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3 ways couples manage money

By Paula Pant ·
Wednesday, October 30, 2013
Posted: 3 pm ET

Congratulations: You are a newlywed! You and your partner now need to combine finances. That can be a tricky topic, especially if one of you is a natural saver and the other throws caution to the wind.

Fortunately, there are several ways you both can indulge in your saving/spending tendencies without driving the other person nutty.

Following are three options for couples to combine their finances, help each other save money and allow each other to indulge that "inner shopaholic."

1. Separate allowances

Some couples decide to open a joint bank account, which they use to pay the majority of their bills. That includes rent or a mortgage, utilities, groceries, veterinary bills, and so forth.

But these couples also maintain separate accounts in which each person keeps an "allowance" for himself or herself. The partners form an agreement on how much money each person receives in "allowance" each month.  This tactic works best when both partners get an equal allowance.

With the allowance, each person can spend that money on anything he or she desires: pedicures, designer handbags or tickets to the World Series.

This tactic simultaneously limits spending while also giving each person the psychological freedom to enjoy some "mad money."

2. Going 'all in'

Other couples go "all in:" They combine every dime of their earnings into a joint account, and cease to distinguish "your money" from "my money." The combined pool of "our income" funds every bill and each discretionary purchase.

While this is the easiest tactic from a bookkeeping perspective, it's one of the hardest from a relationship point of view, because it requires both partners to agree on every purchase.

3. Strictly separate accounts

Some couples never bother to open a joint checking account. Instead, they each earn and keep their own money, while chipping in to cover joint expenses. Some couples pay 50/50, while others chip in proportionately by salary.

While the separate-account system works well for some, the strategy breaks down if one partner decides to become a stay-at-home parent, becomes a full-time student or gets laid off.

As a work-around, some couples decide that the "working partner" pay a "salary" to the stay-at-home partner for his or her domestic duties. Some people think this sounds strange, but others appreciate the formalized nature of the agreement.

As always, personal finance is personal, so couples should choose whichever strategy works best for them.

Paula Pant blogs at about building wealth and living life on your own terms. She's traveled to 30 countries, owns six rental units that produce thousands in passive income, and runs a freelance writing and online marketing company. Follow Paula on Twitter: @AffordAnything.

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1 Comment
Toby Speed
October 31, 2013 at 7:50 pm

Another variation of #1 is to have a joint account where each member contributes an equal amount to the account and keeps the remainder as personal allowance. So the allowances are not equal, but the household ops account (as we call it) is.