How to manage finances as a couple?

Managing finances as a couple, whether you just moved in, or get engaged, or just married, can be a sensitive topic that is difficult to start. However, as uneasy as it sounds, it is very important to have finances understood by both parties to continue a healthy and sustainable relationship. The number one cause of divorce is driven by finances. To be on the same page on finances can help raising your relationship to the next level.

From practice standpoint, there are a few common structures couples use. The best financial structure is vary depending on if you are married or not.

1.Two separate accounts with one joint account.

This is considered as a popular structure because it allows each person flexibility in managing their own finance, but pull in for the common spends.

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I believe that this is the best structure if you live with your partner, but not married.

When two people live together with an understanding that they are not married, they are equally responsible for living expense. It is a fair way to have a joint account with equal contribution for things like rent, furniture etc.

I emphasized equal because, if you both agree that you are not living like a married couple, then you are sharing a space due to convenience of meeting each other. No one person is taking more responsibility financially than the other person.

There are some situations when one partner makes significantly more than the other and wants to have a higher level living standard. In this case, it would be better for both parties to agree on a contribution ratio like 60-40 or 70-30 etc. so that the person who makes less income does not feel stressed about the living beyond the means.

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2. Joint accounts with all incomes pulling in, no separate accounts.

I personally think this is the best way managing finance for a married couple. Marriage is to combine two people lives together, that includes finances. To completely merge each other’s finances and share the responsibility of spending and saving help to build the trust and work towards the same financial goals.

Married couple should have frequent discussion on financial targets, budgets, spends etc, especially when there is significant spend involved.

Marriage takes 100 percent committed to each other. If you believe that your union will stand the test of time, then money is joint, not individual.

This includes families where only one person works, one person earns significantly more than the other, one person has more debt than the other.

When you are marries, his money is hers and hers is his, including debts. If you don’t think it is fair, then you should think twice if you should even get married.

let’s picture a time when one person owns much more money than the other. What will happen? He goes to beach for vacation when she stays home? He is stressed about debt when she is partying?

If those happen in a marriage, that marriage is about to end.

3. Separate accounts only

This can be the case if you just want to live together for the sake of convenience with longer term thoughts. It might be only six months before you decide on next step. You keep your finance separate and pay the bill as needed or spent. Since you don’t have a joint account, it is a good experience to know if both are responsibly pay timely to the bills.

In general, how you manage money as a couple goes with how close you are with your partner. The closest relationship with strong commitment will not distinguish money as his or hers. But it is also a good idea, when relationship is new and developing, make sure money is separately managed to avoid stress in the beginning of the relationship.

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Communicate financials to each other

We all understand communication is a key element in a partnership. When it comes money, it is even more important. If you don’t have a same goal, or understanding of spend, it will quickly ruin your partnership.

Having a great budget, stay off debt and invest your money are all very important steps to align. A team is stronger than a person. When you have support from each other, you can reach to financial target faster. Finances is the fundamental factor to many other elements in life. To have connection in finances builds stronger foundation and leads to long lasting relationship. Don’t stay shy of this discussion and start communicating each other from today.

Simple Wealth For Women is a blogging website focusing on financial discussions. I help women to crush debt, learn how to invest and make more money. I show you simple approach and provide you with specific ideas to help you get to financial freedom and build an amazing life.

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