Getting married is a big step. There are the emotional issues of joining with another person and pledging to love, cherish and support one another for the rest of your life, through good times and bad.
While you’re sharing your life with someone, you’re also likely sharing finances, too. It can be stressful if you don’t have a plan. Sitting down to talk about your expectations should be done even BEFORE you say “I do” – it’s that important to see if you’re both on the same page when it comes to handling your finances.
Naturally, what’s right for you may not be what’s right for another couple — money is an extremely personal topic. Finding common ground is the first step in a long, happy finance future for the both of you. Most couples choose one of three ways to handle their finances after marriage.
One Spouse Handles All of the Money
This is how Mr. Saver and I do it — it takes a LOT of trust. After we married, we opened joint checking and savings accounts and closed our old, separate accounts. We still have our individual 401(k)s and stock investments, but otherwise, everything is merged. I took on the responsibility of handling our finances and paying the bills, with Mr. Saver’s blessing (His exact words were, “I never have to pay a bill again!”) Both of our paychecks go into the joint checking account, from which I pay our bills, give us “allowances” for the week, and buy groceries. We both have debit cards that we use for gas and incidentals. Since we’re both pretty disciplined when it comes to not spending a lot of money, it works out well for us.
Another important aspect of this way of managing finances once you’re married is that you should talk about who is better suited for the “job” and ensure that there isn’t any resentment caused by one person being in charge. That way, there aren’t any surprises later when you and your spouse start arguing over money.
One Household Account & Separate Savings Accounts
This works if you both want some ‘mad money’ to play with each month. While there is one main account that holds enough money to pay all of the bills, two separate savings accounts are stocked with money for extras. If you need a new work wardrobe, the money comes from your account. The same goes for the partner who wants to buy tickets to a Yankees game. I advocate a fourth account for a savings/emergency fund to tap into in the event you’re hit with an unexpected expense, such as an appliance going on the fritz or a medical bill.
All Finances Are Separate
None of your money is pooled with your partner’s. You have separate checking and savings accounts, and each pay specific bills. You might split the mortgage payment and the utilities, or one spouse pays the mortgage while the other takes care of the car payment and utilities. This is the best choice for two very independent people. It also requires a lot of trust that the other person will do the right thing.
These are three of the most common financial management arrangements for married (and unmarried) couples. Do you use one of these, or do you have an entirely different system?
Great post! Really good insight. It’s always difficult to discuss finances and share money in relationships. Thanks for your advice. I recently stumbled upon this blog like I stumbled upon yours. I think they offer some good points and laughter about the topic: http://burisonthecouch.wordpress.com/2010/09/22/dolla-dolla-bill-yall/
Thanks for the post! I’d like to see more like it.
If one person is going to manage all of the finances then it is important for them to keep clear and accurate records. This should include an overview of income/expenses for each month. If something happens to the finance person then the other partner should be able to take over seamlessly.
Great succinct division of three different approaches! Many couples could benefit from thinking about adopting one of these money management methods.
–http://www.poweroftwomarriage.com
We have a joint account and separate accounts so we can be more accountable with our savings and spending. We know we will do anything for each other. It’s just nice to keep track of our own progress, so as to not start getting lazy and relying on another while we still have jobs.
@Sam: I agree, it would be easier to track our progress with separate accounts, if that was our aim. We have disparate incomes, so we believe this is the fairest way for us.
I handle almost everything and hubby runs our Scottrade account. I love budgeting and hate stocks but he doesn’t care about budgeting and loves the stock market, so it works great!
We do have individual fun money accounts at ING that get $75 every month, but we don’t withdraw from them directly. I just take out what we spent at the end of the month from each account (we use the credit card for everything so I can see where our money went and pay it off in full).
We use ING accounts and Smarty Pig for our emergency fund, house and auto fund, tax account, opportunity fund, vacation account, and both fun money accounts. It works well for me to compartamentalize…
@BITFS: You’re very organized, which is a great thing when it comes to finances.
I handle all of the bills and finances in our family, but I actually wish my wife would take more of an interest. It’s nice that she trusts me but I think it’s important for us to be on the same page.
