If you ask 10 different couples how they manage their money, you’ll probably get 10 different answers… including something along the lines of “We don’t. Budget? What budget?”
Let me go ahead and say that might be the only wrong answer here.
Some couples keep separate finances, both before and after marriage. Others combine everything in a complete “what’s mine is yours and what’s yours is mine” approach.
Still others do a little bit of both, keeping joint accounts but also maintaining their own checking or investment accounts.
Ultimately, there’s not a wrong and a right here (well, except for, again, not doing anything at all to create a systematic way to manage your cash flow).
But there are pros and cons to each strategy, and there are some smart approaches to consider as well as less productive behaviors and decisions that you might want to avoid.
To help you optimize your financial life, together, here’s what to think through.
Different Strategies to Consider When Managing Money Together
In general, what I see work well for various couples includes:
- Keeping open lines of communication at all times.
- Being honest and transparent with one another.
- Staying proactive and engaged in the process.
- Making sure each person understands what’s going on with the household finances — even if you hold some accounts separately.
The reason that last point is important is because if something happened to one of you, you don’t want to leave the other person with the difficult task of straightening out an estate they don’t know the first thing about.
Even if one of you feels more competent with money, or one of you enjoys working with the numbers and the other hates it, you each need to at least be involved in some capacity.
Which brings up another common trend in arrangements that work well: you can each acknowledge your weaknesses and own your strengths.
For example, my wife and I sit down and have financial conversations close to daily (what do you expect from two people who run a financial planning firm?).
But just as with the business we run together, she’s focused on operations and is highly detail-oriented and process driven. Meanwhile, I’m focused on the vision and ensuring we’ve set an appropriate course to get us there.
Kali manages the actual tracking of our spending and logs all our transactions into a spreadsheet that we can eventually review together, because she never misses a thing — even if it’s as little as two or three bucks for an iced coffee.
I tend to manage the bigger-picture financial planning items, like coordinating insurance policies and executing on management of our investments, because I excel with strategy (plus, I have the training, experience, and education that my job requires and I do this every day for countless households).
We each have areas where we shine and places where we’re not as strong, so we try to play to our strengths while supporting each other’s weaker points.
And what about the things to watch out for?
Red flags in managing money as a couple, or things that just don’t seem to work as well, include:
Having one person be “in charge” of the money or the finances. You’re a couple and you share a household and a life — you should each be aware and engaged in the financial planning and decision making processes that dramatically impact that life now and in the future.
Keeping things so separate that the other person doesn’t know about them. You can maintain individual accounts, but hiding them or other financial details from each other is a serious issue.
Blaming and criticizing the other person when things don’t go well. Everyone makes mistakes and bad decisions, and instead of attacking each other, a better course of action may be to work with a professional who can help you get your financial life together.
While there can be many money management systems for couples that work well, the best strategy will never survive critical errors like these.
How We Managed Money as a Couple Before and After Marriage
Here’s one real-life example of how you could split finances in a way that feels fair, based on our personal experience.
The way that my now-wife and I split finances before we were married was based on income. We each put in a percentage of our incomes toward shared expenses, like rent, based on how much we each made.
This was more complicated than simply splitting things 50/50, but that reflected the reality of our financial situation since we were self-employed.
It also reflected our preferences as individuals; we’re both “money people” and like to be eyeballs-deep in financial conversations and strategies.
Because we both ran our own businesses and our incomes changed from year to year, it felt like the best way to keep things fair and to prevent one person from feeling more financially burdened than the other.
We also made sure the other person could always contribute what they needed to into their own retirement accounts, and there were times when my wife (then-girlfriend and eventually fiancee) would help out with some joint expenses so that I could contribute more to savings, and vice-versa.
It was a very active, always-evolving process, which suited us well because, again, we’re both finance people and enjoy talking about money.
For people who may not geek out over financial conversations so much (or for those who feel downright anxious or stressed about dealing with money), you might want to use a more general guideline that requires less tinkering and maintenance, like splitting fixed costs evenly or at least setting a specific dollar amount rather than using a percentage that each person will contribute, even if it’s not a 50/50 split.
When Kali and I got married, we combined all of our finances because that made things much simpler for us — but another way to do this if you don’t want to shove everything together and hold everything jointly is to use a bucketing strategy.
You can have “ours, mine, and yours” accounts. Keep a joint checking account that you each contribute a certain amount of money to each month and pay shared expenses from/contribute to jointly-held goals or investment accounts with.
Then you each have your own personal checking accounts (where your pay is deposited), and once you make your agreed-upon contribution to the joint account, you can both do whatever you want with the money remaining in your individual accounts.
This can provide some more freedom and a sense of autonomy for couples who have really different money management styles, while still syncing up on both joint expenses and joint investments or savings.
Don’t Ignore Your Formative Experiences with Money
Another thing to consider beyond trying to use some basic guidelines or rules of thumb is that you and your partner likely have different formative experiences with money, and therefore you might approach your finances with different mindsets, values, and priorities.
That’s not a problem — but it’s important to address where you might not be in perfect alignment with each other.
Money mindsets matter. Money scripts are real and they can drive our behavior if we’re not vigilant about developing our self-awareness and asking questions that get at the “why” of our actions.
This is where communication becomes critically important — and potentially very difficult.
As humans, we don’t tend to intentionally do irrational or ill-advised things. If we choose to do something, it’s usually because it made sense to us.
It might not, however, make sense to our loved ones. It’s like Kali once said to me when we were discussing something we disagreed on: “I know you’re trying to communicate and it makes sense — but I just don’t speak your language.”
That was perfect, because it acknowledged that she wasn’t trying to tell me she disagreed because she thought I was wrong or had somehow done something wrong.
And even though she was listening and acknowledged she heard me, she admitted that she didn’t understand me, and that what I was saying wasn’t clicking for her.
The next time you disagree about how to manage money as a couple, consider that perhaps neither one of you is wrong.
Perhaps you’re just speaking a different language because you understand money at a fundamental level in different ways.
That might help ease the frequency or intensity of financial fights, and open the door for a more patient understanding of how each of you thinks and feels about money.
Implementing a System That Works for You and Your Significant Other
As a financial planner who mainly works with couples in their 30s and 40s, the most important thing I’ve learned is that there is rarely one right way to do things — and that includes how you split finances with a spouse or partner.
Across the hundreds of couples that we’ve done financial planning for, we’ve seen a variety and mix of systems… because the dynamics of each relationship are different.
The “correct” approach for you will be based on you and your partner’s preferences, feelings about money, management styles, and specific strengths to play to (or weaknesses to guard against).
Don’t be afraid to try out different ideas and experiment until you develop a framework for sharing financial responsibilities that feels equitable to you and your significant other.
And above all else, seek to openly and honestly communicate around points of difference or areas where your partner’s take on a financial matter might not make sense to you — and actively listen.
You might have different approaches, but that doesn’t mean one of you is automatically wrong and the other is right.
Managing Money as a Couple Might Be Easier with an Objective Party in the Room
Working with a fee-only financial planner can really help you and your partner figure out some of the hardest issues or things that you strongly disagree on, because that planner can be the objective, independent third party.
Of course, that planner can also serve as expert guide for both of you. So often, I’ll have a couple sit down for a meeting where each person is absolutely convinced that what they believe about a financial situation or decision is a fact…
And as it turns out, one person (or both people!) misses information lacks a comprehensive understanding of something like a tax law or investment account rule. That leads to fighting with their partner over something that’s not even objectively true!
Working with a planner can help mediate those conversations, and ensure that you’re both working with the actual facts so you can make better financial decisions — together, and with confidence.