How to Manage Money with Your Spouse
How do you and your spouse manage money? Do you pool your money together, or do you each have your own money? It’s an interesting question and one that we often ask couples that we coach. The responses that we get are unique as every couple seems to manage their finances in a slightly different manner, but a few common trends emerge.
-Pattern #1: Each individual manages their own money. They have their own bank account and bills that they are responsible for.
-Pattern #2: Each individual manages their own money, but they have a joint bank account that they each contribute money to cover the shared bills, such as rent/mortgage.
-Pattern #3: The couple pools money together in a joint account and it becomes their money. They plan their budget together and share responsibility for all bills.
Tom and I met in college (the very first day, actually). When we began dating (about a week later) we obviously had our own finances/accounts. Over the next four years we grew closer and began helping each other out with money as needed. Tom was very independent and mature, so he had a much better understanding of finances than I did. At the same time, I took out a lot more in student loans to make sure that I had extra money (which contributed to us having a lot of debt), so at times I would help Tom, such as if he had a large car repair bill.
After college we moved into an apartment together and decided to finally open a joint account, but we both kept our separate accounts as well. Although this was a step in the right direction for our personal finances and our relationship, we quickly switched to pooling all of our money together (changed our paycheck deposits to the joint account). Since doing that, we are now convinced that this is an ideal scenario for *most* couples. Below are 5 of the main reasons that we recommend this approach to your finances.
5 Reasons We Recommend Managing Your Money Together
Reason #1 – Simplify your Bill Paying
By far the biggest reason we had for opening a joint account, and to this day has been a life saver for our finances. After college when we moved in together, I remember us playing account limbo. I paid this bill, Tom paid that one. I bought groceries from mine, then didn’t have enough to pay a bill, so we paid it from his that month. We paid late fees for missing payments, or overdrafts for not having enough to cover. At the end of the day, this was simply wasted money that we easily could’ve avoided.
As soon as we got our joint account, it simplified everything for us. Now everything was paid from the same place. We knew exactly how much was going in the account, and we could better track what was coming out.
Reason #2 – Building/Maintaining Trust
I believe sharing a joint account creates a certain level of trust between you and your spouse. One of the biggest arguments couples have often revolves around finances. When you share those finances between one account, you have to trust your partner to be resonsible and they have to trust you.
This idea of trust also comes with the need to communicate. When you have a joint account, it forces you to open that line of communication with your partner. It may be awkward at first, but consistently talking about money and making decisions about it together will build trust between you over time. This will carry over into other parts of your relationship, and make you more comfortable having difficult conversations with each other in the future.
Reason #3 – Personal Accountability
A huge part of being in a relationship with someone is taking accountability for your own actions. It is so much easier to justify spending money on things you want, when you know your partner won’t see how much you spent. It’s also easier for you to spend money when you think “well, it’s MY money” as opposed to “this is OUR money.”
This reason has another side to it. If you know yourself or your spouse has a spending problem, the joint account may cause some contention between you. Communication in this case is essential. If you still find it becoming an issue, this may be an indicator that you need some outside help with your relationship.
Reason #4 – Consolidating your Resources
Many couples out there have very different dynamics when it comes to earning. For Example: Since having our daughter, we decided it was best for our family if I stayed home and Tom continued to work (which was one of our goals towards early retirement). That means Tom is the sole earner of our family’s income, outside of the income that we receive from our various businesses. Even before that event when we were a 2 income household, Tom still made the large majority of our combined income. If we had kept separate banking accounts, this could have easily become an area of resentment between us.
Instead, as soon as we got married, we immediately decided we wanted to open a joint bank account. At the time, we also each opened personal checking accounts that were connected to that joint account. This gave us the best of both worlds. We could pay all of our bills from one account, but we could also transfer money into our personal accounts if we needed to buy a gift we didn’t want the other to see.
Reason #5 – Track Financial Goals
My last reason is pretty self explanatory. While it is not necessary, having a joint account makes it easier for you and your spouse to create and track your financial goals. Over the years of sharing, Tom & I have developed and improved a financial worksheet. We use it for multiple purposes: budgeting, paying bills, income/expense tracking, and debt tracking. This helps us communicate and make sure that we understand where our money comes from, where it goes and how much extra we have each month once bills are paid.
There is not a one size fits all for couples and dealing with their finances, but there are some patterns that many successful couples emulate and have in common. These patterns include trust, open and honest communication, individual accountability and working together towards your goals. As long as you have these traits, you and your spouse will be on the right path to success with your finances, relationship and life.