Money Management for Couples

3 Money Management Methods for Couples

Adding another person to your financial game plan can mean the beautiful destruction of how you already do things.

The truth is, no matter how much we create systematic processes for money management, money is deeply personal and each person handles it differently.

This can be frustrating when in a marriage and is one of the highest contributing factors to divorce.

So getting this right is critical. There is a lot at stake. But… no pressure.

As you go through the process of reconciling differences I suggest that you be flexible, open to change, and focused on your family goals.

This will help to ensure that your financial discovery process is about the overall good of the team instead of what one person thinks is the best plan of action.

There are 3 different options for how couples can manage their resources. We will go through the strategy behind each one, and then bring it to life with an example.

Method 1: The All in Approach

The All in Method is my personal favorite because it’s simple and allows both parties to work as a team.

In the All in Method, each person dumps their whole entire paycheck into a pot (the joint checking account) and it becomes property of Your Family, LLC.

Everything the company does must be approved by both partners and no one has more or less say based on how much they put in. Period!

Decisions are based on family goals and preset plans.

There’s an understanding that everyone is working to contribute for the overall good of the team.

Once you know how much money you have to work with in total, you can begin to budget and manage money as usual, just as you would with an individual.

Except in this case there will be two personal spending accounts to fund.

Example of the All in Method in Practice

Angelo brings home $2,500 every month. Angela brings home $2,000 every month. Total household take home pay is $4,500.00

Angelo and Angela will decide how to use the $4,500 for bills, expenses, debts, etc. They will also determine what they are going to save for and invest in as a team.

After they have paid the bills, debts, and expenses and after they have set aside money for saving and investing, they’ll look to see how much money they have left for fun.

Their fun money will go into their personal accounts.

Each person can have the same amount of fun money or a different amount based on lifestyle as long as both parties agree and stick to the plan.

Once the personal money is gone, it’s gone! So manage it accordingly because when you ask if you can dip into the savings the answer is… nah!

Also… if both parties are contributing different amounts, make sure there is no resentment or animosity. A little communication goes a long way.

Method 2: The Some in Approach

In this approach both parties contribute a set amount into the joint checking account every month.

This amount could be the same for both parties or it could be different based on a percent of income or simply an agreed upon amount.

The point is that each person agrees to contributing a portion of their income to family expenses and then uses the rest however they see fit.

This can get tricky when there is a large income disparity. So that’s definitely something to think about.

I tend to believe that marriage is a partnership and funds should be distributed equally. But not everyone feels that way.

So, do what works for you and just make sure to communicate before hand to make sure everyone is happy because the goal is a partnership that works.

Example of the Some in Method in Practice

Angelo brings home $2,000 every month. Angela brings home $2,500 every month. Total household take home pay is $4,500.00

Angela and Angelo could choose to contribute to their joint checking in two ways:

They could both contribute $1,500 every month for a total of $3,000.00.

Or, they both could contribute 70% (or however much is inline with what they need to cover their expenses, savings, and investments).

This means Angelo would contribute $1,400.00 and Angela would contribute $1,750.00 for a total of $3,150.00.

Angelo and Angela would deposit their contribution into joint family checking account to cover everything in the household.

They get to keep everything else in their personal accounts.

So, while both parties contribute to the household in options 1 and 2, option 1 makes the partnership and the joint accounts the main priority.

Keep in mind that with this method, Angela is contributing more, which could cause an issue and Angelo is left with less, which could also cause an issue.

Method 3: The None in Approach

Joining forces and commingling funds can be scary. Honestly, people don’t even understand how to manage their finances individually so adding another person to the equation can get hectic. In some instances, instead of combining funds, couples choose to divide and conquer.

This can happen a few different ways:

If one person makes significantly more than the other they may divide the expenses such that one person takes care of the mortgage and larger bills while the other person takes care of the utilities, groceries, and smaller bills. Each person handles their responsibilities for the good of the team.

If both parties make a more equal salary, they might divide the bills in a more equal but separate way. But the process would remain the same as each person would manage their part individually.

In the NIS there are no joint accounts and when things come up, both parties work together to manage them. If you think about how you might manage finances with a roommate it is very much like that and is the least favored strategy.

Example of the None in Method in Action

Angelo brings home $2,000 every month. Angela brings home $2,500 every month. Total household take home pay is $4,500.00

Angela covers the mortgage, cable, and her own debt obligations.

Angelo covers the car note, utilities, groceries, and his own debt obligations.

All of the bills are paid every month, they have food to eat, and they get along fine.

However, if the hot water heater breaks they will need to have a discussion about where the funds will come from.

They both might pull equally from their own checking account to cover half of the expenses.

Or maybe Angela will take care of it this time and Angelo can handle the next big expense.

In Conclusion

While managing money jointly things can get lost in translation as far as who manages what.

Be clear about who is responsible for what.

If your partner is responsible for paying the credit cards every month make sure he or she has the necessary log-in information and stuff like that.

No matter who is in charge or how you divide tasks, have a family check-in every week.

Keep it high level and no more than 30 minutes but it will help you stay on track and focused on goals.