- One of the biggest challenges a couple will face is how to manage money in their relationship.
- Through communicating, building a system together, and sticking to it, Sam and his wife Caitlin have aligned their financial goals, bought their own home, and started investing.
- This article is written jointly – the text in black is Sam’s voice and the text in blue is Caitlin’s.
Managing money is hard.
And having double the people in a relationship makes it three times as hard! But combining finances with your partner can be beneficial.
Spoiler alert – the main perk for me was not having to think about money! #morebrainforotherthings!
What are the benefits of managing money together?
We’ve been able to streamline joint purchases, work towards shared goals more easily, and play to each other’s strengths when managing money. Also, this isn’t us but if you’re in a situation where one of you contributes to your partnership in non-financial ways, such as working part-time to look after children, it’s also a way to share the load and make sure you’re all cared for.
Some kind of magic happens and suddenly we have enough savings to buy a house! Someone else’s brain can be used for planning! Yay! And we have the money to fund my ambition of competing in the USA at A Cappella singing competitions! And Sam can pursue his life-long dream of carrying my bags and handing me makeup brushes pre-competition!
I would tell you that I have no financial strengths, but my secret strength is knowing what to spend money on and what not to bother with. Sam had a very shoestring budget through university and it took him a while to figure out he could spend money now that we had more.
So why combine your finances in a relationship?
Well, mostly, Caitlin finds managing finances stressful and overwhelming. And I really hated vacuuming.
Boo hiss finance management…
I managed the housekeeping and Sam managed the finances. That was the deal. Although we’ve since revisited the deal. Now we have a cleaner because we have #prioritsed and #budgeted so it’s feasible and frees our time for things we both think are better uses of our time. I still fill the dishwasher though.
And I clear it!
What were the differences in how you each managed money before combining finances?
I made a budget at the beginning of each year and used that as a guide when spending money throughout the year. This meant that I focused on cash flow over time rather than the amount of cash in the bank.
Note: neither approach is good or bad. They are products of our different upbringings.
My parents both worked consistently with the opportunity to take overtime pay when we needed more money short term. Sam on the other hand had one parent not able to work or contribute to childcare responsibilities for an extended period so his working parent had to carefully manage cash flow because there was no capability for anything else.
So how did two people with very different approaches to finances then manage money together in a relationship?
No tears were involved!
First, we talked about what we both wanted from a money management system. Our three most important principles were that it had to be:
- Abuse-proof – neither of us wanted the other in a bad place if our relationship deteriorated.
- Easy – we wanted it to fit with our current habits and not take up our time.
- Work towards our life goals – saving and spending money is a way to get what we want, not an end in itself.
I was particularly worried about the abuse-proof aspect because I was earning significantly more when we first combined our finances but I think we both contribute equally to our partnership. I didn’t want to put us in a situation where we separated, and Sam ended up in a bad position because the system required him to be assertive to get his due.
Sam is not assertive when it comes to his needs. At all (and still). See the previous point about needing to learn how to look after himself and actually spend money rather than deciding he didn’t need more than food, medication, and a roof over his head.
One other aspect we had to figure out was how “physical” our system needed to be. I was used to money being in invisible “buckets” and adjusting the amounts in these buckets by changing a number in a spreadsheet.
When I managed my own money, I tried having expenses, savings, and spending accounts (because this is what my parents did). Which worked, until I ran out of spending for the month and wanted lunch…
What did you do to manage money in your relationship?
We ended up creating three joint accounts and designating one account as the main account, one as Sam’s pocket money, and the last as Caitlin’s pocket money. Rent, groceries, and other essentials came out of the main account, but all discretionary spending (i.e., everything not designated as an essential) came out of pocket money.
So, we both had access to money at all times – see the previous point about being abuse-proof. But because someone else was involved, I couldn’t just move money in between accounts whenever I felt like it. There were rules to be followed now. Turns out I can be pretty good at tracking my spending if I don’t have to worry about bills and groceries though!
So did it all work out?
Well, for the first half-year or so, I saved a quarter of my pocket money for the last week of the month when Caitlin would run out and come ask me to buy her “presents”!
I was using it as a teaching moment, it was totally planned. I was demonstrating how to treat yourself and helping Sam identify spending priorities so he could be nicer to himself. It’s still a work in progress, but I’m spending less and he’s spending more so I’m calling it a win.
That is… true, I guess. One thing I’ve learned from Caitlin is to treat a budgeted amount like a target, not a cap. This means that instead of just trying to come under it (and me being me, find ways that I can come in significantly under) I now try to spend as close to 100% of my discretionary every month, unless I’m saving for something. It makes life a little more enjoyable. One thing I noticed was that it suddenly opened up a lot of socialising opportunities I’d been missing before, which has been a big positive impact (even though I hate the idea that money impacts your socialising opportunities).
And for discretionary spending?
We’ve also shifted things in and out of what is “essential” and what is “discretionary”. For example, we shifted haircuts to essentials when I realised that one of Caitlin’s haircuts and colours would cost the entirety of her pocket money for the month while mine was less than 15% of my pocket money.
The pink tax is real y’all! Although I enjoy having cute hair so nice haircuts have always been a spending priority for me. Sam on the other hand… sometimes I’m able to convince him to go to a professional to cut his hair instead of doing it himself…
We budget together at the start of each year now, and decide how we want to priortise our spending as a couple. It’s still a work in progress and we’re always going to be learning, but I feel like we’ve been able to take the best things from each other’s money management styles.
Communicating, and building a system together and then sticking to it has paid (figurative) dividends for our relationship.
It helped us adjust our spending and create joint savings. It started some great conversations which aligned our financial goals and has now allowed us to buy our own place and start investing. If you want to start combining finances with your partner or manage money together in a relationship, it might be worth having the conversation!