I was having lunch with a newly married couple when the wife commented that her husband still had a bank account that was set aside for his “fun” money. This irked her because as a married couple she felt like things should be 100% combined and they should make all money decisions together.
He didn’t want to close the account. She expected I’d immediately jump on her side.
I didn’t bite.
There’s no one way to handle money in a relationship. She wanted to combine everything but her husband wanted to be able to buy football tickets or a round of drinks without considering how it would impact her spending. He wanted to hold onto a little independence, she wanted to go all in.
Neither way is right, but it’s important to find a strategy that works for both people, rather than get frustrated because one person won’t heed to the other.
On the other end of the spectrum, I was having lunch with another couple a few months later and one person remarked that they still kept their money almost totally separate. She was almost embarrassed to admit it because to her it felt like an unconventional way to handle money. But they were both happy with it, so why change it?
So how should married couples split finances and their money responsibilities?
I’ve share how Jordan and I split and share our money, but that approach isn’t right for everyone. Read on to find the strategy that works for you.
How do married couples handle finances?
Because I love knowing how other people do manage their money, I really wanted to see if there was any data out there about how married couples handle finances. There are headlines that proclaim that millennials don’t open joint accounts. Sounds more like click bait.
On the other side of the spectrum, people say that keeping money separate will lead to an unhappy marriage.
But the truth is that how people handle their money is a bit mixed. According to a TD Ameritrade survey, 82% of people living together have a joint account. But 42% of people living together also keep a separate account.
So married couples handle their money in all different ways, none of which are wrong or right in every situation.
Should married couples have separate bank accounts?
Here’s where the conversation starts to get tricky, like for couple number one above. One person wants a separate account, the other doesn’t. How should this married couple split finances?
Benefits of a joint bank account
- Full financial picture: Sitting down to look at your financial standing and doing budgeting each month can be a chore. But when all money is jointly owned, it makes looking at the full picture much easier. Assessing spending and saving towards goals is much easier when you only have to look in one place to get a view of it all. (Really want to make looking at everything easy? Here’s how we manage our money in 15 minutes per month with Personal Capital.)
- Transparency: Financial infidelity is a big problem, with a CreditCards.com survey finding that 28% of millennials are currently hiding money from a partner. While having joint accounts won’t solve that problem (someone can always hide money if they want to) joint accounts do promote transparency. Nothing is off-limits and for some, that level of openness is comforting.
- Makes things easier: Joint accounts are convenient. There’s never any calculation about who needs to pay how much and it can streamline your financial process. It can also help in the event that one person passes away, access to money for the surviving spouse is easier.
Drawbacks of a joint bank account
- Loss of independence: If for years you’ve been spending your money however you see fit, it can be a rude awakening to have to OK your spending with another person. While your partner may really not care about your spending it may still lead to feeling like you don’t have control to make even small spending decisions independently.
- No financial safety net: If you need to leave a bad situation, it’s that much more difficult to do if you don’t have any of your own money. Not having some money of your own can lead to having to stay in unhappy (and potentially dangerous) situations because you don’t have an out.
- Increase financial conflicts: If your partner loves something that you think is ridiculous (insert expensive bottles of wine, sneakers, designer sunglasses) you may constantly find yourself trying to justify the splurge. Over the years, that tension can wear on a relationship.
How to split bills based on income
There are a number of ways to split bills based on income or a way that what works best for your relationship. Some bill splitting approaches you might consider include the following.
One joint account for household spending
For all bills that are included in running the household (mortgage, groceries, childcare), each person contributes a set amount to a joint account. Everything is paid out of the joint banking account.
The contribution can be equal — each person contributes 50% of the total. Or it can be divided based on income — the higher earner would contribute a percentage that matches how much they earn. All other money is kept separately.
A serious downside here is that if one person stops earning an income, they won’t have any of their *own* money.
One separate account for personal spending
This is the exact opposite of the income splitting method above. Paychecks are deposited into joint accounts and each person has a set amount (an allowance, if you will) to a separate account. The set amount can be equal or split based on income.
Divvy up the bills
If you want to keep finances completely separate, you can each decide who will pay what bill.
For example, maybe one person pays the mortgage and utilities while another person pays the childcare and groceries. To make this equitable, as income changes, the bill distribution will need to change.
How to both stay in the know on splitting finances
However you decide to combine or split your money, don’t forget this one important point. Both people in the relationship need to stay educated and in the know when it comes to money. Maybe one person has a natural inclination to handle the investing or one person is better about paying bills. It doesn’t matter: both people need to stay informed.
Jordan and I have found that the very best way for us to communicate and talk about our money is to use Personal Capital to aggregate all of our accounts. We can dive into our retirement accounts, check out Henry’s 529 college savings plan, and look at our spending, all in one place.
And because this seriously cuts down on the number of disagreements we had around money, I’m a huge fan. Read my full Personal Captial tutorial and review l review and watch the tutorial I created.
What to remember on married couples splitting finances
There’s no right answer to the question as to how married couples should split money. What matters most is that communication around this topic is always open and both people completely understand the financial situation. Beyond that, well, you do you.
How Jordan and I, a married couple, split finances
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.
The underlying premise of our joint money management is this:
Big financial (and life) decisions are made together. Everything else is simplified.
Our tactic for splitting finances when married
We are fans of the automating your spending and saving budget. Day to day, here’s what this looks like:
- 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)
The transfer done to our individual checking accounts is key of us. To be honest, it might be more key for me than it is for Jordan. I need to have my freedom.
How we decided to split finances when living together
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 5 ways to combine finances (see below) 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 having personal savings accounts 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.
How to manage a personal savings account when married
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.
When our finances change, we change how we split money
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 and split finances. It works for us because we both get to keep our independence with separate extra spending accounts while combining everything else.
5 Ways Married Couples Split Finances
I wrote a piece last year for The Everygirl that went through 5 ways married couples split finances. It included options for splitting and combining money. 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.
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 on how married couples split finances, and you make it easy with the automate your spending 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 on splitting or combining finances 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.
1. Separate finances but 1 joint checking account
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.)
2. Combine all finances but 1 separate account
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.
3. Combine all finances
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.
4. Split all finances
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.
5. Live off one paycheck
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. There is no perfect solution to “how should married couples split finances?”
And don’t listen to the naysayers who claim there’s only one way to do it. You’ve got to do you.
Once you decide how to split finances
Jordan and I have found that the very best way for us to communicate and talk about our money is to use Personal Capital. Personal Capital lets us see all of our accounts in in one place, on their dashboard.
And because this seriously cuts down on the number of disagreements we had around money, I’m a huge fan.
Read my full Personal Captial tutorial and review l review and watch the tutorial I created. Open an account with Personal Capital here.
(note, this is an affiliate link for Personal Capital. Read how we make money.)
If you’re not into financial programs or you’re just warming up to the idea of both taking ownership in your money, use a spreadsheet or a notebook, and have a regular discussion about your money: your goals, how it’s being spent, and where it’s being invested.