Finances For Couples

Peter's picture

Update: I've described a different method of handling your finances as a couple recently as well.

If you've ever been in a relationship where money became an issue, you know how important it is to be open and honest about finances with your significant other. When my wife and I first moved in together she suggested we start things off on the right foot by establishing a fair and open method for dealing with our mutual expenses. Looking back, I think this was one of the best things we've done together as a couple and is one of the (many!) reasons we're so happy together. Today I'll show you how we handle our joint finances and I'll tell you why I think it works so well for us.

Our Method

Let's start off with a diagram showing our system:

Finances For Couples: By taking the time to plan how you will handle your finances as a couple, you'll avoid one of the most common sources of tension in a relationship.Finances For Couples: By taking the time to plan how you will handle your finances as a couple, you'll avoid one of the most common sources of tension in a relationship.

The cornerstone to our method is our joint bank account. Every two weeks we each contribute an equal sum of money to the joint account. We use the money in that account to cover any expenses we incur as a couple. These joint expenses include things like:

  • Mortgage payments & property taxes
  • Utility bills such as gas, electricity, phone and internet
  • Home and car insurance
  • Car maintenance and gas
  • Food such as groceries and dining out together
  • Vacations
  • Etc ...

There are other expenses that we each have that are more personal in nature. We both cover our own personal expenses using our own money. Some examples of our personal expenses are:

  • Clothing
  • Eating out individually
  • Personal luxuries and hobbies such as massages or computer games
  • Medical and dental fees not covered by insurance
  • Personal investments and retirement savings
  • Etc ...

Occasionally, if one of us ends up paying for a "joint" expense using our own money then it's an easy task to transfer that amount out of the joint account into our personal account. Of course it also helps to let the other person know what you are up to when this happens!

So joint expenses are paid for out of the joint account and personal expenses are covered from our individual accounts. That's how we are doing things currently but there is always room for changes.

Tweaking Things

Whenever one of us identifies an expense that we think should be shared between us, we take some time to discuss it. If we decide we want to share the cost then we use the funds in our joint account to cover the new expense. If the new expense in a recurring one, then we might also need to increase the amount that we each regularly contribute.

For example, we are currently each paying for our own medical and dental expenses. However, if one of us developed a health problem and these expenses became large, we might decide as a couple that we want to share the additional cost equally between us. At this point we would determine how much extra was needed and increase our contributions appropriately.

The Benefits

Some of the benefits of handling our finances this way are as follows:

  • We always know that we are carrying our own weight as long as we cover our bi-weekly contributions.
  • We don't question each other's personal expenses. My wife doesn't give me a hard time if I buy some doodad and I don't bother her when she decides to splurge a bit on herself either.
  • It encourages us to discuss our expenses and keep things in the open.
  • It's way easier than trying to keep track of who paid for what and trying to keep things fair. Even small expenses are shared equally as long as they come out of the joint account.
  • It's a lot easier to track where our money is going since all our joint expenses are coming from the same account. We don't have to cross reference our accounts to see the whole picture.

Modify As Required

Our system might not be appropriate in all cases.

For example, both my wife and I are earning enough that we can each afford to cover half of the financial burden. If one of the people in your relationship earns significantly more or less than the other, you might want to consider each contributing different amounts to reflect the imbalance - possibly in proportion to your respective incomes.

So Far So Good

This method of handling our finances together has been working well for us for the past three years. We've had to tweak things a bit by adding or removing expenses but so far we haven't run into anything that wasn't easy to handle using our system. I guess the best measure is that we are both still happy and finances have never been a sore point for us at all.

I'm sure there are some other methods that people use to manage their finances as a couple or as a family. I'd be interested in hearing how you handle things if you are doing things differently.


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Great advice and I love the

Great advice and I love the diagram!

Peter's picture

Thanks Michelle! My wife was

Thanks Michelle! My wife was especially pleased with how her likeness turned out in the diagram.

The concept is so simple,

The concept is so simple, but for some reason you've stated it in a way that made something click for me. Thanks so much - I know I will be taking your advice in the future!!

Do you and your wife make

Do you and your wife make about the same amount of money?

oops :) i just read the

oops :) i just read the whole article. :P ignore my last comment.

Peter's picture

Julian: We both make enough

Julian: We both make enough to cover half our joint expenses. Although we don't make equal amounts, we both feel it is fair to contribute the same amount. What do you think would be best for two people earning different amounts?

Since my husband and I don't

Since my husband and I don't make equal income we each pay our bills in terms of our percent monthly income. For example, one of us makes 58% of our total monthly income, so that person would pay 58% of the monthly (joint) expenses. It works for us.

This would work well when

This would work well when incomes are roughly comparable (as you noted) and both parties are healthy. But, to play devil's advocate, my husband had cancer last year, which was roughly $10,000 in medical expenses. Should he be penalized by having his personal spending cut?

We treat assets coming into the marriage as separate, but everything earned while married goes into a joint account, and all personal expenses go on our own credit cards (paid off in full each month) -- but I see the merits of your solution for some.

Peter's picture

Yes, health & dental

Yes, health & dental expenses are on of the things that we currently keep separate, but they are something that we would consider paying for 'jointly' if one of us started incurring large expenses in this area.

Have you noticed any distinct advantages (or disadvantages) with your system of pooling all your income into one account?

We just put all of our money

We just put all of our money in a joint account. My husband recognizes that I make better financial decisions and it works fine...

My boyfriend and I started

My boyfriend and I started out with this method, and it worked while we were still new at living together. Now that it's been a couple of years and we're engaged, we've started putting all of our money into a joint account and spending out of it.

We haven't had any issues with personal expenses because we tend to talk any unnecessary expenses over with each other before we make them. If we can justify the expense to one-another, we get to buy it. Pretty simple.

When we buy gifts, they go on the credit card, because then you have enough time to give the gift before the card gets paid off and the expense is visible in Quicken.

Another option is to have the paychecks go straight into the joint account and equal amounts of spending money move into the personal accounts at regular intervals. This is an easy way to even out any income disparity.

Before getting married, my

Before getting married, my wife and I used this concept and it worked great. We had an income disparity and I made up for it by paying gas and dining out from my personal account.

Now that we're married, this concept didn't make sense anymore because if we're married, it's because we have the same values and similar life goals. As such, large expenses are discussed and debated. We keep it factual and try to focus on our common goals. We allow each other to splurge from time to time and we both like the safety of saving. And so far, it works.

One thing that helps is that we both came into the relationship with NO DEBT and with similar levels of assets. So when we got married, we were starting fresh.

If one of us had significant debt from a past life (let's say more than $10,000), this would change the situation completely and I would be all for your system.


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