Whether you just got married or you’re living together, the topic of finances is a big subject to discuss. There’s also a big chance that everything between the two of you is not exactly equal. Someone probably has less or more debt, has a higher salary, likes to save, and the list is endless.
It is often thought that when couples are together for the long-term, that they combine everything. However, joint bank accounts and the other methods all have their positives and negatives, so couples should think about the pros and cons of all of their possible options before making such a large decision.
There is no one right way. Different things work for different people. Maybe you want to keep all of your money separate and divide everything completely in half in hopes to avoid any potential conflict? I wish it were that easy.
Here are three ways on how you can possibly separate/combine your finances:
Obviously, this is where everything is combined and nothing is separate. Merging all accounts makes everything easier as there are fewer accounts to keep track of. Having joint accounts can make everything much easier, especially if one person makes substantially less. Having joint accounts allows each person in the relationship to have access to the couple’s money when they need it.
A negative is that if something does happen in the relationship, you might not be financially safe as if everything were separate. If the couple separates, the money in a joint account can be extremely hard to separate.
Ways to make joint everything work: To have everything joint, you need to ensure that there are regular money talks (try to have weekly or monthly money meetings). If there’s ever a purchase to be made (such as anything over $100 or some other set amount), then this purchase is talked about.
Some Separate and Some Joint Accounts
This is where some accounts are separate and some are joint. Some couples like the have joint checking accounts where there income is sent to (so that bills are paid for and everything is divided fairly), and then the retirement and savings accounts are separate. This way each person in the relationship can spend money the way that they choose to do so.
This method works well if one is a spendy spender and the other saves like crazy for things that they truly want. Or maybe someone in the relationship would rather pay off their debts themselves instead of having the other have to bear the burden of their own debts.
Having some joint and some separate accounts provides the benefits of what the joint account method brings but also the independence of finances being somewhat divided. Ways to make the combination method work: Have set allowances that come out of the joint accounts every so often. This way, each person can spend their money the way that they want to.
This is where everything is separate. Expenses are most likely split right down the middle or each person has designated expenses each month. Just because things are separate does not mean that there is always trust lacking. This is the best way to keep everything safe just in case anything does happen.
Ways to make the separate everything work: Have weekly or monthly money talks so that everyone is kind of on the same page. You don’t want one person feeling left out or sour because they make less money, yet they still have an equal amount of bills to pay or something else.
Are your finances separate or combined? Why or why not?
EddiePhoto Credit (locosphotos)