10 Tips for Financially Separate Couples

In last month’s post on marriage and money, Alyssa asks:

“Do you have any tips specifically for couples who live together but don’t share money? My boyfriend and I have lived together for a year (and have been together for three).

We keep everything separate and we split the bills evenly. [Joint goals are] definitely applicable for us, as we plan on getting married so we should save for our wedding together. We have very different spending habits, but I’m trying to nip any major future arguments in the bud.”

This is an important question for couples who have made the jump to sharing expenses or living together, but haven’t yet married their financial lives. It should also come as no surprise that the ideal setup will be remarkably similar to married couples who choose to keep separate finances.

I have ten tips to offer based on our experience and what I’ve learned from other couples:

  1. Use one account for all common bills. Treat it as an escrow account, and make sure it’s funded by both partners before you pay a bill. Having one partner start to make up the difference is a slippery slope that leads to problems. Keeping a joint account is great practice for when your finances eventually combine.
  2. Use a second account for savings. As Alyssa mentions, although their finances are separate, couples have joint goals that need money from Day 1. Initially, they are small, like a trip together out-of-town. Eventually, they lead to larger goals like paying for weddings and buying assets. Set up a separate savings account for this purpose, and agree to the amount you’ll fund it with every week or month. Even if you don’t need the money immediately, it’s a great head start.
  3. Keep everything else separate. Don’t apply for joint credit cards or unnecessary joint accounts that combine your finances. Remember that in most cases, you’re equally responsible for anything that happens to a joint account, whether you agree with your co-owner’s actions or not. It’s easier to cut ties with a joint expense account than to dig yourself out of your partner’s run-up credit card debt.
  4. Share your personal data. You’ll have to decide the level of detail you’d like to share, but I think it’s critical that the other partner know what’s happening with your money if you manage any part of it as a couple. You can learn from one another and stop bad habits early, and it’s useful to have a good understanding of each other’s finances in case of an emergency.
  5. But, be respectful. Although you are a couple, your finances are still separate and mostly private. As a result, if you push too hard with advice and your own view of money, you might find you get a lot of push-back. If your financial differences are that great, and you don’t see a way of working through them by the time you get married, perhaps it’s time to evaluate the relationship.
  6. Be careful with large purchases. Buying big assets like computes, appliances, cars, and (yes, I’ve seen it happen) homes can spell trouble for financially separate couples. The reason is that property rights are often in question if the relationship doesn’t work out, especially if whatever you bought is in only one person’s name. Be extremely careful in how you fund and title these purchases, and keep immaculate records signed by both of you as to ownership.
  7. As long as you’re separate, keep control. Don’t let your partner handle your finances if you’re still managing them separately. If the relationship ends, you’ll be left picking up the pieces and trying very hard to figure out where the other person left off.
  8. Consider your will and other legal documents. If you should happen to die or become injured or incapacitated, how should that affect your partner? Will they be authorized to make decisions on your behalf? Will they receive any of your assets? Many relationships evolve quickly, so looking at your legal documents as often as every few months may be advisable.
  9. Plan for income inequality. Although your income may be similar today, that may not always be the case. What would happen if one of you lost your job or suddenly got a big raise or pay cut? While being the breadwinner in a marriage might be admirable, doing the same in a young relationship could be enabling dependent behavior. Whether you feel comfortable talking about it with your partner, or you do it on your own, decide what you’d do if the situation came up.
  10. Don’t always stick to 50-50. If you or your partner clearly demand more of your common funds, make your money arrangement reflect that. For example, you might use your house as a home office for your online job, while your partner works outside the home. If you’re using more of the home’s resources on a daily basis, it would be fair for you to pay more, whether it’s 60, 70, or some other percentage of the total cost of living.

The lines of communication should stay open regardless of the strategies you use. Keep an open mind and understand that you know your situation best–don’t let what has worked for someone else overpower what you’re confident will work for you and your relationship!

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5 thoughts on “10 Tips for Financially Separate Couples

  1. I think I saw this question come up on Suzie Orman’s show. Her advise was to contribute to the common expenses as a percentage of the salary, so whoever make more, contributes more. Maybe a little too socialistic, but that advise somehow stuck in my mind, even though it never had relevance in my situation.

    1. If you’re making $30K and your girlfriend is making 10, it takes a big leap of faith to start supporting your joint finances in that way if you’re not ready to combine them yet.

      I do agree though that somewhere between the initial stage of dating and marriage, Suze’s approach would be valid.

      1. I make about as much per year as my 2 roommates make put together. But I’m not going to pay more to the gas bill.
        With my boyfriend (he also makes less), if we lived together, I figure we would find a place he he could afford (his place right now is 2 times as expensive as mine anyway), and then split 50/50. If we decide to combine finances later, my savings will be the same as if he had paid less and saved the extra anyway.

        The most complicated situation that might come up in the next couple of years is if I buy a house, and he moves in with me. Because I would charge him rent rather than having him pay part of the mortgage – but then his rent is really covering part of the mortgage, so that could get tricky.

        The only real answer I can think of is communicate!!

  2. After reading this article, I took a bit of a poll at work, to see if a few of my co-workers had been in this situation. None of us have had to worry about whether or not to share finances. It is just a given: no. Is this perhaps becoming less common as people (women in particular) grow more and more financially independent? We couldn’t think of any reason to even consider sharing finances before marriage, and for me, even then, it makes me a little uncomfortable.

    But for those of you who are sharing finances, or having to deal with the question of how to do so, we have a post here at Mango Money about different “spending personalities” and how to combine those in a relationship. Check it out: http://www.mangomoney.com/blog/money/you’re-in-love-with-a-spendthrift-how-to-reconcile-money-management-styles

    1. My BF and I are opening a joint account to pay for joint costs.

      Rent, laundry, groceries, dinners out, vacations, dog costs – these are most of the things we’re splitting down the center at this point. I didn’t really think about splitting according to income, but right now we make about the same amount (except that I own a business, so my income fluctuates, and he has a FTJ, salaried.) Glad to know we’re doing the right thing!

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