Splitting financial responsibilities can be tricky to manage as a married couple. There simply is no one-size-fits-all approach to cover every situation.
To help you decide how to split finances when married, I’ll walk you through three ways to successfully divvy up your funds:
- Combine all your funds into a joint account
- Use both joint and separate accounts
- Use completely separate accounts
Before we review these three strategies, keep the following important guidelines in mind.
Guiding Principles for Couple’s Finances
Establish these core values in your marriage:
Disclosure
Share it all: the good, the bad, the ugly. Write down the details on your income, debt payments, monthly bills, income, spending habits, and anything else related to money. List everything down to your streaming subscriptions.
This process can be difficult and tedious, but your diligence will be rewarded with the clarity and transparency it takes to make sound financial decisions.
Honesty
Don’t lie, cover up, or hide your transactions. Being truthful is crucial to avoiding conflict and unnecessary drama around money.
Open Communication
Have plans to make a big purchase? Want to go to college? Do you have retirement plans?
Talk to your partner as soon as possible about your personal goals. Frequent and deep conversations about money will help uncover the best strategy for each decision.
Goal-Setting
Define what you want to achieve individually and as a unit. Then, create a budget that details your income, debts, and expenses to determine how much you save to achieve your long-term goals.
Setting financial goals will help you construct a solid plan to achieve them.
Roles & Responsibilities
You’ll have to figure out if one or both of you will manage the money. Play to each of your strengths. Perhaps one of you is better at accounting, and the other thrives in high-level management.
Or you could do everything 50/50. Talk through roles and responsibilities before setting a plan in motion.
3 Ways to Split Money in Your Marriage
Discuss these three strategies to help you decide how to split finances with your partner.
1. Combine All Your Funds into a Joint Account
In this method, both you and your spouse open a joint bank account. You agree to deposit all your income here and spend exclusively from this account.
Remember that you’re pooling your resources to pay bills and save. You’ll have to decide whether you’re splitting expenses equally or want to account for the lower earning partner.
The latter adds a layer of complexity to accounting. Only go this route if one or both of you are committed to calculating spending percentages regularly. Otherwise, stick to the same percentage to keep things simple.
A joint checking account (or joint savings account) is best for couples who want to streamline money management and view money as a shared resource for all expenditures. It’s a “we over me” mindset.
- Pros: Joint accounts are easier to manage.
- Cons: Surprise gifts will be harder to pull off and can get complex if you account for disparities in income or debt.
2. Use Both Joint and Separate Accounts
Here, you create a joint account for combined expenses like household bills, rent, groceries, utilities, etc.
But you also have your own personal accounts to do as you wish. Typically, you’d deposit both of your incomes into the joint account and then transfer an agreed amount into your accounts.
Remember to define whether expenses are paid equally or proportionate to your respective income.
With this method, your shared costs are covered. But you also have the freedom to manage personal expenses and buy things at your discretion or surprise your spouse with a gift.
- Pros: Shared costs are covered, and you have your own money, too.
- Cons: You have to manage multiple accounts, and transferring to your personal account can start to feel like an allowance.
3. Use Completely Separate Accounts
This strategy allows both of you to manage money through your own bank accounts (and no joint account). However, this doesn’t mean that it’s each partner for themselves!
It’s still critical to discuss finances regularly and how you pay shared expenses.
In fact, you must communicate even more regularly than if you had a joint account. You’ll have to think through what expenses each of you will cover every month, how to spend money on large purchases and vacations, and who is responsible for paying down debt.
Separate accounts work for financially disciplined people who talk often, but it may not feel as partner or team-oriented as the other methods.
- Pros: Autonomy in managing your finances and personal spending.
- Cons: It’s less transparent, and your relationship can become divided or contentious if regular communication dwindles.
Common Questions About Splitting Finances
Should We Split Finances 50/50?
How you split your finances is entirely up to your unique circumstances. List your personal debts and income to determine the best course of action. Then, compare these numbers to your expenses to understand your individual and collective financial picture.
Once you have this information, decide as a unit whether or not it makes sense to split finances 50/50.
What if One Partner Earns More Money Than the Other?
Don’t let income inequality become an issue in your marriage because you didn’t discuss it. If you make significantly more money than the other, you should discuss how this will impact your savings goals and spending habits.
For example, some couples split expenses based on who is bringing in the lion’s share of income.
If this is the case, explore how to split bills and household expenses based on a percentage of your respective incomes. Even the playing field to alleviate stress and resentment down the road.
How Will You Handle Unexpected Expenses?
Whether you keep “rainy day” funds in a separate or joint account, you should definitely discuss your financial contingency plan for when things go off the rails.
You’ll thank yourself for putting aside that extra cash each month if or when you have an unexpected house, car, or who-knows-what bill pop up. Just make sure you’re both on the same page about how much money you’re setting aside and which bank account it’s in.
Who Pays For What?
Some shared expenses are more obvious than others. For example, you likely expect to split specific bills such as your monthly mortgage, phone bill, and utilities.
But what about more arbitrary expenses, like friends’ birthday presents or student debt? You might decide to take an individual approach, or you might decide to chip in on each other’s expenses.
The only way to achieve this is to have the discussion and set clear guidelines around who’s responsible for which payments.
How Do Your State Laws Impact Finances?
Did you know that depending on where you live, your finances may be impacted differently in a divorce? In community property states like California, your assets are divided 50/50 in a divorce.
Alternatively, in equitable distribution states, a court will divide assets based on income, earning potential, and health status, to name a few.
The point is that without a prenup, your money earned during the marriage could be up for grabs in a divorce. If you feel anxious about this, talk to your spouse about how a postnuptial agreement could potentially shield you both from financial hardship in a worst-case scenario.
Can You Have a Successful Marriage with Split Finances?
Yes, you can have a great marriage with separate finances. The key is to keep an open line of communication and maintain a high level of organization in your savings strategies, payment methods, and how you manage your individual accounts.
Put Your Plan in Motion
That’s a lot to consider! Nonetheless, talking through the strategies in this guide and upholding your core values will help you foster a successful marriage — one rooted in trust, honesty, and transparency.
Once you develop a sound plan, you can enforce it using a prenuptial agreement (or postnuptial agreement) to help solidify it into a contract that ensures your financial future. Feel free to book a consultation call with me to talk through and develop a plan to achieve your financial goals — I’d be happy to help.