Marriage & Money

A few weeks ago I was out to lunch with some of my very favorite girlfriends when the discussion turned to money. Specifically, it was how to handle finances in a marriage. Maybe talking money is still a taboo topic for polite company, but good girlfriends should not be polite company, right? We are real company. Plus we were drinking margaritas, so it was no holds barred.

I realized from our discussion that there are a lot of different ways to handle marital-finances, some of which never even crossed my mind! Although we're no experts when it comes to money, the ladies and I agreed that there is no single “right” way to handle money in a marriage/relationship. All four of us had different arrangements. What is "best" really depends on the couple and what matters is this:

• The arrangement is one both partners feel comfortable with. Everyone has their own style and preferences when it comes to money and spending, so it's ideal to find a plan that acknowledges those preferences.
• It feels fair, otherwise someone is probably going to start feeling resentful, and resentment is an ugly thing that will eventually rear its ugly head. 
• The arrangement needs to ensure responsible spending and budgeting. Obviously an arrangement that results in debt isn't a good thing.

Here are the ideas that came up:  

1.  All-In-One-Pot: All money earned goes in one shared bank account. This is probably what many of us think of when we think of marriage, but I'm not sure it is so common these days. It works for some couples, but both partners need to be on the same page about how and where money is spent and have good communication in order to stay in budget.

2.  Totally Separate Accounts: In the early days Hubby and I each had our own bank accounts. We each took responsibility for paying certain bills and took turns grocery shopping. Other than that we spent our money however we wanted. The advantage is that this eliminates any arguments or need to "justify" spending choices, but this arrangement definitely requires good communication when it comes time to plan a trip or make a big purchase so that the expense is shared in a way that feels fair. And with all of the expenses that come along with having kids, I think it would also be important to have a clear plan for handling those expenses. 

3.  Separate-And-Together: The couple has a shared account that is used to pay bills and other family expenses, but each partner also has some separate spending money of his or her own. You get the benefits of sharing expenses as a couple while also keeping some financial autonomy, and you can get creative with the specifics.This is where the conversation got interesting and we came up with several ways to handle this arrangement:

• Everything earned goes in the shared account and each partner gets the same “allowance” to save or spend however he/she wishes.
• Each partner contributes the same amount every month and keeps the rest. So if the shared budget is $2000/month (just for example), each person would put in $1000 - the "split the expenses down the middle" approach.
• Each partner contributes enough to cover expenses, based on what percent of the household income he/she makes. So if one person makes $30,000 and the other makes $60,000, the person making $30K would contribute 1/3 of what is needed to cover the bills and the person making $60K would contribute 2/3. The remainder is personal spend money.
• Each partner contributes a percentage of his/her income to the shared account. For instance, both person puts 75% of their paycheck into the shared account and keeps the rest in a separate account. In the example above, one partner would put in $22,500 each year and the other would put in $45,000. 

What the couple has to figure out is what constitutes household/shared expenses versus what comes out of each person’s individual spend money. 

One way to manage the shared household expenses like groceries and clothes for the kids is to use one joint credit card. This way you can easily monitor how much is being spent, see where it's being spent, and adjust your budget as needed. Instead of constantly balancing the checkbook, there is just one check to write each month. We are trying this out right now and opted for a credit card that will help us earn reward points to offset another expense - a trip to Disney in the next year or two!

Another thing I realized is that nothing has to be set in stone. We can try something for a while, and then sit down together to talk about how it’s working and whether we are both happy with the arrangement.

Hubby and I have a pretty good arrangement as far as how we handled our finances and it's one we've both been comfortable with. But talking with my friends I realized there were a lot of other options for how we could handle things, ones I had never even thought of, and maybe we could "tweak" our arrangement a bit. I posed some ideas to Hubby and we talked it through until we found a plan we agreed on. I think the conversation is a  critical piece. There were some ideas we discussed that one or the other of us just wasn't crazy about, but having a discussion about it helped us further clarify our needs and preferences when it comes to money.


I’d love to hear other ideas for handling finances and the pros and cons, in your experience. Scroll on down to the comments and share! 

Photo of piggy bank by Ken Teegardin via Creative Commons - Some rights reserved.