The Best Ways for Couples To Manage Finances
There are valuable lessons here for everybody.
There are valuable lessons here for everybody.
Money can be one of the most contentious aspects of a relationship or marriage. One in five couples identifies money as their greatest relationship challenge, according to a 2021 Fidelity Investments survey of individuals ages 25 years and older in a married or long-term committed relationship.
Sometimes the challenge is about who spends too much or who doesn’t save enough. But perhaps the most difficult issue is more basic than that. It’s about how to combine finances, if at all. Is it better to keep everything separate? And if you do join forces, who keeps track of the spending and saving, and how do you do it?
Of course, there is no single right or wrong way for couples to divvy up their finances and financial duties. How tasks and decision-making are split can depend on a partner’s existing financial know-how, interest or willingness. Some people want a 50/50 split of duties; some defer all tasks to one partner. Others, meanwhile, have each partner focus on their individual strengths: One person may be a good at the nitty-gritty of budgets and bills while the other is a big-picture thinker when it comes to money.
We wanted to know the different approaches that couples and partners take. To that end, we asked three groups of people to tell us what they do in their own relationships: professional advisers, academics who study financial behaviour, and Wall Street Journal readers. Here are some of their responses.
Unlike many working professionals, when we got married, my husband and I decided not to combine our finances. Although there is some empirical research showing that people who combine their bank accounts feel a greater sense of “financial togetherness,” which can in turn promote relationship satisfaction, we prefer the feeling of personal control that comes with maintaining separate bank accounts.
We use an expense tracker to equally split bills and daily expenses. When it comes to personal items—like new clothes or videogames—we purchase those from our independent accounts. This means we don’t have to ask our partner for permission to make the occasional luxury or experiential purchase. Importantly, this approach to keeping our bank accounts separate doesn’t mean we don’t talk about financial decisions. When it comes to both major decisions like investing and minor decisions like making purchases for our home or buying a toy for our pet, we make these decisions together. Our general rule is that if the other person is going to split the expense, we ask for their input before making the purchase. Our daily purchase discussions about needs and wants for our family allow us to experience financial togetherness, despite having separate bank accounts.
—Ashley Whillans, assistant professor at Harvard Business School
In our family, it’s all about setting up a “divide and conquer” strategy while maintaining our unique financial independence. We combine our income and it essentially hits three buckets monthly—after we’ve saved 20% off the top. Bucket No. 1 (a joint checking account) is used to pay monthly bills. That gets 70% of the income. Bucket No. 2, which gets 5%, is a savings account for my spouse for buying gifts, entertainment or personal items. Bucket No. 3, which also gets 5%, is a savings account that allows me to do the same. Giving each partner a safe financial space—where they can have some money to do what they want when they want without having to ask—is a really important step to a healthy marriage when it comes to money.
My spouse is the chief financial officer and manages paying the monthly bills. She’s also in charge of making vendor changes when she feels it’s appropriate. My role is the chief investment officer, and I’m responsible for picking our investments, managing our real estate and allocating our 401(k)s. We act as a joint team when it comes to making financial decisions regarding our children—whether it’s allowances, mobile phones or the credit cards they use.
We act as co-CEOs when it comes to mapping out financial family goals and objectives. Each year, we assess our one-year goals in terms of savings, net worth or possible purchases. We review our long-term financial plan to make sure we are on track for goals such as college education and retirement. Having an open and transparent relationship with our money has allowed us to minimize arguments and discrepancies and focus on maximizing our mutual financial goals.
—Ted Jenkin, co-CEO and founder of oXYGen Financial in Savannah, Ga.
My husband and I have a prenuptial agreement and we are both responsible for our own debts. Because we live in my husband’s condo, he pays the mortgage. I pay the association fee and buy the groceries. I am also responsible for my own car payment and car insurance. I collect rent from my former home. We both had assets when we got married, and he does have children from a prior marriage, so this arrangement seems very sensible for us. We both have separate bank accounts and credit cards. In addition, we have separate retirement accounts—both personal and from our employers.
When we purchase a house together (currently under construction), we should maintain our current arrangement, minus the mortgage; we’ll just divide the mortgage payment in proportion to our salaries. If we eventually sell the house, we will split the proceeds depending on how much we’ve invested in it individually.
—WSJ reader Jessica Moran, Fullerton, Calif.
My husband and I have been together for over 10 years and combined our finances after we married in 2015. One tradition we introduced when we started living together was to have a conversation about our finances the first day of each month when we develop a spending plan that we create on a shared Google spreadsheet.
