Mar 26, 2024

Marriage

Why some couples join their finances while others keep them separate

Why do couples choose to join their finances vs keep them separate
Why do couples choose to join their finances vs keep them separate

Ah, love and money, two things that can make the world go round - or make your head spin. If you're in a relationship, you've probably danced around the topic of finances more than once.


Whether you're just starting out or have been together for ages, figuring out how to handle money as a couple can be a bit of a puzzle. We're here to shed some light on the ins and outs of merging finances, keeping them separate, or finding that sweet spot in between.


Why do couples decide to open joint accounts?


What’s the deal with joint bank accounts? Well, marriage tends to prompt partners to plan their future together. When wedding bells are ringing and love is in the air, sharing everything can feel like the natural next step. In fact, 85% of modern couples end up opening a joint account around marriage, though most couples nowadays don’t use them exclusively. 


Pooling financial resources can make things simpler, especially when couples have big expenses like rent or a mortgage to tackle. Creating a joint account is a bit like being in a boat together - you're in it together, for better or worse. And combining incomes can provide a sense of security and stability.


Reasons couples prefer separate finances


Although there are benefits of joint accounts, most dual income couples are taking their time to  merge their money. Some are even choosing to keep their finances completely separate, like two ships passing in the night. There’s no right or wrong answer.


Couples are getting married later in life nowadays.  The US Census Bureau found that the average age at first marriage is around 28 for women and 30 for men, that’s most of your twenties as a financially independent adult. So it’s not a surprise that some people today find it daunting to merge finances and change what feels normal.


Median age at first marriage


Partners entering a second or third marriage who had bad experiences with joint accounts in the past may also prefer separate accounts. Operating finances independently can also offer a sense of autonomy and freedom. As an independent adult before marriage, depending on another adult for money can feel strange to some.


Each partner can maintain their own financial identity and spend their hard-earned money however they best see fit. Even for couples who primarily use joint accounts, having private spending/investment accounts is increasingly common.


Why many couples like a hybrid approach to their finances


Now, if you're thinking, "Why can't we have the best of both worlds?" - you're onto something. Roughly 40% of couples take a hybrid approach to their finances where some accounts are joint while others remain separate. According to Bankrate, millennial couples in particular strongly prefer the hybrid route at roughly 69%. 


The perks of a blended approach is couples can enjoy the benefits of shared finances for common day-to-day expenses and large purchase goals while each partner still has their own cash stash for personal splurges or rainy day funds. It's a strategy that supports a happy balance that works well for both partners.


But who pays for what?


So, how do couples actually decide who pays for what? A UBS study found that 85% of women manage the day-to-day expenses in their partnerships and 58% of men take the lead on long-term investment and financial planning decisions vs 23% of women and 19% sharing those decisions equally.


But like a lot of things in personal finance, there's no one-size-fits-all answer to how couples should split expenses. Communication is key, however, so sit down together and have an open and honest conversation about your financial goals, priorities, and spending habits.


Perhaps you’ll choose to divide up expenses based on each partner's income, splitting bills proportionally to ensure fairness. Or maybe you’ll just decide based on each other’s strengths. 


Different ways couples split expenses


Here are a few examples of different methods couples can use to split their expenses.


Split down the middle: Some couples prioritize equality and go for the 50/50 split on everything. They either divvy up expenses as they come in or tally up receipts and settle the total bill at the end of each month. Some take turns picking up the dinner tab every other time which counts as splitting costs evenly too.


Income percentage: Couples who have very different income levels may find splitting based on a percentage of each partner’s income to be more suitable. This can also apply when two partners have a big age gap or are at different stages of their careers. Each person contributes a fair share based on what they earn. It's like a financial high-five for teamwork.


One central pot: If you're all about a teamwork vibe, consider setting up a joint expense account. Each person tosses in a set percentage of their income - or possibly all of it, and voila. All your bills get paid from one central pot. Just remember, communication is important to keep the account topped up and used in a way you both agree.


Divide and conquer: Some couples divide expenses based on what each partner can afford or wants to take on. For example, one partner can be responsible for the electric, gas, and water bills while the other pays for waste collection, phone, internet, and streaming services. This often creates the most tension since every purchase is another potential conversation.


Whatever approach you take, friction can arise if you’re not on the same page. So, sit down, have a chat, know that it’ll be uncomfortable at times (and discomfort is normal), and lay out your game plan together. And remember, you can always try something else if things don’t work the way you expect. With a little teamwork and a lot of love, you'll be navigating the financial waters like pros in no time.


