Sharing your life with a partner or spouse means you’re also sharing your finances. There are some best practices for managing your finances together as a couple. But every partnership is different. What’s most important is to find what works best for you both. Whether you’re just starting to think about it or looking for new tools to add to your money management toolkit, you may benefit from applying some of these practical tips.
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Why should you start talking about money in a relationship?
It’s not everyone’s favourite topic of conversation, but money plays an important role in our lives. Knowing how your partner views money is a crucial part of your partnership. Our assumptions and attitudes around money can affect large and small spending decisions. It can also be a source of stress, disagreement, or even arguments if you and your partner approach money differently.
Talking about money means clearly and openly communicating with your partner. You’ll want to both share your spending habits, values and behaviours around money.
Understanding each other’s money habits will help build a solid foundation for your relationship. As a couple, it can help you to set and reach financial goals together. Also clearly sharing your financial picture can help you avoid uncomfortable surprises, like if your partner is carrying a lot of debt or has never had a saving account.
What are some money conversation starters?
It’s important to start talking about money together as a couple. Consider one of these conversation starters:
- Did you get an allowance when you were a kid?
- How old were you when you got your first part-time job?
- What tips did you learn from your parents about money?
- Who first taught you about budgeting?
Sometimes money conversations are easier to approach when they come up spontaneously. Rather than waiting until a big event like buying a car or home, consider these opportunities to talk about money:
- When you’re splitting a restaurant cheque or calculating a tip.
- When you’re buying a shared gift for a friend or family member.
- While you’re grocery shopping or talking about favourite recipes.
If either of you feel uncomfortable talking about money, focussing on your shared motivation may help. A common savings goal can bring other valuable conversations to the table. Learn about your investing personalities, including risk tolerance. Consider seeking the support of a third party if there are misalignments in your attitudes toward money.
What financial goals should couples plan for together?
Setting financial goals as a couple can put you on a stronger path for a prosperous future. There are long-term and short-term goals, both should be considered in your money conversations.
Planning your goals together can be a shared source of joy. But make sure the financial realities don’t overshadow your excitement. There are many things that might be on your mutual financial horizon to plan and budget for, including:
Short-term goals:
- Moving in together
- Buying new furniture or appliances
- Taking a vacation
- Planning a wedding
- Building a shared emergency savings account
Long-term goals:
- Growing your family
- Saving for a down payment on a home
- Putting away money for higher education for your children (Registered Education Savings Plan – RESP)
- Planning for retirement (perhaps with an Registered Retirement Savings Plan – RRSP)
Try our Love and Money Quiz to help you start talking about money as a couple.
Learn more about your behavioural biases and how they may impact your investing decisions.
What are some ways to manage your money as a couple?
There’s a lot to consider when creating a shared money management strategy. You and your partner will want to talk about:
- Income disparity: Will you split all costs down the middle or will each person contribute to shared expenses in proportion to their income?
- Unpaid labour: Will you both recognize and value the unpaid contributions each person makes to the household? For example, taking care of the home, planning social engagements and vacations, childcare, etc.
- Debt management: Will you each be responsible for your own debt that pre-dates the relationship? Or, as a couple, will you pay down debt together to get out of debt faster?
- Lifestyles and spending habits: How much say and/or transparency around your partner’s personal spending will you have?
There are three common ways for couples to manage their money: jointly, separately and a hybrid approach which combines the two. There are pros and cons to each, but ultimately, it’s about finding what works best for you. Consider how these three approaches work.
Joint accounts approach
In this strategy, couples pool their resources into joint accounts and pay for expenses out of the same pot of money. The joint accounts approach may be right for you if you’re comfortable pooling your resources and have similar spending habits.
Advantages:
- It’s simple and straightforward, making it easier to maintain one budget.
- It’s transparent and easier to track spending across the household.
- It may help to balance out income disparities if one person makes significantly more money than the other person.
Disadvantages:
- When spending habits are transparent, it can also lead to judgement over spending choices.
- Differences in spending habits can lead to conflict.
- Disparities in income contribution can lead to disagreements about fairness.
