Money is one of the most common causes of fights between couples (ranking just below the classic debate about who forgot to change the toilet paper roll). When you were single, you could spend your money however you wanted – but as a couple, you need to get on the same page, and that can lead to some heated arguments
It’s no surprise that money can stir up such complex emotions, given the different life experiences and perspectives that each person brings to a relationship. But the key to managing money together is trust and communication, as both partners will share responsibility for the financial journey ahead.
Whether you’re about to move in together, exchange vows, or start your joint savings journey, here are our tips on how to manage money as a couple. Trust us: it’s not as scary as it sounds.
To merge or not to merge?
A good starting point is deciding whether to open a joint bank account with your partner. While this makes it easier to manage shared household expenses, it’s a decision that will hinge on your comfort level, trust, and alignment of financial goals.
Before you jump into the joint pool, have an open conversation with your partner about money. Share your financial life stories with each other and reveal any debts hiding in the closet.
Next, determine your collective approach: are you both all-in on the idea of a joint account, do you prefer the independence of separate ones, or are you considering a mix of both?
To give you an idea, here are some ways couples commonly structure their joint accounts:
- Complete pooling. A fully integrated approach where all income and expenses are combined and managed from a single joint account. If you’re looking for absolute financial transparency and joint decision-making, this is it.
- Complete pooling with personal allowances. Choose to combine both incomes into a joint account, but send an allocated portion back to your personal accounts to maintain personal spending freedom within set boundaries.
- Partial pooling. Each individual maintains their personal accounts, but contributes a portion of their income to a joint account for specific purposes like utilities, rent, or savings. This allows for a shared financial responsibility, without sacrificing individual financial autonomy.
Note: Decide on a fair contribution percentage based on each person’s income. For example, if one partner earns 60% of the total income, they might contribute 60% to the joint account, while the other contributes 40%.
While there is no right or wrong approach, the key is to set boundaries and be clear about the purpose of the joint account, and whether it covers only shared expenses or extends to personal spending as well.
Nailing the joint budget
The next step in managing finances as a couple is to establish a joint budget for shared expenses, savings, and those dreamy common goals. Having a budget provides a structured way to manage joint household expenses.
Start by figuring out what each of you brings home and where it goes. Entertainment? Check. Health and lifestyle? Double check. That daily commute – and that daily oat flat white? Check and check. Pay close attention to detailing expenses, making sure that it covers shared stuff, and a little pocket money for each of you.
A useful guideline for salary allocation is the 50/30/20 rule, which suggests allocating 50% of income to bills, 20% to savings, and reserving 30% for the fun stuff.
If you haven’t yet, now is the time to get a good look at your partner’s spending habits. Are they spontaneous spenders, or are they Team Save-for-a-Rainy-Day? While their answer might not matter much now, it’s the tiny ripples that can make waves further down the track – especially when you’re eyeing a deposit for your dream home.
Remember to review and tweak your budget regularly. Life changes, and so should your budget! If you need a hand getting started, check out our online budget planner calculator.
Setting up your savings plan
With your budget cap on, it’s time to sit down and map out your short and long-term financial dreams as a team. Whether it’s squirreling away for your first home, jet-setting on a dream vacation, or building up an emergency fund, aligning your goals will help you distribute your funds accordingly.
First, set a realistic weekly, fortnightly, or monthly savings goal. The key word here is realistic – that means no dipping into it just because the latest iPhone has come out! Set your sights on SMART goals and write them down together to ensure your savings stay on track.
It’s also a good idea to split your savings into different buckets: one for short-term goals, one for the future and another one for emergencies, like a broken washing machine or burst water pipe. You can either pool your savings for a shared goal, or you might opt for separate savings accounts – the choice is yours.
To get the most out of your money, consider opening a higher-interest savings account and setting up regular automatic transfers into it, so you and your partner can sit back and watch your savings grow. Your money working for you! Sounds pretty nice, right?
If you know you can go without touching your savings for a while, and you want to be rewarded for your discipline, then you can also consider a term deposit. Much like a relationship, saving money is all about commitment – and in the case of a term deposit, you commit to keeping money deposited for a fixed period of your choosing, from a few months to several years. In return for making this commitment, you’re rewarded with a higher interest rate. If only life were always this simple, right?
How to manage overspending
If your partner is having a bit of a spending party that’s denting your budget, ignoring the problem won’t make it disappear.
Start by having an honest and positive conversation, setting clear spending limits and encouraging open chats about your financial habits. Don’t just assume that your partner has the same mindset about spending and saving that you do – talk it through with them and make it clear where you’re both coming from.
If you haven’t already, consider implementing a personal splurge allowance that either party can use to buy anything they want. You can facilitate this by providing your partner with a debit card linked to a designated bank account with a set amount of money – once it’s gone, it’s gone!
And remember, if talking about money with your partner feels like entering a battleground, it might be time to bring in the professionals. A financial counselor or couple’s therapist dealing with financial issues can act as objective third parties, offering guidance without hurting anyone’s feelings.
Communication is key
Successfully managing money as a couple boils down to one golden rule: talk it out. Start those conversations with your partner, deal with any worries that pop up, and don’t forget to throw a little celebration when you hit those money milestones together.
Remember, it’s not about finding a carbon copy of your money mindset. It’s about creating a balance that works for the both of you – now, and into your future together.