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Should You and Your Spouse Combine Money?

This article was written by in Family and Life, Featured. 28 comments.


In American society in the past, when it was more common for a family to have one income, that income might have covered the family’s expenses that correspond to the expenses that two incomes pay for now. That family, if typical, often consisted of a father, a mother, and two children. The one income was enough for the necessities and, if this was a middle class family, some additional expenses. For a variety of reasons, two-income families are more common now. The question of whether the two incomes represent money for the whole family or whether there should be separation between the funds contributed by each income-earner.

New couples are often faced with this decision. Some will choose to ignore the issue and never communicate about money, which could lead to other problems after time. Those who do confront the situation have a number of options. Although some states make the decision for a couple from a legal standpoint, there is still the issue of how money will be handled practically.

Three options for combining finances

Here are a few of the possible options for managing two (or more) incomes in a family.

1. Keep finances separate. This is an option that works for many households. Having separate bank accounts can be beneficial if everyone is comfortable managing their own finances. One of the most important aspects of communication within a long-term relationship is communicating about and agreeing on long-term goals. When both parties are dedicated to these goals and make financial decisions that help achieve these goals, like getting out of debt and spending less than one earns, there is no harm in having separate savings accounts and investments. That doesn’t mean that there should be secrets, however.

This may be a good option when both incomes are roughly equal; no one person needs to contribute more to keeping the family running than the other. It is possible for families to contribute an equitable amount, though, even if incomes are not roughly equal. For example, if Joe brings in 80% of the family’s income, his contribution to family expenses could account for 80% of the total.

2. Combine all finances. When two incomes are significantly unequal, this solution may make more sense. Also, if only one individual in the family has the skills or the desire to manage finances, combined finances could make money management simpler. There will be fewer checking accounts and investments to manage. Some people argue that this is the best option to help encourage long-term survival of a marriage because it relies on communication, trust, and compromise, but I think all choices require the skills that are beneficial to a relationship.

Combining all finances would also mean that “his” debt prior to the combination would become “our” debt. If only one individual is entering the relationship with debt, consider the idea that two individuals are now a team, and may work to pay off that debt together. Does it matter if that is student loan debt that accumulated in order to qualify for a high-paying job or if it is credit card debt brought on by a shopping compulsion?

3. Combine some finances. This isn’t an all-or-nothing decision. Legally, if the relationship ends and assets are divided, your state may have laws that govern whose assets are whose and whose debts are whose, that’s only a situation during a divorce. Assuming that the marriage lasts forever, you have the option to handle finances however you determine is best for you. There are a few ways a couple can combine part of their finances. They could keep separately owned bank accounts for the bulk of their income and spending but establish a new account for household expenses. Each income-earner in the relationship could contribute an equal amount or an amount representing their percentage of the total income, like above, but the bulk of the income will stay with the individual. The household gains only what is necessary to pay the expenses, and investments and other assets remain separately owned.

Another approach is to combine most of the income, leaving only a little for each partner. This is often preferred because it establishes shared assets while leaving some “play” money behind. When all income is combines, buying presents for one another seems almost like an empty gesture because the money is coming from the household. With small separate accounts set aside for small surprises, even though the money is coming from the same place, it can feel like you’re not robbing from the house or using part of the recipients money to buy the gift. With separate accounts, you can make that purchase at Jared’s or B&H Photo and Video without the other wondering what they should be expecting.

Who owns the house?

When it comes time for a new family to buy a house, if they choose to do so, will both parties be splitting the down payment and mortgage payments equally? Whose name will be on the title? There could be a situation in which one individual earns more than the other, but both parties want equal ownership. This can be a tricky situation, and it’s something to discuss early on in the house hunting process, before you even begin to look at houses.

When is the right time?

There is a risk in combining your finances too early. If you don’t know whether you will be spending the rest of your life with your current partner, it’s a safer decision not to combine your bank accounts and investments. That goes for adding authorized users to credit cards and co-signing loans, as well. The best time to combine finances is after marriage, though engagement can be a good time to get the process started.

Each relationship has its own dynamics, and a decision that works for one couple may not work for another. For those who do wish to combine finances, here are some tips for combining money successfully in a relationship. Do you combine your finances with your spouse or partner?

Photo: re-ality

Updated January 13, 2011 and originally published January 12, 2011. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.

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About the author

Luke Landes, also known as Flexo, is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about him and follow Luke Landes on Twitter. View all articles by .

{ 28 comments… read them below or add one }

avatar Kristia ♦121 (Cent)

For the first 5 years that we were married, we were both working and we had separate checking accounts. My husband would write me one check every month for his part and I put it towards the bills. He was just starting his business and wasn’t making as much as me at that time, so he contributed what he could. When we had our first child and I stayed at home and stopped working outside the home we decided to join our finances. We both have our own checking accounts with a debit card where our monthly spending money get sent to. I don’t question what he spends from his account and he doesn’t question mine. This has eliminated all arguments.

