3 Methods for Combining Finances as a Couple

A happy couple balances their commingled finances
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Merging finances with another person is a significant, delicate transition, but it isn't an all-or-nothing proposal. Some couples combine every account, from simple checking to retirement funds, credit cards, and the household budget. Others keep separate funds while also sharing one or two accounts for paying bills or taking an annual vacation.

In any case, there's no wrong way to customize your banking and bill paying, so long as it's fair, transparent, and sustainable for both parties. Below are three examples of how couples can share money each month:

The Proportional Method

Couples who use the proportional method to combine their finances each contribute into the household bills at a rate that's proportional to their income.

Example: John and Sally

John earns $2,000 per month, which is 33% of the total household income; Sally earns $4,000 per month, or 66% of the total household income.

The couple spends $3,000 per month on their bills, including their mortgage, utilities, and groceries, with one-twelfth of their annual expenses going toward property taxes.

John pays 33% of their $3,000 monthly bills which equals $1,000; Sally pays 66% of their monthly bill, which is $2,000.

Advantage
  • Neither partner feels the pressure to "keep up with" or "budget down to" the earnings of the other partner.

Disadvantage
  • The higher-earning partner could start to feel resentful, or might start to feel like they're being penalized for earning more.

The couple could also enjoy a middle-ground stage of combined finances. They share household bills, but they also keep separate money for themselves as individuals.

The Raw Contribution Method

Couples who use the raw contribution method each chip in the same raw number, regardless of how much they make.

Example: Danny and Kate

Danny earns $3,500 a month. Kate earns $5,000 a month.

Their household bills come to $4,000 per month. They each chip in $2,000 and keep the remainder of their money in separate accounts.

Advantages
    • The higher-earning partner doesn't feel penalized for their success.
    • The lower-earning partner doesn't feel subsidized.
Disadvantages
    • Their relationship could become strained if Kate lives more lavishly than Danny.
    • Some couples also criticize this method as feeling too "roommate-like."

Complete Combine

Couples who completely combine their bank accounts pay all bills from the same fund, carry only joint credit or debit cards, and cooperate on retirement investments.

Example: Devon and Hilary

Devon earns $3,700 a month; Hilary earns $2,600. Both paychecks get direct deposited into a joint checking account, which the couple uses to pay all their bills.

The couple also carries joint credit or debit cards, which they use to pay for all of their purchases, regardless of whether it's a household purchase (like a microwave) or an individual purchase (Hilary spends $50 a month on vintage records, while Devon likes to collect baseball cards.)

Advantages
    • Unite as a single unit: "we" rather than "you" and "me."
    • If one person's income rises or the other person's income falls, they'll balance each other out.
    • Record-keeping also becomes easier.
Disadvantage
    • The higher-earning partner can resent the lower-earning partner for spending his/her earnings.
    • If one person tends to be a spender while the other tends to be frugal there could be an imbalance.

Conclusion

There's no single best practice for budgeting a couple's money. The most important thing is to realize there are options for your relationship and you can customize the process to fit your collective needs. Of course, regardless of which method a couple chooses, they need an agreement about what to do if one partner's income drops to zero (i.e., if one partner loses their job).

Once you choose a method, don't be afraid to tweak or change it. As a team, you need to experiment with different strategies to find the perfect balance between your individual money and your shared money. Weigh the pros and cons of each strategy together and decide which method feels most natural.

Frequently Asked Questions (FAQs)

What should you do when a couple doesn't agree on how to share finances in marriage?

Some tips for couples fighting over finances include listening closely to your partner to ensure that you understand where they're coming from. You can also put an emphasis on larger purchases or future purchases that you'll spend years saving for; if you can agree on large purchases or share a plan for the future, that can help smooth over smaller disagreements. Above all, make sure you're accountable and honest with your partner.

How do you legally separate finances in a marriage?

A prenuptial agreement ("prenup") can legally define the terms and conditions of a marriage, including how assets or income should be divided in case of disagreements or divorce. Prenups can override state community property law, but it depends on state law, so check with an attorney about how a prenup would affect your financial situation. If you're already married, you can use a postnuptial agreement instead of a prenuptial agreement.