The Best Way for Couples to Manage Their Money

It’s hard to find a less romantic topic than banking. Yet nearly every couple eventually faces this question: Should we have a joint bank account or keep separate accounts?
According to a survey by TD Bank, the answer is often “both.” Nearly half (42%) of couples with joint bank accounts also keep individual ones.

Independence was the most commonly cited reason for maintaining separate accounts. Women were more likely to value their financial freedom, though. In fact, 43% of women said independence was their top motivation, compared with 34% of men.

Just over 20% of couples said they kept separate accounts in order to make sure they had enough money for individual needs, including emergencies and personal spending. Another 16% reported that convenience when budgeting and paying bills was a significant factor, though men were 38% more likely to say so. Only 7% of couples said they kept individual accounts to maintain their privacy.

The survey also found a number of generational differences in couples’ money habits. Millennials were more likely than older age groups to combine their finances before getting married — 70% percent of millennial couples waited to exchange vows before opening a joint account, compared to 88% of duos 55 and older.

Right now, the implications of keeping separate accounts are a little unclear. Some researchers suggest couples are happiest when they combine most, if not all, their money. But those findings might not apply when couples are raising kids together, for example.

Like most money matters, there isn’t a one-size-fits-all approach to joint banking. There are about as many ways of handling this money issue as there are couples dealing with it.

Related: The Best Way for Couples to Manage Their Money

Wondering whether or not you should combine finances with your significant other? Or how to do it? Here’s a quick guide to reasons to combine (or separate) your finances, and ways to make it happen.

To Combine or Not to Combine?

As the TD Bank survey showed, couples don’t usually maintain separate accounts for privacy reasons. Sure, you might want to hide Christmas shopping from your spouse. But if you feel the need to keep most of your spending private, maybe it’s time to rethink being in a serious relationship.

With that said, there are some great reasons to combine your accounts, just as there are great reasons to keep them separate:

Reasons to Combine

Although the TD Bank survey cited ease of budgeting as a perk of separate accounts, sometimes this can get hairy. How do you handle paying for joint expenses, like your mortgage and childcare? What do you do on date night? These questions can be easier when you combine at least some of your finances.

Combining finances can also make it easier for one parent to stay home with the children if that’s what works best for your family. Separate finances only work well when both partners are bringing in an income.

Combined finances also means you need to work towards the same financial goals, and that you need to communicate about your progress. Money can be a source of fighting in marriage, for sure. But once you work through the fight and get on the same team, it can also be a source of strength.

Retirement planning is easier. While you might want to save for retirement through separate accounts, planning holistically as a couple is easier. What happens if one of you saves a lot more than the other? Is one spouse going to travel the world during retirement while the other lives a quiet, frugal life of necessity?

Reasons to Separate

One common reason couples keep their finances separate is that they come into the marriage with significant assets. In this case, you may be more comfortable keeping your money separate.

Also, if you have widely varying spending styles, separating your accounts could help you smooth out money arguments. You’ll each have to meet your obligations to the family unit, but then be free to spend or save as you please.

This seems to be one of the main reasons, in fact, that couples keep their finances separate. They want to be able to make independent spending decisions. And if you ever separate, having separate finances already can make that a bit easier.

Finally, when couples combine finances, the money management often falls exclusively on one spouse. Even if this is what both parties prefer, what happens in the case of divorce or death? The spouse who had no hand in the money management may be clueless about how to even access accounts or pay the bills!

Options for Both

In reality, the majority of couples are somewhere in the middle of completely separate finances and completely combined finances. In order to have completely separate finances, you’d have to maintain completely separate lives–no shared home, grocery bills, etc. And even couples who combine almost all their assets might maintain separate accounts for personal spending.

Here are a few ways you might go about managing money somewhere on this spectrum:

1. Combined, but with separate fun money

This is how my husband and I manage our money. We married young and broke, so we weren’t concerned about keeping anything separate. After all, who cares about separating your assets when they consist of a 10-year-old vehicle and $20 in your checking account?

We’ve had to work hard over the past ten years to meld our differing money management styles. But one thing that’s helped us tremendously is separate fun money accounts. It’s basically an allowance for adults.

Each month, we look at our income and expenses. From the money that’s left, we each get a set amount–the same for each of us–to transfer to a personal checking account. We can spend that money however we want, no holds barred. But we’re also responsible for using this money to fund things like new clothes and other essential personal expenses.

This helps us have some personal flexibility, but keeps us on the same page financially. Plus, we can use these accounts to shop for each other’s Christmas and birthday gifts! Before we did this, I was notorious for finding out what I was getting while balancing the common checkbook.

2. Contributing a set amount

One option for semi-combined finances is to make sure your basic financial goals and needs are covered together. To get started, figure out what you spend each month on things that benefit both of you or the whole family. This might include:

• Mortgage/rent
• Shared transportation costs
• Childcare if you both work
• Other child-related expenses
• Food that you cook at home
• Shared restaurant trips
• Utilities and other items like internet and cable
• Pet care expenses, etc.

Let’s say this comes out to $3,500 per month, at a minimum. Plus, you want to save $300 per month for your annual family vacation, and $300 per month for emergencies like a broken washing machine. So your total is $4,100 per month in shared expenses.

You should then maintain a shared checking and savings account, and each spouse can contribute $2,050 to that account each month. You’ll pay your bills and essentials out of that account. But whatever is left over goes to your personal accounts, to spend or save as you please.

This option works well when your income levels are similar, but you have divergent financial goals. Or it works well if one spouse enters the marriage with significant debt that the other spouse doesn’t want to take on.

In this situation, you need to discuss what you’ll do if one spouse becomes unemployed or gets a raise or a steep pay cut. You’ll also need to be flexible on what counts as a common expense over time, and you’ll have to be excellent at making those spending decisions as a team.

3. Contributing according to income

What if you’re dealing with two widely varying incomes? Maybe one spouse works for a non-profit making $30,000 per year, and the other is in a high-paying career making $80,000 per year? That’s a big spread!

And it’s probably unfair to expect the spouse making $30,000 per year to contribute his whole paycheck to the common fund while the other spouse contributes less than half of what she makes.

If you still want to maintain separate accounts, in this case, use similar steps as the option above. First, total up all your shared expenses and savings goals. Then, divide them according to income.

In this case, the lower-earning spouse could contribute about 27-30% of the shared expenses, while the higher-earning spouse contributes 72-80%. In the case of the $4,100 budget mentioned above, that’s $1,107 per month from spouse A and $2,952 per month from spouse B.

Spouse B will still have significantly more left over than spouse A. But they’ll both have money left over for personal spending, saving, or investing.

Again, communication is essential here. Maybe it makes sense to split the input a little unevenly, having the lower-earning spouse put in even less money so he has more left over. Or maybe it makes sense to split things exactly according to income, but have the higher-earning spouse take on more of the extras, like vacations.

The bottom line is that any time you’re combining lives, you’re combining finances on some level. Even if you’re only sharing some expenses, marriage means you’ll have to figure out how to meet those expenses together. And your money management choices might change dramatically over time.

So be sure to keep track of all your savings and spending–whether on personal or common expenses–and be open to changing your money management style over time.