Love & Money: Yours, Mine and Our Planning

Michelle Barron |
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Money can be a point of contention for many couples. Between everyday living, significant expenses like taking vacations, buying a house, raising a family, and retirement planning, relationships are often filled with tricky financial situations. Even more problematic is if you and your partner have different views on economic matters; one of you can easily say no to the fancy name brand latte, and the other says yes to the offshore fishing boat with accessories. Deciding how to manage yours, mine and ours while planning your financial future can be the key to your success. Unfortunately, as with many things when it comes to finances, one size does not fit all.   

Just because you’ve agreed to share your life with a partner or spouse doesn’t mean you have to share your money. Although many couples combine finances, others keep them separate, understand both styles can work out just fine. While neither strategy offers guaranteed financial peace over the other, planning together has the potential to help put you on the path for financial success individually and as a couple. 

Communicate with your partner about money priorities and a primary budget

Whether you keep your finances separate or share accounts, you’re going to need to learn how to talk to your significant other about money. This includes setting a budget, agreeing on shared goals, and deciding how to cover significant expenses. Think about the necessary living expenses you’ll both use as well as current financial obligations.

  • Rent or mortgage payments 
  • Utilities
  • Car payments, maintenance, and gas 
  • Internet and cable 
  • Groceries 
  • Phone bill 
  • Pet-related expenses 
  • House maintenance and supplies 
  • Toiletries 
  • Insurance 
  • Subscription services 

Once you have a list of agreed-upon expenses, you can then develop a process for covering things that fall outside those categories, including a maintain a cash reserve, long-term saving goals, and entertainment expenses. 

Decide how to divvy up expenses

Compiling the list is only half of the planning. Deciding how to split the expenses is the other half. If you are already in a committed relationship, I don’t have to tell you that you will not magically agree on every priority. Deciding on a framework for splitting the bills so that no one feels guilty for spending money can help reduce potential frustrations.  Consider the following basic strategies:

Combine 100% of everything into a joint account and pay for everything from bills to fun stuff from there. It will mean discussing big purchases before deciding to buy something. For smaller purchases, it might just be your partner giving you a heads up when they’re about to purchase something, so you both don’t end up spending the same money. Your partner can see everything you buy which could mean no surprise presents.

You could split everything 50-50, which seems like it could be an easy solution and works especially well for couples with roughly equal incomes.  By dividing things evenly, you can create a form of equality in the relationship. You might choose to separate each expense as it comes in or reconcile at the end of each month.

If your salaries aren’t even close to equal, that might mean one person is putting entire paychecks toward shared bills, while the other has a lot of extra money to spend. You could consider a strategy that may suggest a fairer starting point with a proportional split. Combine your incomes to get your total household income. Consider the percentage that each partner contributes. Apply each partner’s allocation to the budget you created to determine how much is each partner’s responsibility.    

In a world where many people are trying to figure out how to manage money successfully, understand there is no “right” way to spend money or split expenses. I have seen clients successful with all of these strategies.  Consider any variation to the basic styles to accommodate your personal situation and comfort level. Figure out what works for you and your partner.

Don’t lose sight of the big picture

In addition to managing the day-to-day expenses, it’s important to coordinate long term.  You and your partner should share a vision of your ideal financial picture and how you’re going to work together to achieve those goals, especially retirement.  Even if, as a couple, you decide to keep your day-to-day finances and expenses separate, there are just too many factors that integrate to plan separately.  For example, social security benefits and tax rates are very much linked together as a married couple.  I find it nearly impossible to help couples plan for the future without putting both sides of the financial situation together. 

A key to successfully managing finances within a relationship is to talk about money regularly. For some couples, this may be easy; for others, money is a source of stress, anxiety, and disagreement. Consider your situation; you might have to be a little more mindful about when and how you approach your finances. If talking about finances doesn’t come naturally to your relationship, try scheduling a regular talk. Once per month before most of your bills are due is a reasonable interval. If it’s a stressful conversation for one or both of you, try to set yourself up for success with your plans around the talk. Plan to have a fun date night immediately after your conversation as a reward. Or leverage a financial planner to guide the discussion. 

Of course, just because you make one choice at the beginning of your relationship doesn’t mean you can’t change your mind later on. Guidelines and open communication are crucial to avoiding disagreements and awkward situations around your finances while allowing you to set the path for achieving your financial goals together. Let’s face it as a couple, you succeed together and both of you achieve your individual goals.  

This material is provided as a courtesy and for educational purposes only. Please consult your investment professional, legal or tax advisor for specific information pertaining to your situation.