When my boyfriend and I first moved in together, I had a number of financial crises. I spent so much money on holiday gifts that when my boyfriend asked me to pick up his dry cleaning, I broke down and asked him to give me some money. Otherwise, I couldn’t pick it up.
Eventually, I became a successful professional, and even left a high-paying day job to start my own marketing business. My boyfriend has supported me all the way, and despite the financial woes of our first year living together, we now split finances in a way that really works for us.
But finance is a big point of contention for many couples, and a 2012 study suggests that arguments about money are a top predictor of divorce. Yikes. With that correlation, couples want to make sure they have a system that works.
Studies and data sets can only say so much about what it means to manage a couple’s finances, so I found couples willing to share how they make things work– and where their challenges lie.
Everything is shared
Juliette, a stay-at-home mom and skincare consultant, and her husband Mike, an electrical engineer and photographer, have lived together for 13 years, and they share all their funds in joint accounts.
“All our money is for both of us to spend,” said Juliette. “We have monthly and yearly budgets for many categories of spending but we don’t stick to them very closely. I pay all of our bills and enter all of our spending into the computer on a weekly basis. Mike balances our accounts and checks our budget on a monthly or every few months basis.”
Juliette and Mike’s system works well for them, and Juliette reports that they rarely argue about money. However, big purchases present a challenge for the couple. “I pretty much always want to spend money on home improvement or travel,” said Juliette. “My husband is more likely to want to spend it on travel than home improvement but he’d really rather not spend it on either one.”
One person manages the finances
Hannah, 27, and Dan, 33, live in Cumberland Center, Maine, and they have a two-year old daughter and another on the way. Hannah works as a strategist at a marketing agency, and Dan works as a chef at a popular breakfast cafe.
“I manage our finances pretty much exclusively, but Dan has all our passwords if he ever wanted to see what I was doing,” said Hannah. The couple has four bank accounts: two checking and two savings. One set is Hannah’s, and the other is a joint account. According to Hannah, Dan does better at not overspending when he pays for everything in cash.
But this solution didn’t arise out of nowhere. When Hannah and Dan moved in together six years ago, Dan had a history of running up credit cards, and spending more liberally than Hannah felt they had the money for. Money continues to be a source of stress for the couple.
“The biggest thing we fight about is whether we can afford things,” said Hannah. “Since I manage our money exclusively, I’m the only one that really knows what we can afford. Even though Dan can go online and look at our accounts, it’s not really an accurate portrayal because at any given time, we might have 1-5k in upcoming bills (mortgage, car payment, etc.). Just because the money is in our account doesn’t mean we can spend it.”
Separate and joint accounts
Amanda and Jason, engineers based in Boston, have effectively managed their finances for fourteen years through the use of separate and joint accounts.
Money is generally put into a central account for all main spending areas (apartment, car, food, utilities, insurance, etc.) and both Amanda and Jason have their own accounts for spending money. Amanda pays a prescribed amount from her paycheck to the central account– Jason does the same.
When it comes to joint purchases, Amanda and Jason have a monetary limit that helps them decide if they should consult their spouse. If the purchase is under $100, they don’t need to get the other’s input. “We both think that this helps avoid a lot of fights and bickering and a lot of buying of stuff that might not make sense after a moment or two of consideration,” said Amanda.
“We split up the money management generally in a way that works for our personalities,” said Amanda. “Jason is more concerned with managing the details of financing, so I let him do that, but I contribute when we have bigger decisions. Also, I make sure I understand the basic functions of the accounts.”
When a financial event occurs
Lacey worked as a project manager at a marketing agency when her husband, Derek, a machinery technician in the U.S. Coast Guard, got relocated to San Diego, California. Lacey quit her jobs, packed her bags, and happily joined Derek, but didn’t find another job until the couple had been in San Diego for six months.
“My unemployment was very hard on us,” said Lacey. “I felt tremendous guilt for not contributing financially even though Derek never made me feel guilty about it.” This sentiment was echoed by many of the people I spoke with.
Events like getting married, becoming parents, or going through a bout of unemployment can change the game for many couples, forcing them to re-allocate how they divide and share their funds.
Michelle, an actuary, and her husband, Brian, have gone through various ups and downs in the thirteen years they’ve lived together. “How we share finances is the result of various patches from the point when we started our household,” said Michelle. “When [my son] Simon was born, I made a lot more than Brian, and I loved working, so Brian became a stay-at-home-dad. When Simon started school, Brian started working, so it made sense that he would pay the tuition.”
The key? Communication and visibility
Each couple approaches finances differently, and it’s your responsibility to develop a system that works well for both parties. Here are some key tips on managing finances as a team:
- Be honest about financial history and philosophy. Many couples change how they share finances when they get married, and it’s a conversation you want to have before you’re at the altar, or even before you’re engaged. It helps to talk openly and honestly about each person’s financial history, and then make a decision as a couple about how to move forward.
- Develop a system early on. Have conversations about finances as early as possible, and put various systems into place to avoid heated arguments. Once there are some rules put in place, the couple can move forward and work within the structure they’ve created.
- Share finances in a way that works for you. There is no fair, good, or perfect system for sharing finances. What works for each couple is totally dependent on each person’s personality and financial philosophy. Be honest about what you need to make it work.
- Use apps to enhance visibility for both parties. No matter how you manage finances, apps can enhance visibility, so that both people are able to see where money goes in and out. You can keep your accounts separate but manage them jointly on the XOBI app. For example, you can link multiple bank accounts on your XOBI account and get answers to questions like, “How much did we spend on travel this month?”