Managing money with your partner

How do you and your partner manage your money? Do you have your own salary and then share the common expenses? Or does it all go into a joint bank account and you take as much as you need from there. What about discretionary spending?

How we run our household finances is something we don’t talk about very often. A bit controversial.

Regardless of how much each of you makes, managing income, savings and common expenses can sometimes lead to arguments. A rocky road, indeed.

rocky road

What if one person is a big spender and the other one a natural saver? I see 3 scenarios for dual-income relationships. Single income relationships have limited options which I also discuss later.

Scenario 1: Together in life but separate wallets

I know this is somewhat of a paradox, as sharing trips, school fees and a mortgage requires shared finances to some extent. But bear with me for a second.

What I mean by “together in life, not in finances” is the simple scenario of every person having their own salary and do whatever they want with it. Obviously, people are together, so common expenses like mortgage, rent, groceries, cars, holidays spent together, etc need to be split evenly.

People don’t have to live together but still, shared expenses like eating out, cinema, and holidays occur more frequently than not. But as long as the common outgoings are out of the way, my money is my money.

I guess this is most common at the beginning of a relationship, where boundaries are still unknown and bigger goals cannot be set yet. It certainly was for us, until it wasn’t. But I know people who follow this model many years into marriage and they’re happy doing it.

This has both pros and cons.

More freedom to set personal wants/needs
A sense of extra independence
Harder to implement if salaries differ by much

More time-consuming

You need to know what your expenses are and do your balances once in a while to pay who owns what. I know there are apps to make it easier for you to track debt among X people but isn’t that just too much work? Maybe you have a good sense of what your shared expenses are and you pay them evenly. I pay groceries and car, you pay rent sort of thing.

Last but not least, I don’t see how this model can work if your salaries differ by much, especially if you live together.

Scenario 2: Salaries together as a single entity

I believe this is more common when people start living together simply because it’s easier to manage. If both salaries are considered as a single “family income” entity then it’s easier to plan, especially if they live in a joint account.

To satisfy personal needs, say expensive trips with friends, spa treatments, etc people can just tap into the joint account or have an amount going to their personal account every month. Yeah, not always. Who said that everything has to be split equally?

Your partner may be making more money than you do but still be happy for you to spend more than he/she does. If that’s the case, you definitely know how to choose a partner 😉

I think this scenario of joint accounting has also pros and cons:

Easier to manage
Feels more united
Risk of rampant spending

Potentially more conflicts

It’s easier to let life continue without paying much attention to a joint account. This may cause more conflicts down the line.
But because it all goes into a single account, it’s easier to manage than the you owe me situation of Scenario 1. And easier to manage also requires enough discipline from both members, the lack of which can cause trouble!

Scenario 3: Anywhere in between and single income

Here’s how we deal with finances at the Foxy Monkey HQ:

Once a year we sit down and define what our expenses will be. This is based on historical spending and expectations about what we’ll need. The common spending is well… common. But the personal stuff is not equal. I can’t even remember who spends more but that’s not the point.

We then keep this personal allocation in our bank accounts and everything else goes as a standing order to our FreeTrade and Halifax ISA account.

We use a shared credit card as much as possible. The purpose is two-fold:

a) It gives us free 1.5% cashback on all purchases
b) We can see how much each member spends every month/year

The card we use is the Amex platinum cashback card (<- referral link). We both get £25 if you sign up through my link, and thanks! Amex is accepted almost everywhere nowadays; this was not the case 10 years ago.

We don’t really go back and check our yearly hypothesis too frequently. That only happens next year that we’ll sit down 🙂 But we occasionally keep an eye on the account (mostly me!!).

Obviously, big differences in salary or a single family salary make the joint scenario #2 more likely to happen.

It’s not unusual to see one family member quit their career or go part-time to raise children. And although raising kids is sometimes harder than a full-time job, it’s totally absent when economists count the GDP beans.

