Dual Income Families: How to Manage Shared Money
Managing shared finances doesn’t have to be a wedge between loved ones. This article lays out how money talks can actually make you and your spouse even closer…
For dual income young families where both spouses are bringing in an income, deciding how to split shared expenses with separate incomes can be tricky and lead to serious marital issues if not approached intentionally. HOWEVER, what if I told you that navigating money with your spouse could make your marriage even better? Money discussions provide an opportunity to practice key marital habits (communication, compromise, trust, transparency, vulnerability). While it seems like a hassle talking money with a loved one, it can actually be an opportunity to build an even stronger foundation to your marriage.
Marriage is the ultimate form of unity, the merging of two individuals into one family, personally and financially. It’s the second part… “financially”… that makes a complicated union of two people even more complicated (differing money mindsets, spending habits, life goals, willingness to compromise, financial openness, etc). Here are some stats to consider:
Money arguments are the second leading cause of divorce, behind infidelity.
High levels of debt and poor communication lead to stress and anxiety when it comes to finances.
Nearly half of couples with $50,000 or more in debt say money is their top reason for arguing.
Nearly 2/3 of all marriages start in debt.
1/3 of people who argue with their spouse about money admit to hiding purchases because they know their partner won’t approve.
It doesn’t have to be all doom and gloom though. In this article I’ve laid out 3 solutions for you and your spouse to consider when using separate incomes as one combined household. There isn’t a right or wrong way to manage shared money. The key is to have the conversation and get on the same page today to avoid unnecessary arguments, resentment, mistrust, & negative feelings later.
1. Keeping Separate Accounts
Many couples start with separate accounts as they get used to their new married life. This is especially common for adults getting married after being settled in their career for a few years. They’re used to doing what they want with their money and don’t want to answer to anyone about it just yet.
If you decide keeping separate accounts is best for you at this time, here are some key factors you should consider to make it work:
Assign each bill to one person – You can decide how to split the bills (50/50 or some other way), but make sure you’re clear on who is responsible for paying which bills.
Figure in savings requirements – Determine how much each person will contribute to your savings goals, both short-term and long-term (retirement).
Split the household expenditures (evenly or proportionally to income) – Don’t forget about ‘variable’ expenses, like groceries, household goods, repairs, and emergencies.
This method requires clear communication about a number of different areas, even laid out in a spreadsheet, so you are both on the same page. Each person must hold up their end of the agreement to pay their assigned bills, and no one should hide money from the other just because you have separate accounts.
Pros
Simplicity: You can handle your own spending with your own cards, save to your own accounts, etc. Works well if you both can manage your finances adequately.
Permission Free: You don’t have to ask ‘permission’ to make a purchase as each spouse spends their own money as they please once shared obligations are met.
Cons
If one spouse has poor financial habits, they may eventually need the other spouse’s financial help creating tension (i.e. overspending, insufficient saving).
This method requires a lot more discussion on shared expenses which can lead to more fights and disagreements.
Separate finances can perpetuate a feeling of disconnection, distrust, and not feeling cared for if a spouse refuses to offer financial help in a time of need.
Greater anxiety over what to do if a big shared expense arises that may be hard to cover on your own.
2. Using a Shared Account
If you join finances, there’s less worrying about who pays what or how the financing will work. But there might be more reasons for questioning a purchase or ‘getting permission’ to make a purchase.
If the income level of each spouse is unequal, there could be some hard feelings or feelings of superiority by the higher earning spouse, but if you’re on the same page, and communicating often, that may not happen.
If you decide to use a shared account, consider this:
Communicate often – Just because your funds are together doesn’t mean you shouldn’t communicate. Both spouses should have a say in how the funds are spent, saved, and used for bills.
Talk about purchases – Since you’re sharing funds, always talk about larger purchases. Neither spouse should feel guilty about spending or angry about what the other spouse spent.
Have shared savings goals – With all money in one account, you should both have a say in what to save for and how much. “Pay Yourself First”,
Pros
It’s easier to manage with all your money in one account.
You don’t have to figure out who pays which bills based on their income.
You only need one spreadsheet, and one person can manage it versus separate accounts that require you both to update the spreadsheet.
Cons
It can lead to fights if you don’t agree with how your partner spends money.
If one partner makes more than the other, there can be a superiority/inferiority relationship occurring.
3. Hybrid – Shared and Separate Accounts
The hybrid approach pools your income into one account, but then transfers out a set amount of money each month to separate checking accounts.
The ‘main account’ covers the shared bills, savings, and retirement goals. This leaves little room for arguments as everything is covered by the main account.
The money that’s transferred to your personal checking account is yours to do with what you want. You don’t have a say in how your spouse spends his/her personal fund and vice versa. As long as you both agree on the amount transferred to each account (best if it’s equal), there’s little room for argument on how the money is spent.
Another approach to handle larger purchases with this method is to agree on who will pay which amount. For example, if one spouse really wants an item and the other just ‘kind of’ wants it, the spouse that really wants it can pay a higher percentage of the cost.
Pros
You can buy what you want with your money while knowing the bills are paid.
You still work together on shared goals.
It’s the best of both worlds when sharing funds but still keeping some of your independence.
Cons
There is more than one bank account to manage.
The personal fund can feel a lot like an allowance for some people.
You have to agree on a lot of factors including how much each personal account gets.
Important Communication Tip for Spouses
Remember: Money conversations can become adversarial if we allow them to.
Approach each money conversation from the angle of “what’s best for all parties involved” rather than “what’s best for me”. Discussing challenges as a team will help you feel like a team. If you feel your spouse is looking out for both of your best interests’ and not just their own, it will foster a greater sense of trust, more willingness to compromise, and help you grow even closer as a family unit.
Final Thoughts
Managing shared money doesn’t have to be hard or a threat to your marriage, doing it effectively can foster greater trust and a closer marriage (it works both ways). Before you get married (ideally) or shortly after getting married, have the ‘money talk.’ Transparently discuss each person’s goals, preferences, habits, and thoughts about money before deciding how to share your money.
There’s no right or wrong way to do it as long as you both can consistently communicate and compromise. No one should be made to feel ‘less than’ even if one spouse makes more money than the other. Marriage is a shared journey that requires some give and take but with some work, you can find the happy medium to share your money and reach your financial (and life) goals together.
If navigating how to approach your finances as a married couple is important to you... Schedule a free 30 minute introductory call with me here. A financial planner can help you build better financial habits, help get you and your spouse on the same page, explore both of your money mindsets so you understand one another better, and create a holistic financial plan that incorporates both of your values, goals, and priorities with money all into one place (as well as all the other key areas of your financial life).
Together we can explore “you” in a way that’s deeper than dollars and cents, and start a conversation to get you and your partner on the same page financially. I’m here to help you create a vision for your life, then back into the money moves needed to bring that vision to life. You can live for an epic life today, while still being on track for tomorrow.
Jonathan Grannick, CFP®
Wonder Wealth LLC
San Diego Financial Advisor | Fee-only Fiduciary
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