I have been speaking to couples about their joint finances recently. A lot of issues came up, but one unavoidable decision at the outset was whether to open a joint bank account (or not) and then what to put into it.
Like everything with money, there are emotions, hidden fears, values, and beliefs behind financial decisions, and one needs to tread carefully when discussing these. It can be a good way to have a more open style with money as a couple but then again some may find it repressive and restrictive.
Some couples who have got together later from other relationships seem to prefer to keep accounts separate for simplicity, but it’s not always the case.
Whether you chose to go down the joint account route or not, I would always start these conversations by quantifying joint financial responsibilities. What does it cost to run the house? It only then needs to be decided by what method each will contribute. An agreement is probably wise though. Feeling you are being “taken for a ride” financially is a powerful negative feeling you would want to avoid.
Here are some approaches:
Each contributes a different amount to the pot
- Same percentage split: Each contributes the same percentage of their net pay to the pot giving differing contributions.
- Different percentage split: Each contributes a different percentage of their net pay to the pot.
- Leftovers split: Contribution level so that each person has the same “leftover” money in their own bank account.
- One-Pot: Both contribute ALL their income to one account and work jointly from this.
- One Contributor: One contributes to a joint bank account for the benefit of both.
Each contributes the same amount to the pot
- 50:50 split. Analyse household expenses and savings and both agree to contribute 50% towards this.
As you can see there are different ways to look at this. Which approach is the least unfair and gives the most practical solution? Depends on the couple.
Are there any more joint approaches you can think of? Let me know in the comments. If you want to discuss this or any other financial issue, drop me a line.