In the spreadsheet, each row represents a smaller category of purchases like groceries, entertainment, and clothing that we earmark a certain amount of money toward for the month. We then log any purchases we make on the spreadsheet, and typically don’t discuss these purchases unless they are unexpected and large (like a dental bill). During our monthly financial meeting, we assess how we did with our spending and adjust for the month going forward. We added two new categories to our plan this year: a personal spending account for me and one for him. These accounts allow us a bit of privacy if we make a purchase we don’t necessarily want to share. (This was introduced after our tracking system ruined the surprise of gifts we gave each other over the holiday.)
Tracking all our purchases was painful when we first introduced it, because it focused us on the pain of parting from money. But it quickly became a source of strength, because it has encouraged us to have more regular check-ins with each other about the lives we want and how we can use our money to get us there.
—Grant E. Donnelly, an assistant professor of marketing and logisticsat Ohio State University’s Fisher College of Business
I am the appointed CFO in my household. I remember when I approached my wife and kindly suggested that we hire a financial planner to take a fresh look at our own financial planning. She replied, “Isn’t this what you do?”
We handle both of our incomes in a joint checking account from where expenses are paid. From this checking account, we have monthly electronic transfers going out to an online bank joint savings account for short-term goals. Other transfers go out to brokerage accounts for longer-term goals. We each have our own retirement plans that I manage.
Every year, we sit down and review every financial account we have. My wife gets a one-page report along with copies of the Dec. 31 statements of each account, which I place in the “If I get hit by the bus” estate-planning folder. To keep working in financial harmony, we have another joint account in the same online bank that gets funded monthly. The balance is available solely to my wife to spend as she pleases. This approach works for us. Harmony and simplicity are worth the peace of mind that follows. And always be mindful of making it easier for your spouse to carry on in case the unthinkable happens.
—George Papadopoulos, fee-only financial planner in Novi, Mich.
My partner and I are very, very 50-50 in how we approach our finances. Anything shared—rent, electricity, internet, etc.—is split right down the middle. I have a system for tracking discretionary expenses, and at the end of the month the total of regular shared monthly expenses and one-off expenses gets split. My partner then pays that amount to our credit-card account(s) used for the monthly spending.
The 50-50 setup leaves neither of us feeling like we’re doing more than the other. We also make close to the same salary, so it feels fair.
—WSJ reader Charlie Donley, Philadelphia
When my husband, Ken, and I got married, we were well aware that money was one of the two primary issues that can come between couples and commonly lead to divorce (the other being sex). We decided early on to make sure that our finances wouldn’t ruin our marriage or create emotional or financial strife.
First, we tackled the obvious. Regarding living expenses and large purchases, we opened three checking accounts to pay bills: a joint account and individual accounts for each of us. Neither of us wanted to feel judged by our financial purchases nor be told what we could or could not buy. We pay all of our household expenses, including large purchases that we agree on like a car, through a joint account and our discretionary expenses through our personal accounts. I took on the role of managing our household expenses, primarily out of practicality. We each had an individual 401(k) that we contributed to regularly, and we started a joint investment account as well. We fund charitable giving—a big priority for us—through our joint account.
We partnered on investment and charitable-giving decisions and it didn’t take us long to realize that we needed professional guidance to educate us, help us make investment decisions, and, at times, arbitrate between us to determine the right financial strategies. While it’s not a conflict-free strategy, it has really worked well for us.
—Maddy Dychtwald, author and co-founder of Age Wave think tank and consultancy
My wife and I have a joint account that all of our bills are auto-drafted from every month. Our mortgage, utilities, insurance, auto loans, everything. We figured what the total would be and then figured our proportionate income for the household. For example, my income accounts for 70% percent of the total household income. So, if our monthly bills are $4,000, I would contribute $2,800, or 70%, each month to the joint account and she would contribute her $1,200, or 30%. We did it this way so it would be fair and no one would feel like they are over-contributing or under-contributing, because it’s all relative and subjective.
We also take 10% of any commission or bonuses and put it straight into savings. The remainder is put into our individual accounts for daily life. We use that money for buying whatever we want. It prevents the other person from being upset if they feel too many Amazon packages are showing up at the door.
—Daniel Rodriguez, chief operating officer at Hill Wealth Strategies in Richmond, Va.
I did all of the finances at the beginning of our marriage. However, this inequity turned into a weird dynamic where my spouse felt like she needed to ask for permission to spend money. So, five years ago we developed a budget and financial scorecard.
Monthly, we track income, expenses and our personal balance sheet (assets, liabilities and net worth). The kids are involved in our financial meetings, where we discuss how much we plan on spending for vacations, eating out, etc. One month, the kids were overspending on school lunch ($400 for the month), so they proposed we make home lunches for the next month to balance things out. It has been a really awesome habit for our family and our net worth has increased 8x during the last five years.
