How to Budget Money When Spouses Have Separate Bank Accounts
A match made in financial heaven.
It’s not for everyone, but keeping separate accounts might be the best path to wedded bliss for some couples. This is especially true for people who are accustomed to managing just fine on one income before getting married, and couples where one spouse travels and has a lot of work-related expenses to sort out before reimbursement.
Whatever the reason for separate accounts, it does make budgeting a bit more complicated. But couples who say this system works for them have a few techniques that can help you, too.
Stop Hiding Anything
If the reason behind separate accounts is to keep spending secrets from your spouse, stop it. Secrets only lead to arguments and hurt feelings. If you want a new pair of shoes and know you can afford them, carry those shopping bags into the house proudly.
But if you want a new camera and know you won’t have enough left to pay the mortgage bill, buying it anyway is probably the wrong choice, even if the money you spend is technically yours. The mortgage still has to be paid, so your spouse has to pick up the slack.
Don’t Cave In to Someone Else’s Guilt
Separate bank accounts aren’t the traditional married financial arrangement. That doesn’t mean they’re wrong. Friends and family, if you’re inclined to tell them, might advise that keeping money separate is just a pathway to divorce.
It’s a similar argument as the one against prenuptial agreements. How you manage your money as a couple is really only your concern. If it makes you and your spouse happy, that’s all that matters.
Does it work for you?
Make a Plan Together
Separate accounts don’t mean separate lives. You still have joint obligations, it’s just who pays for what that’s in question. Jacqueline Curtis for Money Crashers recommends sitting down together and figuring out who is responsible for paying each expense.
Perhaps one spouse has a significantly larger income and can comfortably handle paying all of the fixed household bills. The other spouse with a smaller income might then be responsible for “everything else.” This could mean groceries, dining out, and, as Ms. Curtis explains, unexpected expenses such as vehicle repairs. If this doesn’t work, then design a plan that’s fair, and that you can both agree on.
Find Your Saving Style
One of the main goals of any budget is finding ways to save money. That doesn’t just mean paying out less, but also keeping the extra safely tucked away for the future. As with checking accounts, separate savings should also be a joint decision. Managing your own accounts doesn’t mean there’s no accountability.
If keeping everything separate is more than you want to manage, perhaps consider a mutual savings or goal account that you both contribute to.
Couples argue about money at least as much, probably more, than any other issue. If you and your spouse have different spending and saving styles, separate accounts might be exactly what you need. As long as you remain accountable to each other and don’t keep spending secrets, managing a budget with separate accounts shouldn’t be a particular challenge.
Mint.com has budget solutions that work with any personal finance style. Sign up for your free account today.
Carole Oldroyd is a freelance writer who helps families develop and stick to a budget.A match made in financial heaven. It's not for everyone, but keeping separate accounts might be the best path to wedded bliss for some couples. This is especially true for people who are accustomed to managing just fine on one income before getting married, and couples where one spouse travels and has a lot of work-related expenses to sort out before reimbursement. Whatever the reason for separate accounts, it does make budgeting a bit more complicated. But couples who say this system works for them have a few techniques that can help you, too.
How Two-Income Couples Should Manage Their Cashflow
Each Monday we’re tackling one of your pressing personal finance questions by asking a handful of money experts for their advice. If you have a general question or money concern, or just want to talk about something PeFi-related, leave it in the comments or email me at [email protected]
This week’s question comes via email from Benjamin Bruenig:
How can two income couples manage their cash flow without just lumping everything together? I feel like everyone I talk to has some convoluted system of accounts and credit cards or complete chaos. In either case, they are probably letting too much money sit in an account that earns very little return, they are overdrafting that account, or they have to spend hours and hours tracking individual expenditures. There must be a better way to leverage apps and automation, but the big budgeting apps don’t really have this feature.
This is what individual experts have to say generally about an issue that affects each person differently—if you want personalized advice you should see a financial planner.
Everyone Is Different
Managing a dual-income household can be a difficult task, especially since the average couple maintains 16 different financial accounts, according to Eugene Park, creator of Honeydue , an app that helps couples budget. But as this reader noted, there are a bunch of tech options available to help make the process easier—and every couple has different needs.
The most important part of budgeting as a couple is transparency: Each person needs to know what’s going on with the finances, and one person should not shoulder all of the financial responsibility. This doesn’t mean that you need to know what your partner does with every single cent, but you should have an idea of his or her balances, and you should have a frank conversation about bills and who pays for what.
“Decide how to divvy up tasks such as paying bills, managing investments, or arranging appointments with your financial professional,” Marcy Keckler, VP of Financial Advice Strategy at Ameriprise Financial. “Consider establishing a joint banking account for shared expenses and individual accounts for personal purchases. This approach allows you to pay bills with ease, while giving each person the freedom to spend money on their own terms.”
Check out this post for more information on that:
How to Set Up and Streamline a Shared Budget
Dear Lifehacker, My partner and I want to get our finances in order and create a shared budget we…
It’s true that Mint (and most individualized money apps) are not great for multiple users. That’s why Park advises each individual in the relationship to manage their own finances with their preferred app (like Mint or Clarity Money), and then use an app like Honeydue to see joint accounts and set bill reminders. After you decide how you’re splitting up the bills, automate as many as possible.
An added benefit of Honeydue is that each person shares only the information that they are comfortable sharing. You choose the accounts (say a joint account or your individual checking or savings accounts) and whether you only want to share the balance or the actual transactions as well. You can also ask your partner about individual charges.
Another option is the good old-fashioned budget spreadsheet, which is helpful because it’s collaborative and easily-accessible to all parties. Peter Polson, founder of Tiller Money , a paid service that provides premade budget sheets, suggests this setup for couples new to budgeting together:
- Partner 1 income
- Partner 2 income
- Partner 1 expenses
- Partner 2 expenses
- Shared expenses paid by partner 1
- Shared expenses paid by partner 2
“Both partners see everything,” says Polson. “When they talk about money periodically, they can focus on the shared expenses: Are we making the right shared expenses? Is the balance right between the two of us?”
You can build your own, using the outline above as a model, or check out a product like Tiller. Like a budgeting app, it uploads your financial data each day, so you can get a sense of your habits in addition to seeing your and your partner’s budget. Here’s a sample budget that Tiller created:Each Monday we’re tackling one of your pressing personal finance questions by asking a handful of money experts for their advice. If you have a general question or money concern, or just want to talk about something PeFi-related, leave it in the comments or email me at [email protected] ]]>