We’re passionate about guiding families with financial matters. A perennial discussion we have with new clients, or the children of clients is how to best integrate money and finance after getting married and starting a family.
There’s no correct way to split expenses, except for after talking about it, openly and fairly. With few exceptions, there is no longer “mine and yours,” only ours.
So whether or not you merge bank accounts or keep them separate, understand that marriage merges your money in the eyes of the law. Many couples still keep their own accounts for making small guilt-free purchases or buying gifts, but the more you think of your marital finances as one instead of two, in my opinion, the less problems you’ll have.
There are many ways to do this, but here’s some common approaches:
Separate but Equal
Most common, unmarried (and many married) couples keep separate bank accounts and credit cards but split the big household expenses, like mortgage, utilities and groceries, equally. One partner may pay out of pocket for everything and then collect a check from the other, or each partner may pay different bills that can be reconciled once a month.
Proportional to Income
If one partner earns significantly more than the other, you face a difficult decision:
Should the higher earner pay a larger percent of the monthly expenses?
Again, it’s personal, but here’s a suggestion. If your lifestyle together is modest – that is, it doesn’t strain the income of whoever earns less – a more equal approach might be fine. But if the higher earner has more expensive tastes – for example, she wants to live in a bigger home or dine out more often – then it might be time for her to kick in more than a 50 percent share.
These Approaches May Not Work After Having Kids or With a Single Income Parent
A best practice is to completely merge income, expenses, & accounts as a single family unit before an income source goes away. And importantly, have a level of decision making or spending limit that doesn’t compel the income earner to question the stay at home parent on how money was spent or why a certain household item was purchased.
Change is always difficult, but the more a newly married couple can have an open mind and dialogue about the how their future finances will be structured and managed, this can help remove one of the biggest reasons that causes marital stress.