—WSJ reader Regan Fackrell, St. George, Utah
It’s important that we are a team on our spending and saving, rather than the husband paying for certain expenses and the wife paying for other expenses. That approach tends to create conflict. So we have both of our direct deposits going to the same checking account, from which we pay for all of our fixed household expenses, and most importantly, our goals. We also have a joint credit card for all other spending. We decide that if we’re going to make a purchase above a certain dollar amount—for example more than $500—we first discuss it so there are no surprises. We also take into consideration gifts for one another, such as for holidays and birthdays. During this time, we have an unwritten agreement that we don’t check credit-card statements so that there is still an element of surprise.
—Lisa Tuttle, Ameriprise financial adviser and co-owner of the Tuttle Group, Edina, Minn.
My girlfriend, Samantha, and I have been in a relationship for 12 years and have kept our finances completely separate. We use [money-management site] Mint to compare net worth to see which one of us is more effectively managing their portfolio. Whenever our combined net worth eclipses a new $100,000 milestone, we grab a celebratory meal. Who pays? Honestly, Sam usually pays. Otherwise, we’ll split the check using Venmo.
—WSJ reader Dave Cooper, Milwaukee, Wis.
The financial three-way: yours, mine, ours. This is the guiding framework that my partner, Jay, and I use to handle our finances. We are both in our 50s, divorced, and thanks to this system have not had a single money argument over the five plus years we’ve been together.
We decide what expenses we want to treat as combined and we each pay 50% of those costs. That bucket includes: costs related to the condo we own jointly, vacations we take together, and any other forms of entertainment we do as a couple. We then keep the remainder of our finances—both the savings/investments we accumulated prior to meeting as well as each of our current income streams—in our own separate accounts. We use that money as we see fit, from charitable giving to personal grooming.
On the surface, this may seem to be a very cold and clinical manner of handling finances. But in reality, it is shockingly intimate as it requires you to get financially naked and really talk about money with your partner.
—Manisha Thakor, founder of financial well-being consultancy MoneyZen in Portland, Ore.
My wife, Patty, is the chief financial officer and takes the lead in paying bills and handling the majority of our banking. I’m the chief investment officer and do nearly all of the investing as well as taxes. But we build redundancy for two reasons—to make sure one of us doesn’t make a major mistake and so one of us can take over should the other be incapacitated.
We discuss major expenditures and reach agreement before such an outlay. Often times, we compromise. Patty will sometimes catch fraudulent expenditures or ongoing monthly charges for services we rarely use. She keeps our credit score high by paying bills on time.
As the CIO, I typically handle investments though, again, I don’t make any major moves without my wife’s buy-in. For example, I rebalanced during the Covid plunge back in March 2020, but only after her consent. We both have access to all accounts. We are not just partners in life; we also have a partnership in our finances.
—Allan S. Roth, founder of Wealth Logic, Colorado Springs, Colo.
We’ve been married 21 years. Initially, we just had a joint account we each contributed to, to cover the mortgage, utilities and other fixed costs. Then we went more separate for five years or so in divvying up certain items—and that didn’t work as well in working to plan and stay on track for our goals. It even created tension in our marriage.
Now, I run the finances for the family and share our budget and our overall financial picture regularly with full transparency. That allows us to discuss and make decisions that work for today and tomorrow. I use the 50/30/20 approach—50% of earnings go to essential needs (shelter, food, utilities), 30% to wants (entertainment, travel, etc.), and 20% to savings (retirement, house, car, emergencies)—and explain how as we work to pay off the mortgage, wants and savings will get a greater percentage than the target.
—WSJ reader Stuart Robertson, Seattle
My wife and I have slightly different salaries with all sources of income deposited into a single joint account. Each month, we have a short budget meeting, during which we talk about unique expenses for that month—birthday parties, church events, summer camp and so forth. Sometimes, a little debate is inevitable. We set aside extra funds for those things, take a quick glance at the usual expenses and then move on.
We have a dollar amount above which discretionary purchases for the household are made jointly. And we give ourselves a certain amount of pocket cash and move some money into our personal accounts. When we were just starting out, the discretionary spending limit was $50, pocket cash was $20 a week and personal accounts had only a few hundred dollars. To prevent frugal fatigue in those early years, we made ourselves spend a small amount each week on a date night or fun activity. Obviously, those amounts grew over time, but we still stick to these strategies because they’re what got us here.
—John Graves, founder and managing partner of G&H Financial Group, North Canton, Ohio
Chris Dixon, a partner who led the charge, says he has a ‘very long-term horizon’
Couples find that lab-grown diamonds make it cheaper to get engaged or upgrade to a bigger ring. But there are rocky moments.
