3 Methods For Combining Household Finances As A Married Couple

Combining household finances when you marry can be one of the biggest challenges for newlyweds. After all, this is neither a purely financial decision nor a purely emotional one. So, how can you combine your finances successfully, covering all your needs while minimizing conflict? Here are three ways you might consider. 

1. Income-Based Joint Accounts

Most couples don't earn exactly the same amount per person. So the common wisdom to simply split joint bills evenly may actually cause more problems. Why? One partner may be expected to contribute a larger part of their income than the other. A more equitable system is to calculate each person's contribution to joint accounts and shared bills based on their income. 

To enact this method, add up all the shared bills. Then, add up the total average income for the family and determine what percentage is earned by each party. If one person earns $2,000 while the other earns $3,000, for example, one party earns 40% of household income. They would then contribute an amount equal to 40% of shared bills to a joint account with their spouse contributing the remaining 60%.

2. Assigned Household Expenses

Not every couple wants to combine their bank accounts. But you can still share bills by calculating a fair division of costs and having each person pay their assigned items. This can also be based on an income-based calculation, such as assigning roughly 40% of shared expenses to the partner who earns about 40% of total household income. 

Schedule a reassessment of this division of bills at least once per year to see if it's still a fair distribution. Some bills rise while others fall, resulting in an imbalance if not monitored on a regular basis. 

3. Shared Accounts and Allotments

Ready to dive in and join all your accounts? This more traditional route can help both partners to take ownership of accounts and forces them to learn how to manage money together. However, some people worry that they will feel like they cannot spend any money or that their spouse will spend too much of their shared earnings. 

Combat this concern by deciding on a set amount each party can spend without consulting the other. This may be done in two ways. The first is to create an allotment per person (per week or month) that they can spend freely without question. The other method is to designate a dollar limit for what both spouses can spend on a purchase. Both consult together on any larger purchases.  

Where to Start

Deciding which of these methods for combining accounts, splitting costs, and rebalancing expenses would work best for your marriage is vital to making it work. Start by meeting with a premarital financial service such as Ruth Liebel Financial Coaching to learn more. With their help, you and your new spouse will find a path that leads to family harmony forever.