I wrote a piece last year for The Everygirl that went through 5 different ways couples can combine their money. And I received some strong feedback:
“5 ways! There’s only one way! Combine everything!” or “Combine your money? Why make this so difficult! Just keep it separate.”
I get it. Money is touchy. Money and marriage combined? Tread even lighter with your opinions.
Jordan and I use a system that works for us. And we love it. But I also know that everyone is different and what works for us likely won’t work for you.
The most important thing to know is it works for the two people who are actually in the relationship. And that means sharing your feelings and opinions about money. Openly.
The good news is that once you decide on an approach and you make it easy with the non-budget, budget, you don’t have to keep having this same conversation over and over again.
To help you get started deciding what is right for you, there are 5 options below. We’ll use Jane and John as our fictional couple to help illustrate each one. Their household income is $100k per year: Jane makes $60k and John makes $40k. Go, Jane.
Option 1: One Together
The idea here is that all accounts are kept separate except for one joint checking account. That joint checking account is used for shared expenses: rent/mortgage, bills, groceries, eating out. Each person can contribute equal amounts to this account or can contribute based on how much they earn.
Jane and John added up their monthly joint expenses and they total $4,000 per month. Jane and John can either contribute equally or based on how much they each earn. If they contribute equally, they’ll both transfer $2,000 into the joint account at the beginning of the month. If they decide to do it based on how much they earn, Jane would contribute $2,400 (60% of the total) and John would contribute $1,600.
Jordan and I used this approach when we were living together but not married. It worked pretty well for us – aside from when I would get mad at him for eating too much cereal. (And no, I don’t understand how he puts up with me either.)
Option 2: One Apart
This is the opposite of option 1. Rather than having one joint account and keeping everything separate, you combine all checking and savings accounts and keep one individual checking. Each month an automatic transfer is made from the joint account to the individual checking for that person to spend or save as they please. It’s like an adult version of an allowance.
Jane and John each put their entire paycheck into their joint checking account. From there they pay their bills and transfer money into savings. Once a month they also make an automatic transfer into their individual checking accounts of $200. Jane lets that money build up until after a few months she treats herself to a spa weekend with a friend. John spends his money every single month on video games. But neither of them gets mad or judges how they spend their separate money.
This is the option Jordan and I use right now, and we love it.
Option 3: All In
There’s no hiding anything here. The two completely combine their money meaning that their paychecks are deposited into one account and only flows to joint savings accounts and to pay bills. When they want to spend money on anything, they do it from a joint account.
Jane’s spa weekend and John’s video games will come out of the joint checking account. They have a few options as to how they can talk about their spending. They can set a dollar amount, say $200, and anything that costs less than $200 they can purchase without checking with their spouse. They can choose to discuss any purchase, large or small, as my friend did. Or they can choose to not discuss everything and trust that the other person is making the best decisions with the family finances in mind.
Option 4: All Out
This is the opposite of option 3. Rather than combining any money, the couple can choose to pay for different expenses separately, from their own bank account. There’s no combined account and each person keeps their own checking and savings accounts.
Jane and John decided that it made sense for Jane to pay the mortgage on their home since she makes more, and John would pay for groceries and utilities. They trade off paying for eating out and other joint activities. They’re each in charge of managing their own individual spending and individual saving, but check in with each other frequently to make sure they’re on track with their goals.
Option 5: Live Off One
For those serious savers, or people that eventually hope to only have one person earning an income, living off one income is a good option. With this option, one person’s paycheck goes into a joint account and pays all of the living expenses and discretionary spending. The other person’s paycheck goes right into their saving and investment accounts.
Jane and John decided that they wanted to save as much as possible, as easily as possible. Since Jane earns more, they’ll use her paycheck for all of their living expenses: their mortgage, utilities, groceries, and fun spending. John’s paycheck will be deposited directly into their savings account. Since Jane makes 60% of the household income and John makes 40%, they have a savings rate of 40%.
These 5 options are just the basics of how to combine (or not combine) money with your significant other. Once you find an option that sounds about right, fit it to what you both want.
And don’t listen to the naysayers who claim there’s only one way to do it. You’ve got to do you.
Erica Gellerman, CPA
Erica Gellerman is a CPA, MBA, personal finance writer, and founder of The Worth Project: a weekly money newsletter you actually want to read. Her work has been featured on Forbes, Money, Business Insider, The Everygirl, The Everymom, and Lifehacker. When she’s not writing about personal finance you can find Erica exploring Europe from her temporary home base in London.
THE LATEST & GREATEST
“Don’t you dare undervalue yourself. Just because one person is trying to get a bargain basement rate, doesn’t mean that’s what you’re really worth.”
Faced with a hard situation at work, this woman leveraged her story of loyalty to get a promotion and a raise that almost doubled her salary. Really.
After a failed attempt at negotiating, this grad student approached the situation differently and learned a valuable lesson: don’t waste your time asking for something the other person can’t give you.