Go forward with wealth building together


If you and your partner are actively navigating how to merge finances, Plenty was built with your financial situation in mind. Plenty goes beyond budgeting, making it simple to invest, save and grow towards your future goals by unlocking access to the financial strategies of the wealthy. Ready to get started? Sign up for your free trial today.


__


This information is for general informational purposes only. It is not intended to constitute investment advice or any other kind of professional advice and should not be relied upon as such. Before taking action based on any such information, we encourage you to consult with the appropriate professionals. Neither the firm nor its agents or representatives may give tax or legal advice. Individuals should consult with a qualified professional for guidance before making any investment or other financial decisions. We do not endorse any third parties referenced within the article. Portions of the information and opinions contained in this material are obtained from third parties and other sources believed to be reliable,however the accuracy and completeness of the information cannot be guaranteed. Market and economic views are subject to change without notice and may be untimely when presented here. Do not infer or assume that any securities, sectors or markets described in this article were or will be profitable. Past performance is no guarantee of future results. There is a possibility of loss. Historical or hypothetical performance results are presented for illustrative purposes only.



Plenty was founded to democratize access to financial products and tools that accelerate wealth building. Plenty Financial and affiliated entities. (“Plenty Financial”) provide a web, mobile, personal financial management and educational platform to consumers; some of these tools are freely accessible to all consumers, others require a fee-based subscription. Advisory services are provided in the form of software-first financial planning and investment advisory services for fee-based Subscribers. Plenty Financial RIA, LLC is an SEC-Registered Investment Advisor. All investments made are legally owned by you. Investing is inherently risky and Plenty does not guarantee positive performance. Investments are held in accounts at BNY Mellon | Pershings, the world's largest securities servicing company and are SIPC insured. Investing involves risk, including the possible loss of principal, and there is no assurance that the investment will provide positive performance over any period of time.


Brokerage services are provided by Atomic Brokerage LLC "Atomic Brokerage", member FINRA and SIPC. Clearing and custody services are provided by Brokerage firm BNY Mellon Pershing, member SIPC. Plenty Financial RIA, LLC has a relationship with Atomic Brokerage to manage and execute investments on behalf of customers. Subadvisory services are offered through Atomic Invest LLC ("Atomic Invest"), an SEC-registered investment advisor, member SIPC. Atomic Invest was formerly known as Helium Advisors LLC.


Return data used in the interactive tool are hypothetical performance data which contains inherent limitations and is not a substitute for actual investment returns derived from a live portfolio. There are numerous risk factors related to trading and markets which cannot be fully accounted for when depicting Hypothetical Performance. Consequently, future returns are not guaranteed, and a loss of principal may occur. THIS IS FOR INFORMATIONAL PURPOSES ONLY AND SHOULD NOT BE RELIED UPON AS INVESTMENT ADVICE. This site/application has been prepared by Plenty and is not intended to be (and may not be relied on in any manner as) legal, tax, investment, accounting or other advice or as an offer to sell or a solicitation of an offer to buy any securities of any investment product or any investment advisory service. The information contained in this site/application is superseded by, and is qualified in its entirety by, such offering materials. This site/application may contain proprietary, trade-secret, confidential and commercially sensitive information.


By accessing this site, you signify your agreement with and understanding of the following Terms of Use and Legal Information pertaining to both this site and any material in it. Plenty owns and maintains this site. No act of downloading or otherwise copying from this site will transfer title to any software or material at this site to you. Anything that you transmit to this site becomes the property of Plenty, may be used by Plenty for any lawful purpose, and is further subject to disclosure as deemed appropriate by Plenty, including to any legal or regulatory authority to which Plenty is subject. Plenty reserves all rights with respect to copyright ownership of all material at this site, and will enforce such rights to the full extent of the law.


Plenty was founded to democratize access to financial products and tools that accelerate wealth building. Plenty Financial and affiliated entities. (“Plenty Financial”) provide a web, mobile, personal financial management and educational platform to consumers; some of these tools are freely accessible to all consumers, others require a fee-based subscription. Advisory services are provided in the form of software-first financial planning and investment advisory services for fee-based Subscribers. Plenty Financial RIA, LLC is an SEC-Registered Investment Advisor. All investments made are legally owned by you. Investing is inherently risky and Plenty does not guarantee positive performance. Investments are held in accounts at BNY Mellon | Pershings, the world's largest securities servicing company and are SIPC insured. Investing involves risk, including the possible loss of principal, and there is no assurance that the investment will provide positive performance over any period of time.


