How to Manage Money with Your Partner: Six Questions You Need to Answer

If you’re in a serious relationship and regularly share significant expenses, this post is for you. Money can be a major source of friction in partnerships and if you aren’t financially intimate, it is difficult to achieve your goals. Sharing financial details is a powerful start to financial intimacy. Next, you need to determine how you will manage money together.

Every couple manages their money differently and there’s no “one size fits all” answer. Further, the money management approach that works for your relationship today may need to evolve as responsibilities shift at work and at home in the future. That said, there are six questions partners can answer to determine the right approach for them. I’ll start with the more strategic questions first; answering these makes the tactical questions easier.

1. What are our biggest financial goals? Defining your top three joint financial goals provides motivation and clarity. I recommend identifying at least one goal with a short timeline (within the next six months). Record your financial goals, discuss them, and celebrate the progress you make. When you achieve a goal, replace it with a new objective to continue your momentum.

Start this conversation with your partner by defining your joint values, if you haven’t already. This is a common approach that financial planners and experts like David Bach recommend, because aligning your money with the things you value is powerful. For example, if you and your partner value security, you could focus on paying off debt or purchase a home you can afford to increase the security in your life.

2. How often should we check in on our money? Progressing against your goals is easier when you’re keeping an eye on your finances. Your money doesn't sit still when you ignore it. This can be wonderful (automatic investing growing your wealth faster than expected) or stressful (unattended credit card debt generating late fees and interest charges).

You should regularly check in on how you’re progressing towards your financial goals. Scheduling recurring “money dates” with your partner (at least once every three months) ensures you address problems and celebrate progress. Keep a running list of what you need to discuss; your top three financial goals should always be on the agenda. 

If the idea of a money date sounds painful, use the concept of Temptation Bundling in your favor. Temptation Bundling is when you link two activities together - one you enjoy and one you’d prefer to avoid. In this example, you may choose to reward yourself after a money date with a meal at a favorite restaurant.

3. How will we pay for joint expenses? Paying for expenses like housing, utilities, travel, and vehicles should be done equitably, so one partner doesn’t feel beholden to the other. 

First, define joint expenses. Some couples label anything spent by either partner as a joint expense, others put a certain limit in place where they need to “clear” the expense with their partner (say, over $200), and some decide that only certain expenses are joint responsibilities. My partner and I do the latter; we consider utilities, housing, maintenance, groceries, and life insurance to be joint expenses. In contrast, my shoes, evenings out with my friends, and conferences I attend are my responsibility.

Next, determine how you’ll fund joint expenses. My recommendation is to split joint expenses in proportion to income. Here’s an example: Ava is a journalist with a salary of $57,500; she recently married Dinah, whose job as an engineer brings in $125,000. Together, they enjoy $182,500 in gross income. Ava’s income is 32% of their household total, while Dinah’s contributes 68%.

Therefore, to pay their monthly mortgage of $2,500, Ava contributes 32% ($788) and Dinah contributes 68% ($1,712). They’re savvy women, so they signed a prenuptial agreement beforehand that outlines how they’d divvy up these joint assets in the event of a divorce.

4. How will we save and invest together? Investing and saving are critical to building wealth. As a couple, you should decide how much to save and invest. Your emergency fund is critical, but once that’s funded you should focus on retirement, save-to-spend accounts, college (for those with kids), and then investing beyond retirement. Here’s a four-step guide to getting started with investing.

Consider how evenly you are funding investment accounts. I’ve often heard women say, “My partner makes more, so we max out their 401(k) contributions. I can only afford to contribute a little.” If this is your situation, I urge you to consider a more equal strategy. Unequal investing can result in very different account balances; in the unfortunate event of a divorce, you may not receive a financial outcome you’re happy with. Even partners that don’t work outside the home are eligible for a spousal IRA to save for retirement.

5. Where will our money live? Managing your money becomes easier with fewer banks and accounts. When you address this question, consider where you’d like to keep your savings, daily checking, and investment accounts. For investing, I always recommend Vanguard; they have a low-cost strategy and are investor-owned.

Since my partner and I manage our money with a “yours, mine, and ours” strategy, our bank accounts mirror that. Mr. Financier and I have separate checking accounts for individual expenses. We also have a joint checking account for joint household expenses. Our savings and investments are set up the same way; some are jointly held (like our emergency savings account) and some are individual (like my investment account that I started before we were married).

6. Who manages the bills? Deciding who pays which bills will reduce bill-paying stress and ensure you’re not blaming one another for any late fees. Consistency can also help you catch errors. A few months ago, my internet bill unexpectedly increased by $15; I noticed the change because I always pay that bill. I called customer service and immediately received a correction.

It is important for both partners to provide transparency around joint bills. In our house, I am responsible for any joint bill (the mortgage, utilities, auto insurance). However, Mr. Financier knows how to access our mortgage account at any time and we review the statements together. This ensures we’re both aware of jointly-held debts and accounts.

You may elect to pay many of your regular bills automatically. I recommend that if you can schedule the payment from your bank to the service provider, versus giving the service provider permission to pull payments from your bank account. Your comfort level may differ, but I avoid giving my bank information to the cable company, mortgage company, or insurance provider.

Those are the six questions partners can answer to determine their money-management approach. It will take some time to create the right guidelines, but you’ll benefit tremendously when you find the methods that work for your relationship. I would love your feedback; which question was the most difficult for you and your partner to answer? Do you have any other big questions that you recommend couples address?

xoxo, Ms. Financier