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avatar Cruxman ♦331 (Nickel)

I would have to say that combining income to early out side of a marital covenant is and can be a bad idea. As far as in a marital covenant you become one with each other and there for share every thing. All though this is a belief of mine I do understand some people need to not share every thing and need some secrecy. Me and my wife share every thing I know that we will be together until we die. We have made a covenant that is unbreakable and there for are one. Don’t let finances break down a marriage.

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avatar tigernicole86 ♦55 (Newbie)

I have discussed this with my long-term boyfriend. We do plan on getting married and we have discussed all the bills that we will have(ie rent, student loan payments, utilities) and how we’ll pay for them. Luckily, we have a house that his mom owns that we’ll be able to have rather cheap rent for a while plus utilities(I’m guessing somewhere around the ballpark of $400/month between the 2 of us). We’ve decided some bills will be split down the middle(like rent/utilities) and some will be our own(student loans, pets, cable). So, we won’t be combining everything together for tax purposes.

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avatar SteveDH

Once again I’d like to recommend the book “The Family CFO” even though it’s somewhat dated by now. Combining all finances is a choice and I understand “tigernicole86″ thoughts, but they’ll be missing a great opportunity to build a more solid relationship if they don’t plan, work, set goals, and do the “accounting & reporting” together. Sharing financial goals should be just as much a part of the picture as sharing anything else. We only have three rules in our marriage: No whining, No secrets, and No respect. That’s worked great for 42 years. Oh …. “No respect” translates to respecting each other’s “No”. Thought I’d best explain that one ;-)

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avatar SteveDH

Oh, I forgot the newest Post-Retirement rule: No Shirking. The infamous “bad day a work” is no longer a viable excuse for not participating in household chores, cooking, or daily errands.

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avatar Luke Landes ♦127,470 (Platinum)

Those three rules are *great!* (Yeah, the explanation helped.) I agree about the accounting and reporting together — some people just aren’t wired for handling money, and one person may end doing the work. I don’t have a problem with one partner being the household CFO and the other being the household COO, separate but equal roles, but still requiring communication and working together.

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avatar Bryan J Busch

I think the only fair way is to tackle joint expenses using both parties’ income, using percentages derived from the difference in salary. My wife and I have been doing this for many years, before we even got married, and it has always worked.

I even made a video and a downloadable spreadsheet template you can use:

http://stopbeingbroken.com/show/household-budgets/

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avatar ricfleuhardy ♦115 (Cent)

My wife and I combine all of our finances, and we are both 50% owners in everything. When we were married we agreed to become one, and money is no exception!

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avatar gotr31 ♦224 (Cent)

Totally agree! If you are going to be sucessful in your marriage and finances you need to be a team!

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avatar Jess

We have separate finances, aside from a joint credit card which we use for household expenses, groceries, etc. We split the mortgage down the middle and periodically re-negotiate who is paying what bills in order to have a roughly equitable arrangement. We maintain separate retirement accounts, savings, checking, credit cards. We do periodically review our finances to see how we can reduce expenses and discuss what our goals are for the upcoming year (focus on paying down student loans, make house more energy-efficient, re-finance house to lower rate/shorter term, up 401k contributions, etc.). It is possible to have separate finances and also work toward shared goals. This system has worked for us for over 10 years, and we’ve never argued about money, but I imagine that if one of us for whatever reason experienced a sharp drop in income, we’d need to re-think our system.

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avatar GrowRichSimply

My wife and I have always had combined finances for a lot of the reasons listed above. Just to add one thing though, one of the deciding factors for us is the fact that she is a stay-at-home mom and doesn’t earn an outside income. However, I value her contributions to caring for our kids more than my own salary so if I was really paying her what she is worth, I wouldn’t have any left over! In all seriousness, we’ve always combined our finances and will likely continue to do so. As our income grows I imagine the pile of discretionary “fun” money will increase, but all of the big stuff (and decisions) will be taken care of together.

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avatar RobE

I would agree with SteveDH’s view on this subject. When you get married “your” debt becomes “our” debt and our financial goals should be on the same page. All household expenses should come from a joint account that both spouses direct deposit into. Both parties get a say in the budget process and part of the budget includes a category where there is equal amount for each person to freely spend without feeling guilty or leaving them without money for food, rent, etc. This also brings a higher level of accountibility into the picture in order to acheive our finanical goals. A little planning and communication before the marriage can help avoid bigger fights down the road and if done correctly this combination of finances can actually lead to a stronger marriage through great communication!

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avatar Heather

Though our incomes haven’t been too divergent (until this past August), our finances are completely joint, except for retirement accounts. Neither of us needs much play money (and unless there’s a major financial problem, we don’t have problems being OK with the other taking play money), and we’re pretty much on the same page regarding spending and saving. It has worked well for us.

