to see that others have taken the step by step approach to merging finances. I think we would probably also make the move to fully joint if we end up dropping down to one income at any point.

      Thanks for the comment, Jason!
      Matt recently posted…Big Money ChangesMy Profile

    1. Jumping straight into joint finances seems like it works well for a lot of couples. Plus it seems like most couples that don’t start that way trend in that direction the longer they are married. I’d be curious to see statistics on different methods employed and different success rates. For the most part everyone in the PF space is pretty good with money, so I bet we’re a biased sample for any analysis one way or the other.
      Matt recently posted…Big Money ChangesMy Profile

  2. One thing to keep in mind on the student loan front is that marriage can have a big impact on income-driven repayment plans for federal borrowers and possibly taxes as well. It is important for any couple to discuss this topic and understand the consequences of marriage on federal loans.

    1. This is true to an extent. As I noted, I am on a forgiveness track, so I am a federal borrower with an income-driven repayment plan. We have avoided the negative repercussions from marriage by filing our taxes as Married Filing Separately. With our salaries we don’t take much of a hit filing separately rather than jointly on the tax side and avoid doubling up my loan payments as would happen if we filed jointly.

      Thanks for stopping by, Michael.
      Matt recently posted…Looking on the Bright SideMy Profile

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