Couples and Money: Mine, Yours and Ours?
Earlier this week I wrote about couples and money, specifically the issues couples should talk about when their relationship is getting serious.
But after a couple takes that step, they'll move on to confront the practical matter of how to manage their money. Will they keep their finances seperate? Will they combine their money or adopt some other approach? Oppinions on approaches to money management for couples vary widely...so here are a few for folks in a relationship to consider:
The Traditional: This is best described as the pooling of both partners money into an account which is then used for paying all bills. The advantage is that it provides the easiest way to have a clear view of what is coming in a going out in financial terms. But the challenges include keeping organized, who will balance the checkbook, who will do the bill paying and responsibility for joint bank accounts. Wars have begun over lesser issues.
The Modern: This is where each partner maintains his or her own accounts and each has responsibility for contributing their share towards each of the couples bills. This provides the ultimate in control for those who are set in their ways or just so financially incompatible that this is the only way to avoid conflict in respect to money matters. The downside is that there are more checks to write and records to keep. Unless your bank offers a relationship deal, you may also get dinged for extra account fees.
The Combo: This is a combination of the Traditional and the Modern. An example is where each partner deposits their pay into their own separate account and then transfers an agreed amount to a joint account to pay the household bills. Think of this as sharing a bathroom, but having separate sinks.
Regardless of which system you use, you'll need to decide who will be the household accountant. This is the partner who will take on paying the bills and keeping track of expenses. Just remember, the partner who takes on this thankless job gets out of their choice of three other loathsome household duties!
Even though one partner becomes the household accountant, both partners should be aware of the household finances and how the money management system works. You also need to agree on who will have the responsibility to write down checks and ATM/Debit card transactions for joint accounts
Next week I'll write about some of the important financial decisions couples can confront when they commingle their money and make financial transactions jointly.
Ray Martin
View all articles by Ray Martin on CBS MoneyWatch»
Ray Martin has been a practicing financial advisor since 1986, providing financial guidance and advice to individuals. He has appeared regularly as a contributor on the CBS Early Show, CBS NewsPath, as a columnist on CBS Moneywatch.com and on NBC-TV's morning newscast TODAY. He has also appeared on the Oprah Winfrey Show and is the author of two books.
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