Setting up finances as a couple
- Liz Pulliam Weston
- Recent columns
Many couples have only joint bank accounts, some have only separate accounts and some have a combination. Also, more on paying down a mortgage versus saving for retirement.
Dear Liz: My husband and I have been happily married for a year but have reached a disagreement on how to handle our finances. I think that we should have a joint bank account only to pay bills, with each of us putting in a percentage of our income into it while retaining separate accounts for everything else. He thinks that we should have just a joint account. I’m the main breadwinner, so it’s primarily my money that would be going into the account, and I’m just not comfortable having only a joint account. While I have no problem spotting my husband for things, I don’t like the idea of his being able to spend my money without my say-so. I’m also concerned that if we share an account we won’t be able to surprise each other as we will both be able to see what purchases have been made. Finally, I’m worried that we will both make plans for the same money and that will cause checks to bounce. What is your advice on how to handle this?
Answer: There’s no one right way to set up your finances as a couple, and it may take some trial and error to figure out what works for you.
Half of married couples have only joint bank accounts, according to a Harris Interactive poll, while 18% have only separate accounts. Twenty-nine percent take a combined approach, with both joint and separate accounts, and 3% have no bank accounts.
Those who decide to hold all their accounts jointly often say it helps them to be on the same page financially and supports the idea that they’re working as a team. Those who opt to keep their finances separate may have suffered through bad financial experiences with partners, including divorce, that makes them wary of mingling money.
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The joint-plus-separate approach allows for a bit of both worlds: joint handling of bills and other expenses while keeping some money separate for each person to spend as he or she chooses. If you opt for this approach, though, you’ll need to make sure that all the accounts are adequately funded. For example, the joint account will need to have enough money to cover all the bills you’re likely to face, and the separate accounts should have enough for reasonable personal expenses. Being stingy with the grocery money or a lesser-earning partner’s “allowance” shouldn’t be an option.
What may matter more than the configuration of accounts is how you handle spending decisions. Many couples have a “talk to me” amount, which means any purchase above a certain dollar amount must be discussed with and agreed upon by the partner. The limit could be $50, $100, $500 — it depends on the details of your finances.
You’ll also need to discuss how much to allocate for retirement, debt repayment, vacations and other big expenses, since those budget items affect how much is left over for other spending. And if you have a joint account, both of you should have online access so you can check the balance frequently to avoid overdrafts.
With a little experimentation and a lot of communication, you can find a way to handle your finances that works for both of you.