Yours, mine, and ours. These are some key words to think about when beginning or revisiting a conversation concerning money management with your partner. Some couples don’t put that much thought into the merging of finances – but that is a big mistake.
Money can become a source of conflict and tension that can easily be avoided with open dialogue and planning. However, there is no “best” method to money management. Every relationship and situation is different. It is important to be well informed about the options so that you, as a couple, can choose the best plan that fits your needs. The most important factor in discussing finances is agreeing equally on a plan that works for both of you.
Joint accounts offer the most transparency in money management. Both individuals have full access to the account and can remain fully aware of the money flow. For this plan to work, the idea shared must be, “this is our money”. This plan can be troublesome for couples in which one or both of the individuals want autonomy over spending without the watchful eye of the other.
Having completely separate bank accounts allows each individual the opportunity to manage and control separate amounts of money. This option usually works well for couples in which both partners have careers or in situations in which one member has debt or bad credit. Having entirely separate accounts allows the other spouse’s finances to remain unaffected. This may also be a suitable option if you or your partner have markedly different spending habits that could cause friction if the money was merged.
The most common method is a combination of the above outlined situations. This scenario provides a small amount of autonomy, yet also offers an easy way to manage joint expenses. A common system used is to place a portion of each person’s earnings into the joint account to pay bills. Another option is to deposit all income into the joint account and to set up an allowance for each individual to spend on whatever they wish.
Learning how to best manage your finances together will be a trial-and-error method. Plans that work for Mr. and Mrs. Jones, won’t necessarily work for you and your partner. It is important to learn about your personal income and expenses and to develop financial knowledge together. Track last year’s expenses in order to learn where your money is going. This information can be crucial in learning how to effectively manage money and to reach your financial goals.
It is becoming common for those with assets contemplating marriage, or already in a marriage, to consider viable options available to protect their assets in the event that marital bliss turns sour and ends in divorce. It is important to know the implications of choosing to combine assets, such as money, into a joint account. In order to protect yourself and your assets, consider meeting with an attorney and financial planner to set up a plan that works for you and your spouse. These professionals will be able to address any concerns and create a financial strategy catered to your unique situation.