Coupling Up on Finances

In last Friday’s post, I discussed the important issue of financial abuse. This is what happens when the balance of power over finances is severely tipped in one person’s favor over the other in a relationship. Without access to funds, the target is unable to move out from under the thumb of their abuser. Today, I want to talk about the opposite of this horrible situation: how to create a structure to join finances where both parties have a say.

Everyone Does It Differently

The only criteria for the “right” way to do your finances in a couple is in a way that both parties have an understanding of and an influence in the process and direction. As long as everyone is on board with how the finances for the household are being run, it doesn’t matter if your accounts are separate, joint or a mix of both. Generally, there tend to be 3 schools of thought:

There are some who are adamant that each partner must keep their own finances in order to maintain their independence.

Conversely, there are some who are adamant that you and your partner are a team now and should keep all of the money together.

Finally, there are those in the middle. They are adamant that the best of both worlds is to combine most accounts and then each have a separate savings and checking where you can do whatever you like with your agreed upon monthly allowance of, for example, $200/month. That money is then yours to do whatever you want with it without the other partners’ input.

Laying a Foundation

In order to make sure that both parties have a say in how the finances are laid out, it’s best to create a foundation that everyone agrees with from the start. Here are some ideas of discussions to have in order to create that foundation:

How much control do each of you want to have over your finances?

Is there only one of you who is more interested in the daily mechanics associated with your finances?

Even if only one partner manages the daily mechanics of your finances, you’ll still need to discuss them together. How often do you want to discuss the direction your finances are taking you and realign? Biweekly? Monthly? Quarterly?

This is the case for my wife and I, obviously with myself being our money manager. We try to discuss this monthly, spending just 5 or 10 minutes reviewing our budget from last month and asking the following questions for the new month.

  • What events or activities do we have coming up this month?
  • Any large expenses coming up that we need to budget for?
  • Anything special you would like to do this month(i.e. date night, a show/concert, etc)?
  • Anything you would like to do to advance towards any personal goals that we haven’t budgeted for?

If you and your partner both want to work through the finances, you’ll be discussing them regularly- decide when and how often.

Creating Your Framework

Based on the foundation you have built with your partner, you will now add the structure of your accounts as your framework to your finances together. For example, you can hold your money in:

  • All joint accounts.
  • A joint checking/savings/investments, but then you each also have your own checking/savings accounts.
  • No joint accounts. All checking/savings/investments are kept completely separate.
  • Maybe something completely different.

Building Your Budget

Now, you have a solid foundation and framework for how both of you want to create your financial life together. From here, it’s really up to you to build out the rest of your day to day budget within the account structure you have laid out. There are infinite ways to put your budget together and they will be completely unique as they apply to how you live from day to day and your personal dreams and goals together.

Also important to note, budgets are not meant to be restrictive. They’re meant to be what makes you sit down and create a plan for your money and your life; with the best part being that you can change it whenever you want. Just discuss it with your partner to make sure that you’re both on board with the new direction and that the math makes sense.

Wrap It Up!

Taking each of these steps to build up your finances together ensure that everyone is on the same page and taking into account each other’s opinions. This can be time consuming at first, but once everything is built up, you only have to check in on it periodically to ensure that:

  • You’re still working on the same plan
  • Everyone is still on board with the plan itself.

Final thought: Sometimes these discussions might be best held with an objective third party in the room that can help guide the conversations and ensure that everything is accounted for. If you feel that you could use this assistance with the process, check out my financial coaching page to see if it could be beneficial for you and your partner.

How do you and your partner split up the finance duties? How are your accounts structured? Have you changed how you’ve held your finances from your first agreement? Let me know in your comments below!

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