By Jurissa Ayala
According to Kansas State University researcher, Sonya Britt, arguments over money are top predictors of divorce in relationships – by far. Those small disagreements over how money is spent in the beginning of the relationship become major bones of contention as the relationship progresses.
It’s also why it’s so important to get a handle on money management early in the relationship – before the fighting begins. There are many ways couples can go about this.
Separate Checking Accounts and Joint Accounts
One of the most effective is to begin by creating three separate checking accounts so that there is one account that is a household account. Each person contributes a predetermined (and oft revisited) amount to the general fund to cover household expenses. These expenses include:
- Mortgage/Rent payments
- Utility payments
- Insurance premiums
- Mobile phone bills
- Auto loan payments
- School tuition or child care fees
- Credit card payments
- Student loan payments
- Food and Grocery Items (not dining out)
- Clothing and entertainment allowance for adults and children
- Auto maintenance
Essentially, anything that is a necessary bill of the household and not the responsibility of one person or the other should be paid out of this account.
These are expenses that are non-negotiable and must be paid each month. If the standard contributions do not cover them, then each of you must contribute more to cover the basics for that month and readjust contributions in future months to accommodate the necessities.
Each partner also maintains a separate account in this scenario. It’s important to have your own money in a relationship. It’s not about keeping sinister secrets. It’s about keeping the peace.
When you have your own account there isn’t the usual bickering over how much who spent on fingernails or snacks at the corner quick-stop. There aren’t any worries over double dipping or forgotten transactions that lead to bounced checks or NSF fees.
The biggest benefit, though, is that you each have some money each month that you decide how to spend. You can spend it on yourself, your partner, or your children – without asking for permission and without risking the ire of your partner.
What You Should Discuss before Merging Accounts
It’s inevitable in relationships that each party has different incomes, different financial priorities, and different ideas about how the household money should be spent. It’s important to sit down and work out a plan that works for both parties so that financial goals are being met, savings plans are being initiated for the future, and current needs are being met.
These are a few topics you need to discuss before merging your accounts together:
- How much each person will contribute. Different incomes should equal different contributions.
- Credit card ground rules – especially necessary for joint credit card accounts.
- Cost cutting efforts.
- Philosophies on money.
- Financial plans for the future.
- Goals (short and long term).
- Perspectives on debt – how much is too much?
It’s a good idea to consider visiting a financial planner or advisor together. A financial advisor understands the different dynamics couples may have coming into the situation and will work to help you find a middle road plan that will meet your current and future financial needs while leaving you both a little money left over to enjoy month after month too.
Because financial arguments are so central to divorce, and because emotions run high on both sides of the issue, the financial advisor plays a voice of reason between the two of you to help you understand where the other person is coming from so you can both meet your goals.
The earlier you come together on your financial views, the better it will be for your relationship. Establishing joint and separate checking accounts, though, is one of the most important, relationship and sanity saving steps you can take together.