Managing Your Money – Jointly or Separately?
There comes a point in a serious relationship when big decisions need to be made. Some are easier than others. Moving in together is usually a time for optimism and excitement. However, discussions about money tend to be tricky.
There are plenty of things to think about when it comes to managing your money to avoid misunderstanding and arguments. The most important is whether you should manage your finances jointly or separately.
There’s no one-size-fits-all approach. What works well for one couple, might not work at all for another. Here are some things worth giving some thought to.
- Understand each other’s approach towards money. Are you spenders or savers or do you have completely different attitudes? Communication and compromise will be key to finding the right way forward.
- Does one of you have a poor credit rating? Living with someone with a low credit score won’t affect yours unless you choose to open a joint bank account. This means you will be co-scored for future credit – i.e. a mortgage or bank loan.
- If you’re going to have a joint bank account and manage finances together, trust is important. You’ll both be responsible for any debts or overdrafts. If one of you keeps cranking these up, cracks will quickly start to appear.
- Be clear on how the money in the joint account will be used. It might be worth considering having a set allowance each week or month, once all the necessary bills have been paid. This way, you both retain independence and don’t have to seek permission to buy something.
- Don’t leave one of you to act as accountant. Take joint responsibility for the finances. You might not be good at figures or have an interest in balancing the books, but it’s unfair to lay the burden on one person as resentment is likely to kick in on both sides.
- Have regular discussions about your joint money situation so there are no sudden surprises. This means you’ll both be more likely to support each other when finances are tight.
- If you decide to keep your finances separate, you’ll need to decide very early on how to split the bills. If one earns considerably more than the other, 50-50 might not be deemed fair. Plan everything out and don’t take it for granted that one of you will be responsible for the lion’s share.
- The best of both worlds can be a good option – splitting all your finances up into ‘Ours/Yours/Mine’ pots, so some of your money is managed jointly but you still retain autonomy too. Decide what is and isn’t going to be paid from the joint account.
- If one of you isn’t earning, or earning very little, you could choose to keep separate accounts, but the main earner pays the partner an allowance. This is likely to be the most complex of situations, as it could lead to a shift in feelings of equality in the relationship.
- In the early days, it’s probably wise to keep any savings separate. Credit cards too are always best managed independently.
Deciding to share an account is a big decision. It might not be romantic, but it could be a good idea to test the water before fully committing. Consider opening a joint account in which both people deposit an agreed amount each month to pay certain joint bills.
If the situation works well, you can steadily increase how much is paid into the account and share more of the responsibility. No fuss – and no fallouts!