Managing money can be a tricky task as a single person, let alone as a couple. There are often many new discoveries that take place as newlyweds and the aspect of money can be difficult to navigate if you’ve only had to consider your own income and spending. According to a study done by SunTrust Bank, finances are considered the leading cause of stress in relationships. While this may be true, there are ways that you can get ahead of money-causing-stress.
Decide on Joint or Separate Bank Accounts… or Both
There are many options when it comes to banking as a couple. There’s no right or wrong answer and it will depend on your relationship and preferences. Work together to find an option that fits your lifestyle!
Joint Bank Accounts
When choosing a joint bank account, you are deciding to use the same checking and savings accounts together. If both partners are employed, then both paychecks would be deposited into this account. Similarly, if only one partner is employed, each person has access to the funds in the account. With joint bank accounts, each partner still has their own debit card, which pulls funds from the same account. A benefit of a joint bank account is that there is a greater feeling of stability for both partners. A con of this type of banking may include less financial freedom to spend money on whatever you want since both partners will monitor the account.
Separate Bank Accounts
If you are choosing separate bank accounts, then you will likely only have to change your financial habits slightly. Each partner keeps their own account, which is funded by their personal income. What about bills? With completely separate bank accounts, each partner would be responsible for paying certain bills. Decide what bills will be in your name and your partner’s name. Bills, such as personal loans or past debts, may be the responsibility of that individual or might be paid together. Deciding how debts will be paid needs to be part of your conversation. It’s also important to be aware of how much each person makes so you can delegate shared bills appropriately.
A benefit of keeping your money separate is that you have the freedom to use your money as you choose. A con of this method may occur when one person makes more money than the other partner. An imbalanced income between partners has the possibility of causing friction if one person feels they don’t have enough extra disposable income. Be aware of this possibility and address the solution early on.
Separate Accounts Combined with a Joint Bank Account
The final option is a combination of the above account scenarios. Using both a joint and separate account would utilize aspects from both examples. The joint account would be used for bills, groceries, and other necessary expenses while the separate account would be used for items like clothing and other splurges. A benefit of this method is having built-in accountability while still maintaining some financial freedom with your personal account. A con, similarly to having separate accounts, may arise if there isn’t a clear conversation about income and balancing bills.
Set a Budget
Sit down together to create a budget and go through everything! Housing, utilities, bills, debt, groceries, entertainment, and any other spending you know you will have each month. There are many great resources to help you budget (like Mint and Every Dollar) to ensure you won’t forget a category of spending. Pro tip: If you are using a joint bank account, allocate a small monthly amount to each partner for personal spending and define what that spending is and is not for. For example: if your spouse needs a new pair of pants for work, will that come out of their personal spending budget or another category?
This step is crucial when it comes to money in a marriage. If you have a joint bank account, then you will need to discuss what each budget category is meant for. This might seem obvious for items like rent and bills, but categories such as groceries, entertainment, eating out, and clothing may need further conversations no matter what bank account option you choose. This is also a great time to take a look at the year as a whole and anticipate future events that may cause higher spending, such as weddings and holidays. Doing so will give you an opportunity to plan ahead and save in advance.
Questions to Ask Each Other
One partner makes more than the other and we have separate bank accounts. Do we pay equal amounts toward bills or a percentage based on our income?
How are we managing debt? Do we pay toward each other’s debt as a whole or is each partner responsible for their own?
What are our financial goals? Do we want to buy a house/car? What are our feelings toward financing items we want/need?
Meet with a Representative
Need help setting up an account(s)? Stop by any one of our six branches and start talking with a Community West Credit Union team member! Community West Credit Union can help you organize your finances and has the tools you need to reach your long term goals. From checking accounts to a mortgage loan, Community West has all of your financial needs in one place.