How to manage money wisely as a couple

A cuple with a blong young woman and a young man holding cash with funny faces, wondering how to manage money wisely as a couple

How to manage money wisely as a couple?

You may be in a situation where things are getting more serious in your relationship.

Or you may have been in a relationship for a long time, but you feel like you haven’t figured out the best way to handle money yet.

➯ This extensive guide will tell you everything you need to know about how to manage money wisely as a couple.

➯ It will share practical information based on research and studies to help you find and implement an adapted solution.

The commons way to handle money for couples

Table representing methods used in Europe to manage money wisely as a couple

An interesting study conducted by INSEE has shown that there are 3 main methods used to handle money as a couple in Europe.

Usually, couples have the choice between combining all finances, having both  shared and personal accounts, and keeping 100% separated accounts.

➯ For each of these methods, we’ll share the pros, cons, and some surprising statistics.

Number 1: Combining all your finances

What is it about?

Combining all your finances means that you’ll make no difference between what’s yours or not.

Who’s more likely to do that?

According the INSEE, there are a few factors that increase the likeliness of using this solution:

  • If couples have been together for more than 5 years
  • If they are married
  • If they have kids
  • If only one person is working

How to get started?

To put your finances together, you first need to create one or multiple joint accounts.

Option 1 – A practical way would be to create two different accounts.

➯ You could have one spending bank account. You’ll receive your salaries directly on this account, and you’ll use it to pay all daily expenses, monthly bills, and debt.

➯ And you could also have a saving account that would be used to pay your holidays, car, properties, renovations, etc.

Option 2 – Living off one income

Here is a slightly different way of managing money as a couple if both partners earn an income.

➯ Just like the option above, you would be sharing a spending and saving account.

➯ However, this option consists of spending the income of only one partner, and transfer the rest in your shared saving account.

Obviously, this option is not for everyone.

Firstly, you need to earn an income that is high enough to pay for the expenses of two people, or maybe even more if you have a family or in debt.

However, this could be an interesting option as it enables you to ensure that you’re always saving money.

Pros

  • A study called “Pooling finances and relationship satisfaction” has demonstrated that couples who combine their finances are more likely to stay together as they feel more satisfied. This effect is even more prevalent among couples with limited financial resources.
  • This is the easiest way to save time and headaches when calculating who owes what to whom
  • Total transparency
  • Provides a sense of stability
  • Helps you to have a shared vision for financial goals
  • – By sharing your finances, you can help each other in case one spouse’s income suddenly drops. For example, if your partner loses his/her job.

Cons

  • You may feel guilty about spending large amounts of money on things you enjoy
  • You might feel annoyed if your partner tends to overspend money
  • In case you break up, money management will be more complex
  • You may not like full transparency if you don’t want your partner to know everything about your spending.

Number 2: Having both joint and individual accounts

What is it about?

This is the second most popular method to manage money as a couple.

You and your partner would have both shared and individual accounts.

Overall, this method gives you more flexibility in managing your money if you don’t want to pool everything together, but you also don’t want to have completely separate accounts.

Who’s more likely to do that?

Couples that are more likely to use this option are ones that are usually:

  • newer couples (who have been together for less than 5 years)
  • couples who are both working
  • younger generations

How to get started?

You have multiple ways to do it.

Option 1 – Most finances are combined, except miscellaneous money

How?

Exactly like when pooling all finances, you can have a shared spending and savings account with your partner.

➯ In the shared spending account, you’ll receive your salary and pay daily and monthly expenses.

➯ Each month, you’ll send some money from your spending account to your shared savings account. You could use this account to pay for your holidays, car, renovations, etc.

➯ The only difference is that each of you will have a personal spending account. Every month, you and your partner will transfer money from your spending account to this personal account.

This personal account will be used for miscellaneous activities. It can be anything that you spend to treat yourself (shopping, restaurant with friends, etc.).

To have an extra spending account, you’ll first need to confirm with your loved one how much will be contributed by each of you monthly.

  • This fun money could be of equal amount
  • This fun money could also be proportional to income

Once you’ve decided how much money you’ll have monthly, you also need to define what kind of expenses fall under that “extra spending” category. For example, imagine that you go to a restaurant with your partner.

For example, imagine that you go to a restaurant with your partner. Do you consider it a shared expense or a personal expense? That’s for you to decide.

If you decide to have a personal account for extra spending, we recommend our TiC Life lifestyle spending accounts (link to the website). You can open one in minutes and start earning rewards for all your purchases.

Pros of having a personal fun account

  • You may have a sense of freedom as you are able to spend money on the things you enjoy without guilt.
  • If you want to surprise your partner for his birthday but don’t want him to see the expense on the shared bank account, this is a good solution

Cons

  • You’ll have to take some time to define how much each of you will have monthly
  • You will have to use two different spending accounts (shared and personal), which may complicate things.