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avatar TakeitEZ ♦549 (Dime)

I have been irresponsible financially in the past so my wife now is the CFO of our household. I deposit into her separate account monthly the amount required to cover my half of the necessary expenses (food, rent, utilities). I am becoming more responsible financially and we will revisit the joint account plan in the future once it is clear that I can control my finances smartly.

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avatar krantcents

Whole lot of choices, it is personal at best! This decision requires the couple to sit down and discuss extensively. There is no right or wrong answer. It is what works best for that couple after they make an informed decision.

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avatar 20 and Engaged

My fiance and I combined out finances when we first moved in together (prior to the engagement), but we did it like #3. We have our separate bank accounts, which our checks direct deposit to, and our joint checking/saving for household expenses. It’s been working for us, and we plan on keeping it like this through our marriage. If it ain’t broke, don’t fix it.

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avatar jim

I think combined finances is best and thats what my wife and I do. However I do see that for some people splitting finances may work better.

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avatar Bobka ♦13 (Newbie)

When we first married, even though we both were working, my wife and I decided that we would attempt to operate financially as if she was a non-working spouse. Because all the major bills were paid out of my salary, this forced us to live modestly. My wife maintained a personal account, and I maintained the joint household account. She was able to save some money, and this arrangement also allowed her later to easily leave and reenter the workforce when we decided to have children. Eventually, as my income grew over time, we were able to pay off the house and successfully save for retirement and the college education of our children. This arrangement has worked well for us, and I believe it would also work well for others.

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avatar emizar ♦329 (Nickel)

My husband and I started out with a small joint account for household expenses while maintaining all of the personal accounts we had before we were married. Slowly, more and more money is being diverted into the joint account as we get our married routines down (we’ve been married just over one year). Most recently, we’ve decided to pursue combining our car and renter’s insurance, as we’ve been carrying car insurance with difference companies until now. Once we’ve done so it will just make sense to pay that bill from the household account. I suspect that over time we will reach a point where the majority of our money will be joint instead of the majority being separate as it is now.

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avatar Tony

Given the fact that we have 2 opposite money habits (I am a saver, she’s a spender), we are keeping separate accounts for now. We have a joint account to which we both contribute 50% for paying the bills. We earn similar wages, mine is fixed while hers varies so she has the potential to earn a lot more than I do, but a lot less also. I like to save most of the money I have left. She spends the money she has left to the point that she has no emergency fund, no retirement savings, and still plenty of college loans to repay. She no longer has credit card debt (nor credit cards) after filing for personal bankruptcy. I have told her about the beauties of saving and spending responsibly, what she once called “being cheap”. So far it has fell on deaf ears. My only victory was to convince her to both contribute slightly more every month to the joint account to save towards a family car.

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avatar skylog ♦368 (Nickel)

i have always wondered how many people feel about this. it seems to make the most sense, for many reasons, but i know many people who refuse to do it. obviously, if the relationship fails, there can be many issues with this, and i have heard many horror stories, but it still seems to be this is the route that makes the most sense.

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avatar Sustainable PF

Most divorces stem from issues over money. Be transparent with the money, share it. Having one spouse more wealthy than the other, or spending w/o the other knowing is recipe for disaster.

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avatar DonnaFreedman ♦70 (Newbie)

I’m not planning to marry again (unless it’s for something really romantic, like health insurance). However, if I decide to live in sin then I’ll suggest yours/mine/ours: We each contribute the same amount to household expenses, including setting up an emergency fund, and whatever’s left over we get to use any way we like.

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avatar eric ♦1,549 (Half-Dollar)

LOL Donna….health insurance is a sexy attribute these days I’m guessing. ;)

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avatar faithfueledbennetts ♦264 (Nickel)

Personally, when I got married, the two of us became one. This is in many areas for us, including finances. I feel being married has a lot to do with selflessness and compromise. We took each other’s good & bad, including debt. We have always had combined banking which has never been a problem.

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avatar Jacob @ My Personal Finance Journey

Very good posts! Highly applicable to today’s age when so many houses have both parents working. I would probably tend to go with the option of keeping some things separate, while having combined accounts for household expenses.

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avatar slug

My wife and I went from separate accounts when we had equivalent salaries (which worked well) to combined accounts now that I have a more lucrative position and she has stayed home for the past 5 years. I do wish I had more play money, but don’t we all! If I get a raise, so will the play accounts…maybe.

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avatar Jordan

I refuse to provide for anyone else except myself and kids if I ever decide to have any, which means I keep seperate bank accounts, anyone who lives on my property pays their share weather they choose to work or not, or else can live on the curb I will not provide for ANYONE regardless if I legally marry or not, its not a money issue as it is a principal I don’t provide a free ride in life for anyone regardless of their situation, don’t like it then do something to earn your OWN income.

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