Couples’ Finance – Shared vs. Separate Finances

couples-financeArguments over money are one of the most common sources of tension in most relationships. Whether both partners work and earn similar incomes or one partner pays the bulk of the household expenses, discussing household finances and deciding on a joint financial plan is key – but how should you handle your joint income?

Sharing Finances

One option that many couples choose is to pool their incomes in a joint account or use a primary and secondary credit card so that the total household expenses are shared and paid for equally. This system is great for couples who earn similar incomes and spend most of their money as a couple – on their home, car and expenses relating to children, travel and buying household items.

While this system has the advantage of being transparent, with both partners having access to their combined income and being able to keep track of all expenses through a joint account, it may not be suitable for couples who invest their savings in different ways or where a large gap in incomes exists between the two partners.

Keeping Finances Separate

If you and your partner do not earn a similar income, it is important to discuss who is going to pay for what – usually the partner who earns more opts to pay for large expenses like the household rent or bond payment, and car repayments. The partner who earns less may contribute by paying for groceries, holidays or expenses relating to the children. This system of separate finances has been successfully applied over many years by the traditional family where the husband tended to earn a larger income than the wife, and as long as both partners agree to this system it can be very effective.

Keeping finances separate also allows the two partners to invest their extra income according to their own system. Since the partner who earns more may need to support the couple after retirement, he or she will need to invest more than the partner who earns less.

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