- It’s harder to keep gifts or surprises a secret.
- It may require setting ground rules for using the shared account responsibly.
Before you take on debt as a couple, make sure you know your responsibilities as a joint borrower. Once you co-sign a loan with someone, you’re equally on the hook for repaying that loan. There are lots of ways you might borrow money as a couple, including a shared credit card, a mortgage, or a joint line of credit. Additionally, as a couple, get clear on how you’ll use the loan and how you’ll repay it.
Separate accounts approach
In the separate accounts approach, each person keeps their individual accounts. However, both people are responsible for paying their share of the expenses. This might look like:
- Sharing all expenses 50/50.
- One person pays rent while the other pays for utilities and groceries.
- Each person contributes to expenses proportionately based on their income.
This strategy might be right for you if maintaining your financial independence is important to you, or if either party has previous debt they’re working to pay off.
Advantages:
- It enables each person to keep their autonomy and may feel fairer.
- It enables each person to maintain an individual financial record and credit history.
- Any debts each person has remain their own responsibility.
- It can be an effective way to manage differing money management personalities within the couple and prevent conflict.
Disadvantages:
- It may take more work to determine a budget and execute payments.
- More communication about money may be needed for transparency.
- It can be trickier as shared expenses increase for the couple (such as children, a shared car).
- There may be tax-related disadvantages, particularly related to investing and saving separately.
- There’s more legwork involved in planning for and navigating the financial side of unexpected life events, like job loss, illness, or death.
Hybrid approach
The hybrid approach combines the previous two strategies. As a couple, you decide how to divide your income between your accounts. You could maintain one shared account or credit card that is used to pay for household expenses. At the same time, each person maintains their own separate accounts for personal spending or other specific purposes.
The hybrid accounts approach may be right for you if you have shared financial goals and want to start combining your financial lives, but you each still want to maintain some financial autonomy.
Advantages:
- Any debts that pre-date the relationship can be kept separate.
- Each person maintains control over how they spend their discretionary income.
- It can be flexible and adaptable — you set your own rules and ease into a shared financial life.
- It may result in less conflict around spending behaviours.
Disadvantages:
- It involves opening and managing several different bank accounts.
- It requires preparation and clear planning to make a shared budget and know how much money gets pooled for shared expenses versus separate ones.
- If there are income disparities, you’ll need to decide as a couple how much is fair for each person to pay into the joint account to cover shared expenses.
- If one or both of you have income fluctuations from month-to-month, there will be more work involved to update your budget and transfers to the shared and separate accounts each month.
How often should couples talk about money?
One way to stay on top of your money as a couple is to schedule regular money dates. Consider opening a bottle of wine or enjoying a nice meal together after.
You’ll want to review your expenses, connect about bill payments, adapt your budget as necessary, and track progress toward your financial goals. You may want to automate bills payments or transfers to streamline your accounting. Use this dedicated time to:
- Raise any concerns about your finances.
- Make changes to your accounting structure.
- Check in about your shared long- and short-term savings and investments.
While one of you may be more interested in money management than the other, it’s important that you both are active participants in money dates so you can work as a team.
When you combine financial lives with your partner there are also legal matters to consider as well. For example, have a will and keep it up-to-date. Ensure your beneficiaries for life insurance and financial accounts reflect your wishes in the event of your death. Taxes also play a role — you’ll be taxed differently if you’re married or common-law than when you’re single.
Summary
Whatever approach you take to managing money as a couple, make transparency a guiding principle. Get to know each other’s financial lives, try on accounting strategies, and adapt them over time to suit your partnership. There’s no right or wrong way to do it, as long as you’re having open and honest conversations with each other about money. Some tips to try:
- Start having money conversations early in your relationship.
- Find ways to learn about your partner’s attitudes towards money as well as your shared financial goals.
- Plan for shared goals together as an important opportunity to work out your approach to managing money as a shared household.
- Determine which money management strategy to use as a couple: joint accounts, separate accounts, or a hybrid approach.
- Set regular money dates to talk about your finances together.
- Consider having a will and keeping it up to date.
