The relationship between love and money has changed. For most of the 20th century, the default way for couples to manage their finances was to merge everything into one account. In many cases there was only one primary earner in the home and the other person was reliant on that earner for their livelihood. Today the majority of households have two earners and couples are getting married later in life, after years or even decades of financial autonomy - this has created a paradigm shift in the way we think about managing money in our relationships.
If you and your partner are considering different ways of managing money together, we’re here to help! Before you begin talking about this, remember that there is no one size fits all - there are many factors that you and your partner may want to consider before deciding how to handle your finances together. Some of the things you should discuss include:
There are three primary methods that couples can use to manage their finances:
Those who choose to keep their finances fully separate usually maintain their own checking accounts, savings accounts, and investments. As a result, if you choose to live together and/or have shared pets, children, or purchase large assets together, you will likely need a comfortable method of accounting for who owes who for which bills. Some systems that work best for couples with this set-up include keeping tabs of expenses in a shared Google Sheet or Excel file and settling up periodically (ex. once per month) or using Splitwise to track expenses. Often there is one person who spearheads this process and will let the other person know when it is time to settle up - it’s important to define how you will manage this process together so that it doesn’t feel awkward to one person to ask to be reimbursed.
Among those who choose this set-up, some couples prefer not to keep track of who owes who and just trade off paying for expenses. This usually works well in the early stages of the relationship but can start to feel unfair when you have many larger expenses such as shared rent, pets, children, etc. If you choose not to keep track of expenses, it’s important to ensure that you and your partner are both comfortable with this approach and that sometimes one person may spend more than the other.
Some couples prefer keeping finances fully separate because it makes it easier to split assets in case of a separation down the road. However, If you are married, keeping your finances fully separate doesn’t necessarily protect your assets in the case of divorce. Many states consider all assets earned during the marriage to be joint, regardless of which accounts they sit in. If you feel strongly about maintaining separate finances, it is best to have a pre/post nuptial agreement to reinforce the separation of finances.
In a “yours, mine, and ours” set-up, couples choose to have some money separate and some money combined. Oftentimes, couples maintain the separate accounts that they had prior to meeting each other and then also open up a new joint checking account, joint credit card, and/or joint savings account in both of their names. This approach enables each party to maintain a sense of independence and also facilitates an easier way for both parties to participate in shared expenses without worrying about reimbursements.
If you choose to fully combine your finances, you and your partner will likely open up a new shared checking and savings account and new credit cards in both of your names and transfer all of your existing assets into those new accounts. This is the most traditional model and the way that most married couples have managed their finances historically. This approach enables you to approach all financial decisions from a team perspective but also means that you need to be more on the same page about how you spend, save, and invest your money. Early research shows that couples who have fully combined finances are more likely to stay together, driven by feeling more like they are on the same team and thinking of everything as “our money”.
We hope that laying out the three primary ways that couples choose to manage their money will be helpful to you and your partner! Remember there are no rules here - you and your partner can mix and match the elements that work for you from each model. Many couples today are choosing to do just that, for example by having fully combined accounts but separate personal credit cards that they don’t have access to and withdraw from the joint account to maintain a sense of privacy. The most important thing is to speak openly with your partner about what’s important to each of you when managing your finances, understand what past experiences may influence those choices, and choose an approach that feels comfortable to both of you.
If you are struggling to decide how to manage your finances as a couple, you may want to consider working with a financial advisor. A financial advisor can help you to assess your current financial situation, develop a budget, and create a financial plan that meets your needs and goals. Have any questions about managing finances as a couple? Check out our socials for more information or download the Tango app below!
-Jacklyn Rome, CEO & Founder, Tango