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

Five Signs You Aren't Financially Intimate With Your Partner

In a strong relationship, you often feel compelled to share just about everything with your partner – your fears, goals, interests, and passions. As your relationship develops, your connection deepens, and you become even more intimate. But does your intimacy include the topic of finance?

Being financially intimate means sharing your financial status, goals, and struggles with your partner. Money is a tremendous cause of friction in partnerships and fighting about money is a top predictor of divorce in married couples. Many of us are raised not to talk about money or have shame about some aspect of our financial situation. But hiding information does not strengthen a relationship.

There’s some good news; one survey conducted by MONEY found that, “…couples who trust their partner with finances felt more secure, argued less, and had more fulfilling sex lives.” That sounds pretty good, doesn’t it? How open are you with your partner? Here are five signs that you aren’t financially intimate with your partner, in order of increasing intimacy.

You don’t know whether they save or invest. Do you know if your partner has an emergency fund? Are they investing in a 401k or other retirement plan? Saving and investing are necessary to build wealth and create financial stability, so you should know whether your partner is doing so on a regular basis. If you’re in a very serious relationship or married, you should have an understanding of how much is in their accounts.

You don’t know if they have debt. Does your partner have credit card, student loan, auto, real estate, or other debt? How do they feel about this debt; is it under control or is it a source of stress? Are they actively paying it off? How much debt is does your partner owe, in total? Debt is something that many of us take on to achieve other goals, but it can hamper financial freedom if not managed effectively.

You don’t know their credit score. How healthy is your partner’s credit? If it is weak, what steps are they taking to strengthen it? Before you merge finances, move in together, or get married, you should see your partner’s full credit report. Many of us have had credit issues; I’m no stranger to credit card debt myself. However, credit affects a wide range of financial decisions – credit card and loan rates, housing decisions, and even hiring decisions. Sharing credit reports can help you make better joint financial decisions and work together to strengthen them if needed.

You don’t know their salary and compensation. What is your partner’s base salary? What other forms of compensation are they eligible for (bonuses, company stock, profit sharing, etc.)? Women can struggle to address this topic with their partners because of the damaging and outdated “gold digger” stereotype. However, starting and maintaining an open dialogue about compensation ensures you can address joint finances productively.

You don’t know where their accounts are. Where does your partner bank? Where (and how) is their 401k invested? Which credit cards does your partner have? Yes, you should know where your partner banks. You might not have access to the funds in each account, depending on how you’ve set up your joint finances, but knowing where the money is located can be important in an emergency and promotes transparency between partners.

If any of these are knowledge gaps in your relationship, I suggest starting the conversation with your partner as soon as possible. Each couple addresses the topic of finance differently and to open the conversation, you can share this post, schedule a money date, or bring the topic up in the course of regular conversation.

Approach your partner with authenticity and remove all judgment. If you’re nervous about talking about your student loan debt and don’t know if your partner has debt, you could say: “I’m nervous to talk about my student loan debt, but it is very important to our relationship that we can openly discuss money and personal finance. I haven’t shared the details with you, but I have $52,300 of student loan debts to pay off. I’m working hard to get my smallest loan paid off in the next few years. I’m curious - do you have any student loan or credit card debt?”

By sharing your emotions about the topic, giving your partner information about your status, and then asking a neutral, non-judgmental question of your partner, you’re starting the dialogue in a productive manner. Give your partner some slack; they may be nervous, scared, or worried to talk money. On the other hand, your partner may be relieved about the chance to share what they’ve been working on, or a secret personal finance nerd that has a lot of knowledge to share.

Good luck in building even more financial intimacy with your partner. I’m curious about what topics you and your partner have tackled together to build your financial intimacy; let me know!

xoxo, Ms. Financier