Wedding planner Sterling Boulet has some advice for brides-to-be regarding lab-grown diamonds, which cost a fraction of the natural ones.
“If you’re trying to get your man to propose, they’ll propose faster if you offer this as an option,” says Boulet, of Raleigh, N.C. Recently, she adds, a friend’s fiancé “thanked me the next three times I saw him” for telling him about the cheaper lab-made option.
Man-made diamonds are catching on, despite some lingering stigma. This year was the first time that sales of lab-made and natural mined loose diamonds, primarily used as center stones in engagement rings, were split evenly, according to data from Tenoris, a jewellery and diamond trend-analytics company.
The rise of lab-made stones, however, is bringing up quirks alongside the perks. Now that blingier engagement rings—above two or three carats—are more affordable, more people are dealing with the peculiarities of wearing rather large rocks.
Esther Hare, a 5-foot-11-inch former triathlete, sought out a 4.5-carat lab-made oval-shaped diamond to fit her larger hands as a part of her vow renewal in Hawaii last year. It was a far cry from the half-carat ring her husband proposed with more than 25 years ago and the 1.5-carat upgrade they purchased 10 years ago. Hare, 50, who lives in San Jose, Calif., and works in high tech, chose a $40,000 lab-made diamond because “it’s nuts” to have to spend $100,000 on a natural stone. “It had to be big—that was my vision,” she says.
But the size of the ring has made it less practical at times. She doesn’t wear it for athletic training and swaps in her wedding band instead. And she is careful to leave it at home when traveling. “A lot of times I won’t take it on vacation because it’s just a monster,” she says.
The average retail price for a one-carat lab-made loose diamond decreased to $1,426 this year from $3,039 in 2020, according to the Tenoris data. Similar-sized loose natural diamonds cost $5,426 this year, compared with $4,943 in 2020.
Lab-made diamonds have essentially the same chemical makeup as natural ones, and look the same, unless viewed through sophisticated equipment that gauges the characteristics of emitted light.
At Ritani, an online jewellery retailer, lab-made diamond sales make up about 70% of the diamonds sold, up from roughly 30% two years ago, says Juliet Gomes, head of customer service at the company, based in White Plains, N.Y.
Ritani sometimes records videos of the lab-diamonds pinging when exposed to a “diamond tester,” a tool that judges authenticity, to show customers that the man-made rocks behave the same as natural ones. “We definitely have some deep conversations with them,” Gomes says.
Not all gem dealers are rolling with these stones.
Philadelphia jeweller Steven Singer only stocks the natural stuff in his store and is planning a February campaign to give about 1,000 one-carat lab-made diamonds away free to prove they are “worthless.” Anyone can sign up online and get one in the mail; even shipping is free. “I’m not selling Frankensteins that were built in a lab,” Singer says.
Some brides are turned off by the larger bling now allowed by the lower prices.When her now-husband proposed with a two-carat lab-grown engagement ring, Tiffany Buchert, 40, was excited about the prospect of marriage—but not about the size of the diamond, which she says struck her as “costume jewellery-ish.”
“I said yes in the moment, of course, I didn’t want it to be weird,” says the physician assistant from West Chester, Pa.
But within weeks, she says, she fessed up, telling her fiancé: “I think I hate this ring.”
The couple returned it and then bought a one-carat natural diamond for more than double the price.
When Boulet, the wedding planner in Raleigh, got engaged herself, she was over the moon when her fiancé proposed with a 2.3 carat lab-made diamond ring. “It’s very shiny, we were almost worried it was too shiny and was going to look fake,” she says.
It doesn’t, which presents another issue—looking like someone who really shelled out for jewellery. Boulet will occasionally volunteer that her diamond ring came from a lab.
“I don’t want people to think I’m putting on airs, or trying to be flashier than I am,” she says.
For Daniel Teoh, a 36-year-old software engineer outside of Detroit, buying a cheaper lab-made diamond for his fiancée meant extra room in his $30,000 ring budget.
Instead of a bigger ring, he got her something they could both enjoy. During a walk while on an annual ski trip to South Lake Tahoe, Calif., Teoh popped the question and handed his now-wife a handmade wooden box that included a 2.5-carat lab-made diamond ring—and a car key.
She put on the ring, celebrated with both of their sisters and a friend, who was the unofficial photographer of the happy event, and then they drove back to the house. There, she saw a 1965 Mustang GT coupe in Wimbledon white with red stripes and a bow on top.
Looking back, Teoh says, it was still the diamond that made the big first impression.
“It wasn’t until like 15 minutes later she was like ‘so, what’s with this key?’” he adds.
Chris Dixon, a partner who led the charge, says he has a ‘very long-term horizon’