It can be hard enough trying to manage your own finances; from income to expenses to savings to investments. Adding another person into the mix (a la managing finances as a couple) brings a whole set of complexities that if are not thoughtfully planned for, can cause a large amount of stress in a relationship! If you are an engaged couple preparing for marriage; firstly a big congrats! Secondly, a big congrats for planning ahead and thinking about how you’ll actually manage your money.

Mrs. Money and I have been married for coming up on 10 years and have had our own fair share of money woes and challenges. I won’t say we’ve got the perfect system for managing our money but on the whole we’ve found a good system that works for us. As this blog often serves as a repository of resources for young professionals, I wanted to share some of my thoughts and experience for those looking to think through how to manage their money with a partner!

Take inventory and assess

Before coming up with a grand plan for how you’ll manage your money, it’s important to understand where each of you are coming from as you enter into this partnership. It’s important to have an in-depth discussion to understand the financial situation that each of you are bringing to the table, and also understand how you each separately manage your money today. Success in personal finance isn’t a one-size fits all secret formula, it’s understanding yourself and how you best manage your money!

Start by thinking through assets; bank accounts, investment accounts, real estate, crypto as well as income. You’ll want to understand what sources of income you have and how much is coming in. You’ll then jump to liabilities each is bringing to the table; mortgages, credit card debt, auto loans, personal loans etc. A marriage (in my opinion) has to have good communication; you need to be fully open and honest all throughout your marriage. There’s no sense in hiding a bank account or a debt, I know on social media a secret bank account may be intriguing or somehow a good idea but in my experience honestly is the best policy and that includes your finances. If one partner has more debt than the other or more income or assets than the other it’s all just part of the equation and a factor for how you’ll work together!

Secondly it’s important to understand how each manages their money today. Each of us thinks differently and how we manage our money might look very different. Perhaps one of you is super organized and has a spreadsheet for every penny of your expenses whereas the other partner is easy going and as long as there’s money in the bank at the end of the month you feel ok! Neither approach is necessarily right or wrong! However if the organized partner came into the marriage expecting the easygoing partner to be as organized as they are things might not go so well! It’s also important to understand your partners’ level of comfort and complexity with their money. Are you a day trader with a large stock portfolio who enjoys options and derivatives and goes deep into Wallstreetbets on Reddit? Or perhaps you keep things exclusively in a low cost index fund and don’t ever check the balance of your accounts. Maybe you’re just getting into investing and are a bit intimidated by the idea of risking your hard earned money! Finally, understand is one of you ‘good’ at managing your money, does one really enjoy doing it whereas the other might now? Be open and honest with where you’re at!

Set goals and dream

Before jumping into the details of how you’ll actually manage your money, I think it’s actually better to start with your goals and dreams. What will you as a couple want to spend your money on, what’s important to you? Do you enjoy taking vacations and trips, do you enjoy hobbies that take time and money, perhaps it’s shopping or self-care, maybe it’s eating out at the latest hot new restaurant in town? We all spend our money differently and how we spend our money might look similar or different. Understand what the other values is helpful as you think through what it’ll look like as you decide how to earn, manage and spend your money; both together and separately. I would say it’s a safe assumption that you probably already know a lot of these things about your partner but best not to assume!

Next I’d recommend thinking about the future. Do you own a home today? Do you both own homes? If not do you want to one day? Is this a condo in the city or a house in the suburbs? What about retirement; what do you dream of that looking like? Are you on a FIRE pathway (financial independence retire early) and you want to save 75% of your money now and retire by age 40? Or maybe a more traditional retirement around 65 but with the goal of really living it up then? What about children; do you want them, how many, have you thought about one partner staying home? What about saving for their college? You don’t have to have all the answers here, and even if you did it would likely change but I think having these conversations now at least will help you think collectively what you will prioritize and plan for.

Get paid, spend money and invest

Now that you understand where each person is coming from and what baggage (good or bad) you’re brining to the table, you can now figure out the actual mechanics of how you’ll manage your money, together. A marriage is a partnership, and finances are a big part of that partnership. There is truly no right or wrong answer for how to manage your money, only figuring out what works best for you as a couple!

Decide who is doing what

Each month will have money coming in and money coming out. You’ll have bills to pay, credit cards to payoff, and have to ensure you are keeping your finances balance! Ideally this will mean that more money is coming in vs. going out! First thing you’ll want to figure out what this will look like. Who is responsible for actually paying the bills and keeping an eye on the checking account? Is it one of you, or both of you? I’ve seen it work both ways; whether having one person do it or having both partners be responsible for their bills (although for joint bills you’ll want to identify one person to do it). Or perhaps you’ll rotate!

Decide who keeps what

This next question gets more into how you’ll manage your money – more jointly or more separately. Once again I’ve seen and heard of couples on both sides make it work for them. What’s more important is being clear and having a good plan.

For Mrs. Money and I, we’ve 100% combined all our finances. We have a monthly budget with categories like: General Living, Fun, Travel, Gas etc. We spend money together (i.e. going out to eat together) but we also spend it separately; when Mrs. Money goes out with the girls or maybe I buy a new pair of headphones for myself. Mrs. Money and I (as best we can) don’t keep tabs or score on who’s been spending more vs. the other and I’d say in theory we’d like each of us to spend about the same amount of money on ourselves but in practice this doesn’t happen. A few years into our marriage we actually changed things up a bit and Mrs. Money got her own dedicated category in the budget for her discretionary income. She expressed feelings of guilt or feeling like she was owed more than she was getting and so we created her own bucket in the budget for her to feel more empowered to spend her money how she wanted to!

Tactically this looks like one joint checking account and joint savings accounts. I manage the budget and Mrs. Money gives me receipts (which we joke feels like submitting receipts to your boss for expense reports) but it’s only because she doesn’t enjoy updating our spreadsheet. I pay the bills aside for her credit card bills, which she is responsible for.

 Or split it up more

The other common scenario I’ve seen is a joint checking account that is fed into from your individual checking accounts and this joint account is used to pay for the common joint expenses (i.e. the mortgage/rent, groceries, utilities, date nights, childcare expenses etc). Outside of that each partner is empowered to spend their money in ways that they want to! This is a great approach for couples that are perhaps each bringing more into the marriage, or for couples that each independently enjoy managing their own money, or even those with very different money management styles where sticking with what works for them is better for both of them!

Making it work for you two

Finances are a big part of a marriage and being on the same page (or the same team to say it another way) and being in communication towards where you’re at and where you’re going is key. Be open and honest, figure out the joint plan that works for you both and then stick to it, but also be open to adjust in the future!