I know, I know, this is a different sort of topic for me. But this morning as I swiped my card at the grocery store, I was thinking about how well our money management system works for us. We hardly ever talk about money. The only time we do is when we are planning a big purchase or an expensive trip. It’s great! You see, I love money, but I hate it. I don’t like to talk about it, because it’s stressful, because student loans, ya know?
So being able to go about our everyday lives without ever discussing money seems like a pretty sweet deal to me. And when we do talk about it, it’s for planning a trip or buying something fancy?! Heck yeah!
Okay, are you intrigued? We didn’t always have our stuff figured out, so I thought I’d share a little bit about how we learned to manage money as a couple (hint: it took a lot of trial and error) and some tips I learned along the way. This advice is not just for married couples! We lived together for five years before we got married, and that’s when we figured all of this out.
5 Tips for Managing Money as a Couple
First, a few disclaimers:
- Disclaimer #1: I am not a financial advisor or anything of the sort (though I did work in the financial industry for two years). These tips are based on my own personal experience!
- Disclaimer #2: This post is not about how to make a ton of money and get rich. Trust me, we’re still working on figuring that one out and I’ll be sure to let you know once we do 😉
- Disclaimer #3: I realize that not *needing* to talk about money every day is a blessing (and we are very grateful), but even when money is short, I believe that these tips are still (or even more!) helpful.
Phew! Alright, moving on…
Tip #1: Know how much things cost.
You might call this setting a budget. But I like to think of it less as a budget and more as an overview. Be realistic. You’re not trying to cut back on expenses or limit how much you spend on take-out each week (not at this point, at least, you can do that later). Right now, you just need to know, realistically, how much things cost you.
What are your joint living expenses? Things like rent/mortgage payment, utilities, and groceries. The necessities that both of you need and are responsible for.
In addition to your joint expenses, you need to figure out how much your individual expenses are. For us, this includes things like student loans, credit card payments, car payments, and car insurance.
Make sure you don’t leave out the non-necessities! Remember, you’re trying to get a realistic picture for what you spend, not necessarily what you *believe* you *should* be spending. Factor in dining out, Netflix, your monthly Target spending, Spotify, all of it. This is not a time for shaming or blaming, people. You both spend money. Own it and accept it.
Once you’ve done this together, you should both feel good simply because you know where all your money is going. I don’t know about you, but I know that for me personally, the thing that usually stresses me out the most about money is that mysterious feeling of “where did it all go!?” When you have it all mapped out, it instantly eliminates that stress factor.
Tip #2: Know how much you make.
Never, ever keep your money a secret. Ever. Never, ever! You should both know how much the other makes. If you are interested in managing your money together with a shared responsibility (which I assume you are, since you’re reading this) there is no reason for you to not know how much your partner makes, and vice versa. If you want to keep it all separate and private, go for it, but this isn’t the post for you! In order to manage your money as a couple, you need to be open. One of you might make much more than the other. One of you might make all the money while the other makes very little. Maybe you both make about the same amount. It doesn’t matter. A healthy and open relationship with money means a healthy and open relationship with each other. Communication is key.
Tip #3: Have a shared money philosophy.
This one might take a while for you to both get on the same page. You might come from very different backgrounds, and you might have been raised to view money in very different ways. Maybe one of you is a big spender and the other is extremely frugal. Maybe one of you loves to think and talk about money while the other hates it. I’m guessing this is all very normal. Opposites attract, right? Talk about your beliefs about money with each other. You might not totally see eye to eye, but by discussing it with your partner you will be able to eventually have a shared philosophy. Is money meant to be saved? Is it meant to be spent? What sorts of things do you feel are worth spending your money on? If you don’t fully agree, at least you know where the other person is coming from.
Tip #4: Have shared goals.
This is kind of a continuation of the previous point. What goals do you have as a couple? What things are the most important to each of you? Travel? A big house? Expensive clothes? Nice cars? Again, you may not be in total agreement, but by having this discussion, you should be able to meet somewhere in the middle. Once you know what you are both willing to spend money on, this will help you spend your money wisely and avoid arguments in the future.
Tip #5: Manage your finances in the way that makes sense to you.
Do you want to combine bank accounts? Keep separate accounts? Put your bills on autopay? Have credit cards? The answers to these questions will vary from couple to couple, so you have to choose a system that works for you.
I think the biggest question to tackle is regarding your bank accounts. You basically have three options when it comes to your accounts. 1. Keep your accounts completely separate. 2. Open a joint account and combine everything. Or 3. A combination of both.
When we first moved in together, we kept our finances separate for a while. We each had our own bills, payments, and expenses, and we each had our own paychecks that went to our own separate checking accounts. But over time we realized that with our combined living expenses, it would be easier to combine our finances. Even if we had split up the bills evenly between us, having to ask for money, and having to physically (or digitally) hand over money, can cause all sorts of weird, yucky feelings. We didn’t want that. Yet at the same time, we weren’t married and we didn’t want to completely combine everything! For a few years we simply kept our separate accounts and tried to split the bills evenly between us.
It was when we bought our house together that we decided to act like a real (un)married couple and open a joint checking account. This is what really made things so “autopilot” for us. Here’s how we did it:
- Open a joint checking account in both of your names.
- Determine how much your joint monthly expenses are. For us, this means house payment, utilities, and groceries. You can also round up to include some of your “fun” joint expenses, like going out for dinner or going to the movies. For easy math, let’s say this comes out to $1,000 (wouldn’t that be nice!)
- Divide that between the two of you. You can split it in half and choose a flat sum (so in our easy math example, this would be $500 per person per month). Or, if one of you makes much less than the other (which was the case when we lived together and I was a broke grad student) you can choose to do it by percentage (for example, each of you contributes 50% of your paycheck, or more or less, depending on how much is needed to cover your monthly expenses). Following along with me so far?
- Divide your per-person, per-month amount by the number of paychecks you get. Typically this will be two per month for each of you. If you want to get really technical, you could multiple your monthly amount by 12 to get your yearly number ($1,000 x 12 = $12,000) and then divide that by either 24 paychecks (if you are paid twice per month) or 26 paychecks (if you are paid bi-weekly).
- Set up direct deposit so that your per-person amount is deducted directly from your paycheck. The remainder of your paycheck should go to your own separate checking account. If you don’t have direct deposit, set up an automatic transfer each month so that you don’t have to think about it.
With this system, we pay all of our bills out of our joint account. When we go out for dinner, we pay with this account. When we buy groceries, we pay with this account. We check it every now and then just to make sure we’re staying within budget, other than that, it’s pretty much on autopilot!
The remainder of each paycheck goes into each of our separate checking accounts. This is where we pay our own separate bills and where we get our own separate spending money. I personally love this system because I don’t feel like I’m burdening our marriage with my car payment, for example, and I always know exactly how much money I have to spend if I want to splurge on something for myself (but let’s be honest, most of my “splurging” takes places on a Saturday morning trip to the thrift store).
So that’s our system, and it works really well for us. It’s not rocket science, but it did take us a while to get here. I’m not saying we have it all figured out, and I’m not saying we never argue or worry about money, but for the most part, we are pretty much on the same page. We don’t agree on everything and our personal philosophies and views on money are still a little different, but over time we’ve come to see more eye-to-eye. And at least when we do disagree, I know where he’s coming from and he knows where I’m coming from. But most importantly, we’ve figured out a way to handle money that makes sense to us as a couple. It really comes down to open, honest communication, and making sure you’re on the same page.
What about you? Do you have any tips for managing money as a couple? Leave a comment! I’d love to hear how others deal with this tricky subject!