Does this mean that they shouldn’t have an equal say at the single income coming in? They should if you ask me. Society and nature expect the mother to play that role most of the time. And I believe sometimes this is what causes the much-hated gender pay inequality.
PS. Don’t shoot the messenger 🙂 

What really matters

If you want to buy a Tesla and don’t have enough money for the 2-month Southeast Asia trip your partner may not be very happy about it.

Which is why the technical bits don’t really matter. It’s more of an accounting task and it even becomes optional.

What matters is that you agree on what you want to do together and that your goals align. Then the splitting becomes much easier and it’s mostly accounting.

As you would expect, if one is a natural saver and the other a big spender, it gets much harder. Another factor to consider when picking partners 🙂. However, don’t get too deep into this rabbit hole. Patience is a virtue and research has shown that more patient people tend to be wealthier and happier. But up to a point.

As Klement says:

People who are more patient tend to be wealthier and happier. And on an individual level, people who are more patient and able to wait for delayed gratification have higher retirement savings and a better life in general.

Incredible as it may sound if you check the link between patience and self-reported happiness the most common measure used in happiness research), more patient people tend to be happier, but only to a point. Once you enter the top 6% to 8% of most patient people in the world, your life satisfaction peaks and then starts to decline.

Shifting to the top 1% of most patient people in the world reduces happiness by about a quarter of the difference in happiness between people with a college degree and a high school diploma. In other words, misers are less satisfied with their lives.

So having a partner who is different from your tastes may lead to more happiness despite your arguments telling you otherwise!

And that’s all I have to say about splitting finances between 2 adults. Unless you’re a 3-adult family (have you watched You Me Her?) in which case sorry, it’s too complicated!

What’s your experience managing money with your partner? I’d be interested to hear from people who have totally separate finances as I’m not in that camp anymore. Do you agree or disagree most of the time and how do you manage your finances?

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    7 thoughts on “Managing money with your partner”

    1. I’m so glad that you’ve brought this subject up Michael. I haven’t lived with anyone for over 15 years. One of the reasons for this is that I’m fiercely independent with my finances. I wouldn’t know how to go about splitting it. I definitely wouldn’t want to put everything into one pot as it would be tricky if the relationship ever ended. Obviously we always hope that it doesn’t but these things do happen. My last partner left me because I wouldn’t live with him. I’ve just got into a new relationship, found love during lockdown (without meeting up), with someone that I had a blind date with 12 years ago and hoping that if it works out I can let my guard down a bit on the living together front. We are looking forward to our 2nd date in 12 years after lockdown. 🙂

      • Thanks for sharing your story, Sharon. Yeah, the one-pot scenario really works only if there’s an absolute trust which happens later in the relationship. Good luck with the date 😉

    2. Hi, I’m eight years married and my wife and I have a joint account but separate personal accounts. I manage the joint account or rather I check it to make sure everything is coming and going as it should be.

      I earn approximately £6k a year more but we contribute equally to the joint account. I generally pick up more of the larger yearly expenses like car insurance and any unexpected bills. She is more of an impulse spender and I like to consider purchases carefully before diving in (boring I know). Having all our money in one pot is not practical as my wife openly admits she wastes money on stuff she doesn’t need, however, as long as she can meet her monthly joint account commitments who am I to tell her what she can/can’t spend her money on and vice versa.

      • Very sensible approach. I think finding the balance between meeting common goals and freedom to spend is key in marriage. Thanks for sharing.

    3. We started with splitting everything based on salary earnt. So that if one of us earnt more, then they would both pay slightly more of the bills- but also have slightly more “free” money to do with what we wanted. That worked for agesssss, until we realised that we wanted to get to FIRE quicker and having separate pots wasn’t working so well. So now, we still have separate current accounts, but they are barely used- only for a little discretionary spending. Most of it then goes into a joint account before its invested.

      • You made a great point. I also think people who work towards FIRE need to have joint accounts. Not that it can’t be done otherwise but working towards FI together is easier to manage.

        Having said that, I know a few people in the community who want to FIRE on their own while the partner keeps working. As long as it works out well for them I 100% approve. I just find it hard to believe it’ll work long term.


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