Money touches every aspect of your life – and we all have different experiences and perspectives on personal finances. How do you manage conflicting opinions, desires, and values when it comes to managing money together?
Today, we’re talking about how to manage money as a couple. We’ll not just provide some big-picture tactics but also share the details on what we do and how we divide the responsibilities of financial planning and management in our household.
This is a serious topic, considering 48% of people report fighting about money; 60% of those fights tend to be about spending. 41 percent of Gen Xers and 29 percent of boomers report that money was a direct cause of a divorce, and some research shows that disagremeents about money are a leading predictor of future divorce.
Money touches every aspect of your life. And everyone has different money mindsets, perspectives, experiences. It’s almost like a setup for an argument!
It’s inescapable, and it’s also very likely that you are going to disagree on the right course of action more than just occasionally.
So how do you work it out? How can you effectively manage money together?
3 Approaches to Managing Money with Your Partner
There are three very general approaches that most people take:
- Combine everything
- Keep everything separate
- Combine most things, but maintain a few separate accounts for specific purposes (for example, you might have a joint checking account where paychecks go each month, but you each have your own checking account where you pull a small amount of your paycheck into for personal spending that you have full control over)
One thing you don’t need is one specific system or way of doing things. Many approaches can be effective, productive, and successful.
Every relationship has unique dynamics and what works for one couple would feel like a struggle to another, so know that there’s not some ultimate, “correct” way to handle money together.
The only exception to that rule might be communication.
The Bedrock of Successful Money Management within a Marriage
Success in managing money jointly with another person starts with good communication.
You don’t have to be an expert in any particular topic area to do well at money management with a partner. You simply need to sit down together and discuss things like:
- What you see in your financial life that works, and what doesn’t
- What topics or concerns you’re not sure about
- What specific questions you have
- Where you feel strongly and what feels like a boundary or non-negotiable to you
- What opportunities you might have or challenges you need to navigate
This isn’t an exhaustive list, but it should help cover a lot of ground when you talk about your finances with your significant other.
Simply talking about what’s going on is progress toward a better outcome, both financially and within your relationship.
In fact, communication is one of the hallmarks of a couples money management system that works – regardless of the details of that system.
What Everyone Who Manages Money with a Partner Needs to Do
There are many ways you could handle your finances together in a way that works for your relationship or family, but all of those strategies are going to have a few things in common:
- Open communication, and even erring on the side of “over”-communication. Avoid assumptions and seek clarity from yourself and each other. Practice active listening to show that you hear and understand.
- Honesty, with your partner and yourself (for example, be able to say “I don’t know”).
- Be proactive and fall in love with the process. Know money stuff can be difficult and emotional, and learn to sit with that discomfort – know that it’s normal, and it’s also okay to feel how you feel about finances.
- Keep everyone involved, even if you have separate finances or different responsibilities. An equitable relationship is not one that is perfectly 50/50 every time.
- If you need an expert, find one. You don’t need to waste time squabbling with each other over who is right or who has the better strategy; you can go, together, to an expert in whatever issue you need to resolve and say “can you help us work through this?”
Remember, this is something you’re doing together.
That’s really the backbone of any financial management system for a couple (alongside communication): make sure you are both involved.
How to Get Each Partner Involved in the Financial Planning Process
Here’s what that can look like, again with the idea in mind that things don’t have to be 50/50 to be fair, to work, and to function well.
Both people should understand:
- The general, big-picture plan and long-term goals
- What each person is responsible for
- What the questions, unresolved issues, or problem areas are
- The inventory of financial life: assets, liabilities, insurance policies, important contacts (like CPAs, attorneys, or other professionals), where accounts are located and how many of them are there, the status of items like estate planning, and so on.
You don’t have to know every last detail of these things, but you should have a general understanding of the “where, what, how much, and why” behind the key areas of your financial life.
If nothing else, you both need to be aware in case something happens to one of you. You only do a disservice if the uninvolved spouse is suddenly left with the responsibility and the burden of not just managing a financial life alone, but of knowing where to even begin if they have zero clue what the setup looks like.
This becomes critical if you are a staunch DIYer and your partner has no idea what you’re up to. That’s a distaster waiting to happen.
What Won’t Be Effective When Managing Money as a Couple
On the other side of “what works,” here’s what you need to watch out for when managing money together with a spouse:
- Having one person be in charge of everything, with the other partner completely uninvolved (or simply in the dark about the details).
- Keeping things from each other (this applies even if you manage money separately; you shouldn’t hide things, and each person should have an understanding of the overall, comprehensive financial picture at the household level even if you maintain separate accounts).
- Blaming, shaming, or criticizing.
- Lacking commitment to the idea of a “team effort” or an ongoing process; there’s no “end” to financial planning. There are always financial decisions that will need to be made, and ideally, you’ll make those decisions together as the couple you are.
That covers some dos and don’ts for working together around financial issues. With that groundwork, let’s discuss what we personally do in our own relationship and financial life.
How a Financial Planner Manages Money with a Spouse
Longtime BYH listeners and readers will know Eric and Kali’s starting point. It’s all about the values – and then we follow that up with a number of other steps and actions to make sure we’re not just planning and managing well, but implementing and taking action too.
1. Discuss Values and Goals (and Set Goals That Align with Values)
We look at values every few years; those shouldn’t shift too much because they are core values. They do evolve over time, but not annually. Goals might shift faster.
We go through a big list of potential core values, and identfiy 5 that speak most to us. We do this separately to develop individual values, and then work together to develop a list of jointly-held, family values that help guide our goal-setting and financial decision-making.
(Ours are contribution, togetherness, play, growth, and wellness – in case you were curious!)
When we make specific money choices, we can check back against both the individual and the fmaily values to ensure we’re making decisions that are in line what our stated core values.
2. Complete Big-Picture Financial Planning
We do a big, often hours-long planning session once a year. This is where we:
- Update any information in our existing plan as necessary
- Run long-term projections
- Evaluate various scenarios to help decide on potential courses of action
- Check in on progress toward goals
- Adjust any frameworks as needed (like savings rates or spending plans)
We also sit down on a quarterly basis for a mini planning session (that still make take several hours!). In this quarterly meeting, we’re looking more granular: we’re evaluting specific line items in the budget, specific short-term spending decisions, confirming we’re tracking toward yearly goals like amount of money saved.
3. Implement Our Financial Plan
This is where we start dividing up responsibilities and who is doing to actually implement the plan we made. Eric takes the lead on investment strategy, tax planning, and insurance. Kali manages cash flow, budgeting, and tracking of all details (from individual transactions to scheudling the meetings where we’re sitting down and discussing our finances).
This system has evolved over time, and most couples will likely find this as well. What works for you when you start out will shift and change as your relationship develops and deepens.
4. Refer to Our Team of Professionals
We also use experts to help us. We don’t do this in a vacuum!
Even though Eric is the expert as a certified financial planner, he also works with a CFA for investment strategy, a CPA for taxes, an insurance broker and an estate planning attorney for protection planning.
What Approach Should You Use to Managing Money as a Couple?
Ultimately, that’s a personal decision you should make with your partner.
But if you’re looking for a recommendation… we give ours at the very end of this episode:
Further Reading & Links from This Episode on Managing Money Together
- Details on the survey responses around money and marriage, via Marketwatch
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