It seems like a straightforward question, but for many new couples it’s a minefield.
Should you combine everything into joint checking and savings accounts? Have individual accounts and put a portion of your income into common accounts? If you keep some of your money separate, does that mean you don’t love each other as much as couples who combine everything? Should you split up your money based on specific goals, like starting a business or funding travel?
If you and your new spouse are having trouble deciding how to manage your bank accounts, don’t panic quite yet.
We talked with four personal finance bloggers to get their best tips for managing joint finances. Turns out (surprise) there’s no one system that works for everyone, but there are factors everyone should consider. Here are some tips that will help you find a process that works for you and your relationship.
Tip #1: Start Talking Early
Kara, the mind behind The Frugal Feminista and a personal finance coach, has been married to her husband for two years, but they started talking money long before that.
“We had a critical conversation about finances about six months into dating, once we both felt like we were going to be together long-term,” Kara says. “I knew I needed a partner who was responsible about our finances and shared my priorities, so it was important to talk about those things early.”
Didn’t start talking about things quite that soon? Don’t panic; it’s never too late to start getting on the same page.
Natalie of Budget & the Bees and her husband began talking about their finances once they were engaged; that was when they discovered they had very different ways of managing money. “Understanding each other’s perspectives came from realizing that our views were shaped by how we were raised,” she says. Keeping that in mind helped them agree on how to work towards long-term goals, such as saving and paying off debt.
If you are looking at a long term relationship, don’t wait to figure out a financial or banking system. Start talking early about your financial priorities, debts, and how you feel about dividing up your money.
Tip #2: Consider the Emotional Side of Things
Emotional? But weren’t we talking about banking?
Turns out, deciding how to manage their money is one of the most emotional decisions that couples have to make.
“Before you get to the tools, you have to unpack what money means to each person,” Kara points out. “Everyone has a different financial personality, starting with the messages given to you in childhood, and you have to come to an agreement.”
For her, that means that she and her husband both have independent checking accounts; from these they each put a percentage of their income into common savings accounts, as well as joint checking for monthly bills.
“As a feminist and a grown woman, it’s important for me to have money that is just mine and I don’t have to ask permission to use it,” she explains.
Shannon, the financial advisor behind Financially Blonde takes a completely opposite approach. “If you are not willing to put everything together financially, then you have one foot out the door emotionally. From my vantage point, couples with separate accounts are not as connected emotionally as those with joint finances.”
She advises her clients to merge their accounts, then set an “allowance” that each person has per month to spend at their own discretion.
Even when deciding something as seemingly mundane as where to stash your money, you can find yourself facing all sorts of emotional trigger-points. Don’t take them personally, but do take them into consideration.
Tip #3: Pick a System That Fits You as a Couple
When trying to decide how to split up your accounts, your system doesn’t have to look like anyone else’s. Even our personal finance gurus didn’t all do things the same way.
Shannon and her husband put their incomes into a single checking account, and from there they make payments into a common brokerage account for savings and investments. They even share a joint credit card.
“When we first married we had a joint account but two individual accounts as well, and we definitely treated our individual accounts with more care and concern,” she explains. With everything pooled together, though, they feel like they work more towards common financial goals.
What if you want to split things up more? Sarah of The Frugal Millionaire and her husband have multiple accounts between the two of them. “I have my own bank account and savings account, my husband has his own business account since he works for himself. We share one joint checking and savings account.”
Few things are more personal that personal finance, and everyone’s needs will be different. Whatever system you end up using, make sure it’s based on your own goals, priorities, and spending habits, not just what other people are doing
Tip #4: Reevaluate Often
One thing all our finance gurus agreed on was the need to take a second (and a third, and a fourth) look at you systems. Not just at the beginning of a marriage, but on a regular basis.
While living internationally for several years, Natalie and her husband found it easier to stick with joint accounts, as well as a joint credit card. But that doesn’t mean that they’ll never change their system.
“He’d like us to have an account for bills, an everyday spending account, an emergency account, a travel savings account,” she says. She’s less sure that many accounts are the way to go, but thinks the important things is to meet in the middle. “Be open with each other, and you’ll reach a decision that’s best for you.”
Sarah agrees wholeheartedly. “The accounts are just a formality,” she points out. “You have to have them. As long as you are communicating, you can work together to meet your financial goals.”
Those goals may change, so what worked this year may not work in the next. The important thing, all the experts agree, is to be open and honest. Once you’ve done that, you’ll be able to figure out a system that works for your marriage.