Option 2 – Most finances are personal, except bill splitting

How?

➯ Both partners will have separate spending and savings accounts.

➯ They will create only one shared bank account used to pay shared bills such as the rent, electricity, etc.

Once they have both received their salaries in their personal bank accounts, they will transfer a monthly portion to the joint account to pay the joint bills. 

➯ And now the question arises: how to share the bills fairly?

There are multiple ways to do it:

  • You can pay 50-50. This way, the calculations will be easier.
  • You can split shared bills according to your income. This can be helpful if your incomes are different. By paying 50-50, it could put some pressure on the lower earning partner.
  • Pay for specific bills. For instance, you might pay the groceries, electricity and water while your partner pays for the rent.
  • You can find other arrangements. There are unlimited possibilities for sharing bills that you and your partner can think of. 

Pros

  • This can give more freedom and independence from your finances.

Cons

  • You’ll have to make sure to always have enough money in the shared account to avoid problems regarding the bills.
  • You’ll have to take some time to define how much each one of you will have each month
  • You’ll have to use two different spending accounts (shared and personal), which may complicate things.

Number 3: 100% separated accounts

What is it about?

This solution implies that you and your partner will have no joint account.

You’ll earn and manage your money, while your other half will do the same.

Who’s more likely to do that?

  • Young couples who do not live together
  • Couples who are looking for more financial freedom, empowerment and self-identity
  • Couples with trust issues or with a partner who has shopping addictions

How to get started?

This method doesn’t require to create any joint account.

You’ll just have to use your own individual accounts to manage your spending and savings.

However, you’ll still have shared expenses to some degree.

When it comes to splitting bills, you’ll have multiple solutions:

  • You can pay 50-50. This way, the calculations will be easier.
  • You can split shared bills according to your income. This can be helpful if your incomes are different. By paying 50-50, it could put some pressure on the lower earning partner.
  • Pay for specific bills. For instance, you might pay the groceries, electricity and water while your partner pays for the rent.
  • You can find other arrangements. There are unlimited possibilities for sharing bills that you and your partner can think of. 

Pros

  • You’re both actively involved in your finances. Some people might be frustrated if they’re the only one managing the finances. With this technique, you won’t have that issue.
  • Since there is no shared money, you don’t have to compromise on your spending.
  • Having separate accounts can be a good solution if one partner has money issues, such as shopping addiction. This method would be a way to protect your income.
  • If you end your relationship, you won’t have to think about how to divide the money fairly

Cons

  • Having separate accounts does not prevent money conflicts
  • You will still have to determine how to split shared bills
  • According to an INSEE study, couples with separate accounts are less likely to work out in the long run
  • Since you have joint bills to pay but no joint account, one of your bank accounts will have to be debited. And the other partner will have to make regular transfers to that account to pay his or her share.
  • With separate accounts, finances are not transparent. As a result, couples who don’t trust each other are likely to have conflicts because it’s easier to hide things from each other.

How to choose among these methods?

a man and woman who are in a relationship are wondering how to manage money wisely as a couple

Each couple is different

There are many factors that will influence your decision on how to manage money wisely as a couple.

➯ It depends on your age, marital status, children, debts, values, whether or not you both work, and even the country you are from

How to make a decision

Take some time to talk and hear each other out

Take the time to discuss your opinion, your financial situation and your vision together.

If you have a different approach, hear each other out.

Having different opinions within a couple is the opportunity to collect different perspectives and make a more informed decision.

➯ Communication about money is important because it correlates to couple satisfaction and long-term relationship success. 

Once you agree on a method, it’s time to implement it

Start by calculating your common expenses together.

➯ How much do you have to pay per month?

If you don’t want to share all your finances, how to you want to split shared bills?

➯ Have you ever thought about your financial goals?

▸ How much would you like to save?

▸ How much money would you like to have for extra activities?

Talking about your financial goals will also help you to make the most appropriate decision.

With all this information in mind, you’ll be able to make an informed decision and try it out.

If you end up not liking this method, that’s ok. You can always talk about it and find alternatives until you’re 100% comfortable with your way of managing money.  

Conclusion

There are so many ways to manage money as a couple.

And there is no straightforward answer on how to do it.

The most important points are to be aware of the options you have, talk with your partner and agree on a solution that feels natural.

➯ Keep in mind that life is constantly changing, and your way of handling money might also change over time!

We hope you found this guide helpful and learned some new things about how to manage money wisely as a couple!

Now is the time for you to move closer to your financial goals with your partner!

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