Brokerage services are provided by Atomic Brokerage LLC "Atomic Brokerage", member FINRA and SIPC. Clearing and custody services are provided by Brokerage firm BNY Mellon Pershing, member SIPC. Plenty Financial RIA, LLC has a relationship with Atomic Brokerage to manage and execute investments on behalf of customers. Subadvisory services are offered through Atomic Invest LLC ("Atomic Invest"), an SEC-registered investment advisor, member SIPC. Atomic Invest was formerly known as Helium Advisors LLC.


Return data used in the interactive tool are hypothetical performance data which contains inherent limitations and is not a substitute for actual investment returns derived from a live portfolio. There are numerous risk factors related to trading and markets which cannot be fully accounted for when depicting Hypothetical Performance. Consequently, future returns are not guaranteed, and a loss of principal may occur. THIS IS FOR INFORMATIONAL PURPOSES ONLY AND SHOULD NOT BE RELIED UPON AS INVESTMENT ADVICE. This site/application has been prepared by Plenty and is not intended to be (and may not be relied on in any manner as) legal, tax, investment, accounting or other advice or as an offer to sell or a solicitation of an offer to buy any securities of any investment product or any investment advisory service. The information contained in this site/application is superseded by, and is qualified in its entirety by, such offering materials. This site/application may contain proprietary, trade-secret, confidential and commercially sensitive information.


By accessing this site, you signify your agreement with and understanding of the following Terms of Use and Legal Information pertaining to both this site and any material in it. Plenty owns and maintains this site. No act of downloading or otherwise copying from this site will transfer title to any software or material at this site to you. Anything that you transmit to this site becomes the property of Plenty, may be used by Plenty for any lawful purpose, and is further subject to disclosure as deemed appropriate by Plenty, including to any legal or regulatory authority to which Plenty is subject. Plenty reserves all rights with respect to copyright ownership of all material at this site, and will enforce such rights to the full extent of the law.


Plenty was founded to democratize access to financial products and tools that accelerate wealth building. Plenty Financial and affiliated entities. (“Plenty Financial”) provide a web, mobile, personal financial management and educational platform to consumers; some of these tools are freely accessible to all consumers, others require a fee-based subscription. Advisory services are provided in the form of software-first financial planning and investment advisory services for fee-based Subscribers. Plenty Financial RIA, LLC is an SEC-Registered Investment Advisor. All investments made are legally owned by you. Investing is inherently risky and Plenty does not guarantee positive performance. Investments are held in accounts at BNY Mellon | Pershings, the world's largest securities servicing company and are SIPC insured. Investing involves risk, including the possible loss of principal, and there is no assurance that the investment will provide positive performance over any period of time.


Brokerage services are provided by Atomic Brokerage LLC "Atomic Brokerage", member FINRA and SIPC. Clearing and custody services are provided by Brokerage firm BNY Mellon Pershing, member SIPC. Plenty Financial RIA, LLC has a relationship with Atomic Brokerage to manage and execute investments on behalf of customers. Subadvisory services are offered through Atomic Invest LLC ("Atomic Invest"), an SEC-registered investment advisor, member SIPC. Atomic Invest was formerly known as Helium Advisors LLC.


Return data used in the interactive tool are hypothetical performance data which contains inherent limitations and is not a substitute for actual investment returns derived from a live portfolio. There are numerous risk factors related to trading and markets which cannot be fully accounted for when depicting Hypothetical Performance. Consequently, future returns are not guaranteed, and a loss of principal may occur. THIS IS FOR INFORMATIONAL PURPOSES ONLY AND SHOULD NOT BE RELIED UPON AS INVESTMENT ADVICE. This site/application has been prepared by Plenty and is not intended to be (and may not be relied on in any manner as) legal, tax, investment, accounting or other advice or as an offer to sell or a solicitation of an offer to buy any securities of any investment product or any investment advisory service. The information contained in this site/application is superseded by, and is qualified in its entirety by, such offering materials. This site/application may contain proprietary, trade-secret, confidential and commercially sensitive information.


By accessing this site, you signify your agreement with and understanding of the following Terms of Use and Legal Information pertaining to both this site and any material in it. Plenty owns and maintains this site. No act of downloading or otherwise copying from this site will transfer title to any software or material at this site to you. Anything that you transmit to this site becomes the property of Plenty, may be used by Plenty for any lawful purpose, and is further subject to disclosure as deemed appropriate by Plenty, including to any legal or regulatory authority to which Plenty is subject. Plenty reserves all rights with respect to copyright ownership of all material at this site, and will enforce such rights to the full extent of the law.