Combining finances when married can be a tough conversation. The trick to splitting expenses is maintaining some independence. Our system for combining finances when married has worked for us for the past 7 years.
How to combine finances when married starts with making big financial decisions together. Simplify everything else. Splitting expenses takes understanding your spouse's priorities and creating an automated spending plan. Maintain some financial independence by transferring a percentage to individual checking accounts.
After so many years, we have almost perfected our system. I say almost as there will always be debates over spending. Our system for combing finances is built to evolve with our changing goals, priorities, and moods. This may not work for you, but we hope you get some ideas on how to combine finances when married.
Why We Combine Finances the Way We Do
Years ago I was out with a friend. We were having lunch and popping into some cute boutiques in San Francisco. She found a dress that she absolutely loved and wanted to get it for a wedding that summer. Rather than making the decision herself, she called and asked her husband for permission to get it.
That moment is seared into my memory.
She called. To ask. Permission.
Naturally, I was curious and wanted to know more about how they managed their funds. She said they combine all their money and before they spend money on items individually, they usually check in with each other to make sure the other person approves.
At that point I was currently unmarried and living with two girlfriends in a small apartment, so managing money with a spouse wasn’t on my mind. But I made a mental note that the approach she was taking was not one that I wanted to replicate for myself when I got married.
I completely understand the need to make joint decisions on purchases that will affect the family finances. And this approach worked for her. But if Jordan called me to ask if he could buy a pair of pants, I would seriously question his ability to make independent, rational decisions.
On the other hand, I’ve met couples that silently seethe over the fact that one person has a shopping habit that far exceeds the other persons. I could see myself falling into the same trap of resentment and realized that was also an approach I didn’t want to take.
Our Premise for Sharing Finances When Married
We all have likely heard that money is one of the leading stresses in relationships. So when Jordan and I started dating, moved in together, and eventually got married, we were very intentional with how we approached our money together.
It has evolved over the years. How we manage it now that we’re married is different from how we managed it when we were dating and living together. And it may change again as we change.
*By the way, the photo above is from our wedding 7 years ago. I'm loving Jordan's shaggy hair and the fact that I used to be tan. And young. So, so young.
The underlying premise of our joint money management during marriage is this:
Big financial (and life) decisions are made together. Everything else is simplified.
How We Combine Finances When Married
Here’s our system for combining finances on a monthly basis:
- Both of our paychecks are deposited into a joint checking account
- Bills are automatically paid
- Transfers are made to different joint savings and investment accounts and each of our individual retirement accounts
- An automatic transfer is done to individual checking accounts for each of us. We each get an equal amount transferred to our checking each month and we can choose to spend it (or not spend it) as we please.
- We are free to spend what’s left in our joint checking on what we need and want for the remainder of the month (rent, groceries, eating out, entertainment, etc)
We are fans of the the automatic spending and saving budget. Sitting down together to develop this automated money management system was key to our financial relationship bliss.
When designing your system for combining money, it is helpful to have a shared set of priorities and a spending plan (aka, budget). A spending plan to me is a proactive way to choose where our money goes.
A healthy money mindset starts with understanding what your partner values spending their money on and what they may disdain. Understanding the priorities for our money and allocating spending appropriately makes combining our paychecks a non-event because we both support how the money is being spent.
Don't underestimate the power of an automated spending plan. One doesn't have a chance to dwell on purchases or bills as everything is happening in the background.
It works for us because we both get to keep our independence with separate extra spending accounts while combining everything else.
Individual Checking Accounts for Spouses
Step 4 is key for us. The transfer done to our individual checking accounts is what gives us independence on our spending. To be honest, it might be more key for me than it is for Jordan. I need to have my freedom.
I can spend my transfer anyway I choose and he can do the same. Having our individual accounts makes it extra special when giving gifs to each other as the gifts are purchased from these accounts. On the other side of the coin, if Jordan goes to a bachelor party then he can use his account to pay for the trip.
How We Decided on a Combined Finances Approach
When we got married we made roughly the same salary, but we both knew it might not always be that way. Career changes, moves abroad, and kids would eventually come into the equation.
As there are so many ways to combine – or not combine money, we went through the different options and picked one that felt fair to both of us.
We could have kept our money separate and only kicked in a percentage of our salary to cover shared expenses. But I know how competitive I am and if there came a time when I was earning less, I wouldn’t want to be constantly reminded that the percentage I contributed was less.
We could have totally combined our money and not had separate spending accounts, but there are some things that I want to do or buy and I don’t necessarily want to weigh how that would affect our household finances. I need some freedom.
Giving ourselves equal spending amounts each month that went to individual accounts helps us both to feel like we have freedom without always breaking down who contributes what to the household finances.
Why Sharing Finances is Important for Us
When Jordan was offered the opportunity to move abroad in 2014, salary was a big consideration. At the time we were equal earners. The move abroad was going to result in him making substantially more while I would take a significant pay cut, due to the job market in London. (I quickly learned that my MBA from Duke didn’t matter at all in a different country.)
If we had contributed to household expenses based on the percentage that we earned and his percentage shot up to 75% and mine went down to 25%, that would have been a huge hit to my ego. And I probably would have been resentful.
Though that scenario did happen, because we didn’t look at it based on percentages and who can contribute what, it made it easier for me to stomach the pay cut and focus on the great international experience we were going to have.
In the future as Jordan explores new career paths and I continue to make more, not having to compare who earns what will again be helpful as we navigate those choices.
Combining Finances with Independence
As I’ve mentioned, I focus solely on making sure my spending reflects what I love. And Jordan does the same. Having individual spending accounts enables us to focus on what we really want to spend on as individuals and not hold back.
Who am I to judge his decision to buy a new pair of skis or fly to the US for a bachelor party? It’s his happiness, not mine.
When we were in Italy last month we went to the Prada outlet. As he debated a leather jacket that was really, really expensive, it was his decision to make, not ours. He knows whether he has money in his account and can make the decision that makes him the happiest, without considering me, our credit card, or our savings accounts.
We’ve both used this money for wildly different reasons. Here are a few:
- Taking my Mom and my Dad on respective 60th and 70th birthday trips
- Helping my sister when she had a huge emergency medical bill and needed a quick loan
- A weekend away with friends
- Birthday or Christmas presents for each other
- New clothes, shoes, etc.
And my favorite: when I quit my job to try my hand at working freelance and writing, he bought me my computer. That I'm currently still using. Knowing that he spent his personal money on that because he believed in me gave me the confidence to go out and believe in myself.
Based on our different life goals, we regularly look at our savings rate and determine if we can adjust it. When we decided that we wanted to start saving up for a second home (this one a tiny home), we adjusted our automatic savings transfer by a little each month.
We also realized at one point that the money in each of our individual checking accounts was accumulating a little too quickly. So we cut that monthly transfer by 25% to see if we could still feel comfortable living with that. (We do.)
Of course, this is just one of many ways to combine finances. It works for us because we both get to keep our independence with separate extra spending accounts while combining everything else.
This article was originally published on December 22nd, 2017 and updated on September 25th, 2019.
Erica Gellerman is a CPA, MBA, personal finance writer, and founder of The Worth Project: personal finance and family travel. website. 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.
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