Building a lasting relationship is like immigrating to a new country – it helps to speak the right language.
That doesn’t mean you need to have all the same priorities and opinions. Rather, you should both have a good idea of what makes the other person tick. Financially, that means coming to a firm understanding of how you’re going to manage money.
This isn’t as easy as it sounds. According to research conducted by The Harris Poll on behalf of the American Institute of CPAs (AICPA), 73% of couples who live together say financial decisions are a consistent source of tension in their relationship.
Want to avoid becoming a statistic? Learn which financial love language you both speak by reading below.
This strategy involves each person having their own bank, credit card, and retirement accounts, but chipping in toward shared expenses as a unit.
The biggest question with this plan is how to divide all the bills and joint costs. Some prefer to do an even 50/50 split while others prefer a proportion based on income.
For example, let’s say you earn $75,000 while your partner earns $50,000. In this case, you would divide everything 60/40. Many couples prefer this way of dividing expenses to avoid punishing the lower earner.
If the higher earner also has a large student loan balance, consider factoring that in when calculating the percentage.
You may decide to open a joint bank account to pay bills like rent, utilities, internet, and groceries. You can also pay for things with your individual account and then use an app like Splitwise to track who owes what.
Even if you have separate accounts, you should still talk about long-term financial plans like retirement. If you want to retire at 50 and your partner plans to work until 70, that will have a huge impact on your finances. You’ll also have to decide how to save for joint goals. This includes vacations, getting a pet, or remodeling your kitchen.
Who this works best for: This method is best for unmarried couples, blended families, or those in less traditional situations. If you each have children from a previous relationship, it may be easier to keep everything separate. This strategy is especially popular with unmarried couples who don’t want to combine accounts.
This also works well for couples where one party has a spending problem. It prevents them from running up a balance on the other person’s account.
One popular way for couples to manage money is to pay all bills and other necessary expenses through a joint account and create separate accounts for individual discretionary expenses. The allowance method lets each person buy whatever they want, judgement-free.
Every month, each person gets the same amount of money in their personal account. Any money not spent during the month rolls over, allowing people to save for their own long-term goals and purchases. If you both prefer a cash envelope budgeting method, then you would each get the same amount of cash to spend at the beginning of the month.
This method can prevent arguments and judgemental comments like, “You spent how much on that?” If you want to drop $500 on a PS5, you would be completely within your rights to do so – assuming you have enough money saved in your discretionary account.
It’s best for both parties to receive the same amount every month, even if there are huge income discrepancies. Making it proportional to each person’s income could foster resentment, especially if one spouse does more of the household tasks.
Decide early on what counts as a household expense and what counts as a discretionary expense. Do hair cuts, gym memberships and personal care products come out of the shared account? You may need frequent check-ins at the beginning to ensure everyone is on the same page.
Who this works best for: This strategy works well for couples who want to pay for big picture expenses together, but still maintain some financial autonomy. It also allows each person to buy gifts for the other without having the surprise spoiled on the bank statement.
Two Become One
Some couples prefer to have all their money pooled together, including their discretionary income.
This method is best for partners with excellent communication skills and infrequent financial arguments. Also, if one person has no interest in managing their money, they may use this system to allow the other person more control.
Who this works best for: This strategy may work for couples with similar spending habits or who are on a tight budget and need to track every dollar.
It also works well for couples who are high earners and naturally frugal. For example, if you both earn much more than you spend, you may not see a reason to have individual allowances because you always come in under budget.
How to Determine Your Financial Love Language
Look at how you currently manage money together and which money love language you’re using. Then, talk about whether or not you would prefer a different setup.
When explaining what kind of system you prefer, listen to what your partner is saying. Even if you could save more money by having a completely joint system, your partner may feel like they’re being controlled or that you’ll judge their spending decisions.
You should also check in regularly to make sure your partner is satisfied with the arrangement. Opinions can change over time, and what once seemed fair may become a problem. For example, keeping everything separate may be less realistic once you have a child together.
If you’re still having financial disagreements or can’t agree on an equitable method, it may be worth finding a licensed financial therapist specializing in couples. The Financial Therapy Association has a directory you can search to find a qualified counselor, many of whom are also licensed marriage and family therapists.