Money and relationships is a huge, broad topic with many different aspects. One of those aspects is how to appropriately combine money, or whether or not you should combine money and accounts.
Figuring out how to combine money successfully, can be the difference between a harmonious financial existence, and a total freaking nightmare. That said, it’s totally doable to combine finances. You can do it yourselves. The first step is joint accounts.
I don’t know if there’s one “best” way to combine finances, but I know what works for the hubs and I, and that’s “His, Hers, and Ours” accounts. (I don’t know who coined that term, but I first heard it from GVO‘s show, Money Morons)
A little History
My husband and I started living together around five years ago. We’d been together for five years at that point and it just made a lot of sense to finally get a lease together. We didn’t combine our finances at that point, but we did share expenses equally. It was kind of confusing, keeping everything straight with regards to who owed who what, who’s turn it was to get the groceries, etc. So, once we moved out of the city and back to our small town, I pulled the trigger and got us joint accounts with ING Direct.
My husband keeps his own accounts with the local credit union from which he pays for his credit card, his phone bill, and any personal expenses or purchases he’d like to make. He also has a savings account where he keeps a few month’s worth of basic living expenses since he’s self-employed and his income can be unstable.
I still have my own chequing account with a separate bank. I use this to pay for all of my personal expenses like clothing and haircuts. I have my personal credit card and line of credit with this bank, as well as my savings account where I keep money for taxes from my blog income, some savings, etc.
We have a joint chequing account with ING Direct. From this account, we make all purchases that we would consider joint expenses. This means groceries, beer, stuff for the pets, car repairs, etc. If we owned a house, we’d make mortgage and home insurance payments from this account as well. The vast majority of our spending is done through our joint chequing account. We both put money in each week, and I’m able to monitor our spending through my Mint.com account.
We also have several joint savings accounts. Ones for our emergency fund, our wedding gift money, and general joint savings.
The Beauty of His, Hers, and Ours Accounts
Personally, I love the way our accounts are set up. We’re able to spend as a unit when we are buying things together, but we each have our own autonomy when it comes to the rest of our cash. Any money that we don’t need to pay bills or achieve some sort of joint goal, we get to keep to ourselves and spend as we like. For me, that means that I get to keep a lot of my extra cash to pay off debt, which has been where 99% of my “extra income” has gone in the last two years.
Once I’m out of debt our current setup will need to be tweaked, since I have grand plans to start saving for retirement, travel, and maybe even a house down payment. But for now, this “his, hers, and ours” system of accounts really works for us. It keeps us working together, but not so close that we are all up in each other’s personal business.
Combining money, especially when partners have different spending patterns, can be a difficult period of adjustment. I think that gradually combining accounts the way my husband and I have, can be a great way to ease into things without giving up all financial autonomy.
How do you handle your money with your significant other? Do you have completely separate finances? Completely combined? I want to know!