4 Ways To Handle Your Finances as a Couple

Posted by under Personal Finance . Published: February 19, 2020

What’s the best way to handle your finances as a couple? How can those in a relationship do money management? How should couples share their income and split their expenses?

It’s important to know the answers to these questions because money is one of the most common reasons why couples fight. In fact, next to infidelity, financial problems are the leading cause of divorce in America.

Unfortunately, there’s no best setup when it comes to handling money in a relationship. My parents combined their income and it worked for them. But I also know of a couple who found success in doing separate accounts.

Personal finance is personal, and what worked for others may not work for your case.

So, here are four options you can consider. The goal is to experiment and even customize these basic strategies until you find the best one for you and your significant other.

1. Separate Finances

Money is kept in separate bank accounts, and each one has full control over how their money is spent. All expenses are negotiated, which can either be split equally or however the couple finds fair.

For example, one can pay for the electric bill while the other pays for the water bill and cable TV subscription. Then for the groceries and rent, both parties give their equal share.

Benefits:

  • Quick and easy to set up.
  • Each one maintains financial autonomy, i.e. there’s no need to ask permission for personal expenses.

Challenges:

  • It’s not always easy to find a fair split when negotiating their common expenses.
  • One person can mismanage their own finances, which can affect their ability to contribute to the couple’s expenses.
  • There’s less sense of financial union in the relationship.

This can work for:

  • Couples who are still dating or just engaged.
  • Couples who both want to maintain autonomy over their own income.
  • Couples who are both financially disciplined.

2. Proportional Earnings

Money is kept in separate bank accounts, but each one has to contribute a portion of their income to a joint account. They maintain full control over their personal account, but the couple must have consensus over how the joint account is spent.

For example, each one gives 80% of their income to the joint account, while keeping the 20% for themselves. They can spend that 20% in any way they want without asking permission from the other.

Benefits:

  • There’s a sense of both financial autonomy and financial union in the relationship.
  • Less likely to have conflicts on personal expense decisions.
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Challenges:

  • There’s a need to maintain several bank accounts.
  • The set up can get complicated when the combined income is barely enough to over their joint expenses.
  • Shared account can get mismanaged if one lacks financial discipline.

This can work for:

  • Couples who are not legally married but living together.
  • Couples who both have substantial income.
  • Couples who tend to have a lot of personal expenses.

3. Joint or combined accounts

Money is kept in a joint account. The couple must both agree how the money is spent, regardless if it’s for a shared or a personal expense. A joint or combined account is only possible if both have income. Otherwise, this setup becomes the One-income setup that’s described next.

Benefits:

  • There’s a great sense of financial union in the relationship.
  • With their incomes combined, there’s a bigger budget and more financial options available for the couple.

Challenges:

  • Financial decisions can take longer as both have to agree on the expense.
  • The set up can get complicated if there are trust issues in the relationship.
  • One person can see the setup as unfair when they start to earn significantly more than the other.

This can work for:

  • Couples who are married.
  • Couples who both have modest income.
  • Couples who have similar spending habits.

4. One-income setup

If there’s only one person earning in the relationship, this becomes the default setup. The dynamics is similar to the Joint Account where all financial decisions should be made by the couple.

However, it is recommended that the breadwinner gives their partner a regular allowance for personal expenses to give them a sense of financial autonomy. This may not be necessary if the other one has some form of income, albeit smaller and irregular when compared to the breadwinner.

Benefits:

  • The non-earner can focus on taking care of the household, especially when they already have kids.
  • The non-earner can explore and study income opportunities with higher than usual risk. Because the breadwinner covers their essential expenses, any financial losses in those opportunities won’t much affect their lifestyle.

Challenges:

  • The breadwinner must earn a significant amount to cover the household’s expenses.
  • The breadwinner may feel entitled and demand to be the sole decision maker of their finances, which shouldn’t be.
  • The non-earner may experience self-worth issues and feel less about themselves in the relationship.

This can work for:

  • Couples who are married.
  • Couples where one earns a significant amount than the other.

Which one of these setups are you doing? How’s your experience so far? Share them in the comments and let’s have a discussion.

Moreover, I talked about Personal Finance for Couples in episode 6 of my podcast. You can listen to it and check out the show notes here.




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One Response to “4 Ways To Handle Your Finances as a Couple”


  1. Chris says:

    Thank you for this great article!

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