Last week, in my three part blog series, Love and Money Pt 1, we started the conversation by talking about how to create a budget you and your spouse or significant other can live with. Today, I want to break down different ways to tailor your checking and savings accounts for your needs. Now let me start by saying that, no matter what someone else tries to tell you, there in no ONE right way to do this. I know that a lot of people believe, once you join together in marriage you join your money too. And, while I do agree with that, I think don’t think it necessarily means that having all of your money in joint accounts is the right way to go for everyone.
For example, if I’m a saver and my partner is a spender and we have different accounting styles, then having separate accounts make save us from a TON of arguments while still getting us to our money goals!
Here are the pros and cos of the 3 most common ways to set up your checking and savings accounts as a couple.
This is definitely the most “traditional way” with 1 Checking + 1 Savings, you’re each taking your paychecks, depositing them into one joint checking account and paying all bills from said account. The same rings true for your savings, everything is combined.
The biggest pro is that this way is very easy. Both of you can easily see what’s coming in and what’s going out. This way works best if you’re a couple with similar spending and savings habits.
Even if you both agree on a budget that includes spending money, if one person is a spender and one is as saver, you may butt heads using the same checking account. I know that, in my previous marriage, my ex-husband could go a month without spending a dime on any unnecessary expenses whereas, I felt suffocated by that kind of financial regidity. If we had budgeted for it, I spent it and if we hadn’t budgeted for it, I still spent it. Ha! Not always my finest moments!
With 1 Checking —-> 2 Checking + 1 Savings. Your money starts by being deposited into one account (lets call that “Account A”). All of your bills are paid from Account A and a portion of your income is deposited into a joint savings. After bills are paid and money is saved, each partner receives a budgeted amount as their own “spending money”to deposit into their own checking account (Accounts B & C).
I like this method because it creates partnership while still allowing for individuality. You are partners in paying the bills and saving for the future however, you have the freedom to decide what to do with your own spending money without feeling like you have to answer to anyone. If you choose to save your money for months and then spend it all on a $1000 Sephora shopping spree, awesome! No one is going to ask questions or care because it’s not affecting joint money at all.
Also, for spenders, having their own checking account might give them more responsibility and ownership over their money. Once it’s gone it’s gone so, they either have to learn to budget wisely or spend many a night sitting all pitiful and penniless on the couch.
Any method that allows for a personal account requires trust. I hope that’s a non-issue in your relationship but, for many couples, trust is a concern. If that’s the case in your relationship than you might find yourself asking “what’s he/she really doing with their money? why are they always broke? what aren’t they telling me?” Clearly that’s not a good headspace to be in. So, for this to work, you need to either decide that you trust your partner, or pick another accounting style…or another partner but THAT’S none of my business!
This last style, 2 Checking + 2 Savings, is what Scott and I do. We first started budgeting and accounting like this because we’re not married yet and weren’t ready to merge our money. But, now that we’re at under a month until our wedding, we’ve been talking a lot about money, and we decided that we’ll continue this style with a few tweaks.
With 2 Checking + 2 Savings, we each have our own checking and savings accounts. We divide up household expenses based on income, Scott pays 60%, I pay 40%. Additionally, each of us is responsible for half of the month’s grocery and eating out budget. So, at the beginning of the month, I put $200 into our “Grocery” envelope and $100 into our “Eating Out” envelope. Then, two weeks later, Scott does the same.
While our savings accounts are separate, we’re still saving towards joint goals. Currently, Scott’s savings is our Wedding account and my savings is our Emergency account. As a couple, we’ve decided how much we’ll add each pay period to our accounts.
Related Post: 2017 Budget Planner
There are many reasons why we’ve decided on 2 Checking + 2 Savings. The first is that we each have significant personal bills (I have student loans and credit card debt. & Scott has monthly trips to visit his daughters) and paying those expenses separately saves us a lot of banking confusion. Additionally, as anyone who’s ever switched banks knows, changing your direct deposits and auto debits is a nightmare! So, we just let well enough alone!
Other than the whole trust thing again, I can’t really think of any major cons. As someone who personally uses this way, I have to say that it’s been a really great option for us. I’m sure some people will see this style as “too separate” but, the thing that makes it work for us, is that we still create our household budget together and communicate about our money a lot!
So what way do you and your honey bunny budget your money? Is that working for you or do you think you’ll try another from the above suggestions? Comment below and let me know.