I like Evan’s idea of a PowerPoint presentation. Maybe if I make a few fancy slides it will get her attention. 🙂
@Mike: I think a Powerpoint presentation would make Mr. Saver want to leave me, haha.
Before we were married, I read that the yours/mine/ours doesn’t work. For us, it was perfect. Because. Because we both work (disclosure – Jane on average makes 10% more than I do, both of us have variable incomes) and neither of us wants to share a checkbook.
So, each payday, our income is direct deposited into our individual checking. She’ll tell me how much to transfer out of her account to Joint, keeping what she wants for the next two weeks. I do the same, and then plan the next two weeks bills from the joint account.
I pay all the bills and handle all the investing for all our accounts.
The downside of this showed up some months ago, when Jane wanted to buy me a piece of art that was quite expensive. It wasn’t like she could skim that amount or hide the purchase. 15 years married and this was the first this happened. Gifts till now could either be bought from checking acct, or charged and given before the bill showed the purchase.
@Joe: Same here with the variable incomes. For us, pooling our resources seems to be the fairest way for us to pay the bills — otherwise, things could get petty. You and your wife’s strategy is a good example of finding the way that works best for you.
The Wife and I literally had to make a power point flow chart to discuss what was happening with our dollars. Once we did that our money discussions became so much easier!
@Evan: That is too funny — but you gotta do whatever works!
(His exact words were, “I never have to pay a bill again!”)
That’s kind of BF’s reaction – I’m a control freak and much more organised/good at getting things done than him, so it makes sense that I handle this stuff. I do try to get him to pay the Sky bill occasionally (he’s the one that wanted pay TV after all) and sometimes he wants in on doing the transactions and stuff, to be ‘involved’ I guess.
Our savings are separate, reflecting our different individual circumstances and what we came into the relationship with.
We did have the one person handles the account. But I think I had the belt tightened too much in regards to {lack of} mad money. So, now we have our separate accounts. And we split out finances down the middle. So we are each paying equal. And there is no bars on his mad money. 🙂 It is working well.
Now I have all my finances automated. Bills are set up to be paid at the beginning of each month from one account. Mad Money & Cash Allowance (gas, groceries, etc…) money is automatically transferred into another account. And then I have my savings account which is automatically set up to recieve a percentage of my paycheck. It works out great and I never go in the red.
Mr. Red and I have one joint savings account and two not joint checking accounts. I guess I’m afraid starting a joint checking for bill money would just be too many accounts. Our bills are $340 each month, so that’d be an account that never had more than $700 in it. It just seems superfluous to us.
Right now, Mr. Red gives me half the money for all bills each month, I deposit it in my checking, and I’m responsible for paying all of the bills on time. This makes sense to us because I’m the one on all the accounts, so it should be my responsibility.
Also, I hear ya on the “resentment” front. Mr. Red and I solved a potential hot potato last week by playing a game of rock-paper-scissors to determine who would be the “primary” on our savings account. 😉 Much more fun than actually having an adult discussion about it! hehe
@Kevin There’s some validity to the thought that combining finances allows you to save more. I’d be accountable to someone besides myself so every expense would be questioned thoroughly before I went through with a purchase. Thanks for that food for thought! 🙂
@Red: What’s funny is that I’m the primary on our checking/savings accounts and didn’t realize it until we got our first statement! Mr. Saver is primary on the mortgage, so it’s pretty fair, methinks.
Steve and I have the second one, household and separate accounts plus a joint savings account. It works for us for now.
Maybe one day in the near future we’ll get around to closing our separate accounts. who knows!
We do it how you do it. I take care of all of the bills and savings, and then give out fun money.
I tried to get her to do it once and she was like “nah, you can do it.” So I continue to do it. So far it’s working pretty good.
I guess I feel like we can save so much more if we combine our finances because we can control our spending better.
@Kevin: I also think it’s easier to save — once a month I push a set amount into our linked savings account, which we don’t touch. Other than that, I pay the bills and do the “fun money” thing. Mr. Saver doesn’t seem to mind that I’m ‘in charge’ and I make sure to keep him in the loop all the time regarding our finances.
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