This Essential Financial Planning Tip for Couples Can Make Life So Much Easier

Financial planning for couples can be so much easier if you stop trying to balance, juggle, consult, and compromise on absolutely everything, and accept that couples can choose, if they wish, to manage their money on the basis of “his, hers, and ours”.  (Quick caveat: Yes, of course, this can also be “his, his and ours” or “hers, hers and ours”.)

Long-term coupledom usually means at least some level of shared finances, but how much depends on many factors. The level of shared finances needed will depend on your life decisions, such as whether to have children and who should make the financial sacrifices invariably involved in raising them.

Given the many forms that families can take, this tip is not for everyone, but it will work for many couples, and can reduce tensions and arguments, especially if you each have very different saving and spending styles.

What Does “His, Hers, and Ours” Look Like in Practice?

It can look slightly different for every couple of course, but a good step-by-step guide is:

• Set up a joint checking account for day to day shared expenses
• Set up a joint saving account for saving towards shared goals
• Retain separate accounts for all individual expenses
• Make a budget for day-to-day essentials and decide, based on that, how much you need to each pay into your joint checking account monthly
• Discuss your shared goals and decide, based on that, how much you need to each pay into your joint saving account monthly
• Agree to revisit the situation regularly as your situation changes

Straight away you’ve eliminated the need to argue over each other’s spending habits. You each fund your own personal spending from your own account, exactly as you did before you met. Because you’re sharing day-to-day expenses, it’s likely those will go down, but you’re also encouraging each other to save for those future shared expenses.

If you’re planning to be one of the increasing number of happily childfree couple in the world, this arrangement could well work long-term (although childfree couples also have specific issues to think about when it comes to financial planning). If you are planning on having kids, it will need significantly adjusting when that happens.

Some Things to Keep in Mind

It’s better to over-estimate day-to-day needs and have some extra money to play with than have to resort to the usual arguments later because your account needs topping up.

If you’re likely to have joint emergencies you may even want to build an emergency fund into either one of your shared accounts.

Shared expenses will change and evolve. When you first get together, you might be saving for a dream vacation. Later you might be aiming for a wedding, or a house.

The contribution to the shared accounts does NOT have to be equal. Many couples choose to contribute depending on their income, especially if one is younger, less established, still studying, or simply in a less well paid career. Keep in mind that which one of you is the high-income partner may well change over a lifetime.

Each of you will need to look at any extra accounts you may need, including savings accounts for individual goals, retirement accounts and personal emergency funds.

There are certain things you should share with your partner when it comes to financial planning, including anything that’s likely to impact their credit score or tax situation, so make sure you both know about the things that really matter.

Be prepared for sudden changes and discuss how you’ll deal with them. What will happen if one of you loses your job or gets sick? Do you have insurance and/or emergency funds in place to help deal with that?

Having children changes everything, and not just because your joint savings will now include ‘new nursery’ or ‘college fund’. If kids are part of your plans, your money management as a couple will get more complicated. If that’s you right now, speaking to a financial planner who specializes in advice for new parents might be a worthwhile investment.

Managing money as a couple can be complicated and, if we’re not careful, full of conflict. But a “his, hers, and ours” approach really can cut down on arguments. As a bonus you’ll be forced to:

• Look at your day-to-day expenses
• Make a budget
• Assess exactly how much money you can save by merging expenses
• Discuss your shared goals
• Address how willing you are to support each other

Some of those conversations may be difficult, which is great. Having difficult conversations is part of being in a healthy relationship, and talking about these things early on will potentially make you stronger. It could of course also highlight incompatibilities that need to be addressed. Again, the sooner this is done the better, whatever the outcome.

Feel like you still need help? There are specialist financial advisors for newlyweds, and no, you don’t necessarily need to be in a traditional marriage to talk to them.

Karen Banes is a freelance writer specializing in entrepreneurship, parenting and lifestyle. She writes articles, website content, ebooks and the occasional award winning short story. Her work has appeared in a range of publications both online and off, including The Washington Post, Life Info Magazine, Transitions Abroad, Brave New Traveler, Natural Parenting Group, and Copia Magazine. Learn More About Karen