When it comes to relationship problems, money can be a big one. In fact, money related issues between couples are one of the biggest reasons for couples splitting up. If you’re in a long term relationship or about to embark on a serious one with your partner, you need to know the best way to manage money in a relationship.
The good news is there are a ton of different options. There’s no one size fits all. Rather couples should discuss and decide how they want to manage their money based on what suits them best as individuals as well as a couple.
Here are some options for how to manage money in a relationship:
- Both keep individual accounts, completely separate and split bills
- Open a joint account that shares all the money and that all bills come out of it
- Have both a shared account and keep separate accounts
- having an allowance paid by the main earner
Understanding each other
Before you decide which options to look into for dealing with money, you need to have a serious talk with your partner. It’s important that you are both completely honest with each other and that you trust each other. You might not want to have this talk discussing your financial state and habits, but if you ignore it, you might have trouble down the road when it’s too late.
First of all you have to check each other’s credit. If one of you is bad with money, in a lot of debt, has trouble with credit cards etc, they need to be upfront about it. In situations where you may share and account or agree to share debt, not knowing your partner’s credit history could really get you in trouble.
For those of you who are in America, being with someone who has a bad credit score won’t affect your own credit score until you open a joint account together. After that they can definitely affect your credit score which may take you a long time to recover from.
This talk is also to make sure you and your partner can trust each other. Not only with money, but also with responsibility. Whatever solution you decide on in the end, you have to be sure that it’s a fair solution. You may need to set up boundaries and rules.
Most importantly make sure both of you understand the arrangement and that both of you take an active role in managing your finances. It’s very easy to fall into the trap of one person having to do it and the other person taking on the responsibility. But this isn’t healthy for your finances or your relationship.
Keeping separate accounts
Keeping your accounts separate is the best option if you want to be in total control of your finances and keep independence. If you have a partner who is terrible with finances, this could also be the safest option for you.
If you decide this, it’s important that you’re clear on how bills will be split. You can both decide to pay 50/50 on everything or decide different splits per bill.
Keep in mind however that you’ll still need to be considerate of your partner when you spend. You’re responsible for paying some of the bills and if you spend all your money then it’ll fall to your partner to make up for it. Or vice versa.
Some couples keep separate accounts but have access to each other’s online accounts. This helps them with transparency and trust, whilst still giving them both financial independence.
Sharing a joint account
Joint accounts can be a good solution for a lot of couples. Both incomes go into the account and all bills come out. It’s great if you have lots of small bills and expenses shared, as it saves you having to constantly work out splitting bills.
Sharing accounts does mean you both have responsibility for it. You should consider sharing an account if you have similar spending patterns. Sharing an account means both partners can always see the other’s spending habits.
If you decide to have a joint account, it’s important to have agreements on spending allowances. If you want to buy something above a certain amount, you can say that both partners have to agree. You can set a budget for how much you can each spend individually a month.
A bit of both
You can always work out a hybrid plan between the previous two points. Keep separate accounts but also open a shared account together. With this method, you can both put a set amount into the shared account and all shared bills can come out of it.
It lets you keep your own account independently, meaning you have more control over personal spending. It also offers you more privacy if you want it. You can buy individual items without feeling the need to get permission from your partner first, although if it’s a large amount of money it’s always good to discuss it with them first anyway.
If you go down this route it’s important to decide how much both of you will be contributing towards the joint account, as well as which bills will be coming out of it.
Setting up a savings account
You can also start together by simply setting up a savings account. This means you both put money into the pot, it might be for a reason such as a wedding or down payment for a house, or it could simply be for emergencies.
Make sure that one person can not take money out without the consent of the other. Both partners should discuss how much goes into the account each, and what you might expect the money to be taken out for.
This is a good way to see how you handle managing your finances together, without needing to invest a lot of money. It also takes away the stress of dealing with bill payments.
Setting up an allowance
Some couples have a system where the main earner may give an allowance to their partner. This happens if one of you are not earning much, or does not have a job. It might sound a little strange at first if you’ve not done it before, but it’s not super uncommon.
There are many reasons why one partner may give the other an allowance. By no means is this seen as a “favour”. Reasons could be things such as one partner maintains the household and looks after children, which can be argued as a job in itself.
If you’re going down this route, it’s important to be clear what the allowance is for. It could be to pay for bills, or it could be for personal use. You’ll need to decide on this before hand, as well as discuss the amount of the allowance. Both partners need to have a strong understanding of the arrangement.