4 Ways to Manage Money in a Relationship

Alex Boswell

Tips from Financial Management Authors

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In the last month, I’ve read two different books on personal money management. They were “Money: A User’s Guide” by Laura Whateley (with a fantastic cover I might add) and “Go Fund Yourself” by Alice Tapper.

Both were great books on general money know-how, and I found myself nodding along to the vast majority of the pages. One area that they both touch on which I found particularly interesting was how to manage money in a relationship.

Right now, I’m single as heck, and social distancing sure isn’t helping in that regard. However, it’s always worth getting some ideas prepared for a hopeful eventuality that someone might love me one day. Though while reading the tips, I was able to compare them to existing relationships around me and found them to be pretty accurate.

When to Talk About Money

Before getting into the practicalities of managing money in a relationship, how and when do you bring it up?

For me, in the past, I’ve typically brought up the money talk very early on, in the first or second date even. Since I come from a working-class background, it’s super important for me to establish what I can and can’t afford as I’m not in the business of giving off false pretences.

Creating boundaries like that, in the beginning, has worked well for me before, but that may be because the relationships I’m referring to were with other men. There’s a whole other article in my mind about gender biases in money management. Though the crux of it is, no matter the gender, people often have different attitudes towards money.

Alice Tapper says:

“We not only bring our own financial situation to the table but with it our trailing financial baggage: inherited values and beliefs about how money should and shouldn’t be managed as a couple.”

Naturally, money becomes a dominant issue when a relationship develops further, and you decide to move in together — that’s where these money management styles come in.

In ‘Go Fund Yourself’, Alice describes four common styles of money management in relationships. Each of them also happens to be familiar enough that I can refer them to real-life relationships that I know use these styles successfully.

#1 The Separates

The Separates are, I feel, the second most common type of money management in relationships. In reality, I think this is how most relationships start and the style sticks because it works for them.

The people in these relationships keep everything financially separate from each other and may sometimes create rules for joint bills. Most of the time I’ve seen these split equally, especially if they earn a similar amount of money. However, I’ve also seen relationships that split bills according to the proportion of income they are making.

For example, if one person is earning 75% of the household income, then they would pay 75% of the joint expenses. In my mind, this is a fair arrangement, but it’s possible that others might feel burdensome. So it depends on the people in the relationship.

#2 The Sharers

The opposite of The Separates, this style of money management entails pooling combined incomes into a shared account to pay all expenses. I think this is likely the most common approach in long-term relationships like marriage.

In both books I read, the authors recommend that a regular conversation should take place about what the financial needs vs wants are to make sure all participants are on the same page.

What you don’t want in a relationship is to find a partner that thinks your need is not necessary, or conversely you feel their need should be a want. Talking about these things and making compromises ensures common ground and less chance of walking fine lines.

#3 The Hybrids

I think this style of money management is pretty typical among roommates, but naturally could be the perfect fit for romantic relationships too.

Instead of going all-in with The Sharers method, The Hybrids will create an account in which all parties will contribute a certain amount each month. In this way, you can keep personal finances separate while paying shared bills together.

Though a warning on this one and the previous style too as it is appealing to newer relationships. In the U.K at least (I’m not sure about elsewhere in the world), when you open up a joint account with someone, their credit score can affect your own. It might be a little awkward, but it’s worth comparing credit scores to see if there is a big difference between them.

#4 The Allowance

Potentially the most controversial given contemporary Western views on relationships. However, I know for sure this method can work for some.

If one person in the relationship earns significantly more than the other(s), then they may decide to transfer money to a different account(s) as a form of an allowance. An arrangement like this can work if the primary earner is used to a lifestyle and doesn’t want a partner to feel like they’re missing out.

Shifting perspective a little, this kind of method can also work if the other(s) aren’t able to manage their money effectively for whatever reason.

It should be clear though that the parties are happy with this style of money management and is not viewing the allowance as a ‘favour’, ‘loan’, or used in a way to manipulate and control financially.

In Summary

When reading these styles of money management, I imagine that you felt strongly about the levels of fairness in each. Or, I hope, you read them while comparing your financial situation.

As I mentioned before, people have varying opinions on what is the most effective or fair way to manage money in a relationship. It’s quite likely that you and your partner (or future partner) have differing views, so it’s essential to talk about them.

Getting on board with each other in finances is perhaps one of the more empowering feelings as a couple striving towards financial goals whether that be buying your first home together or trying to achieve FIRE (financial independence, retire early).

I’ve seen it blossoming for other relationships, but here’s hoping it’s something I get to experience for myself.

This article is for informational purposes only; it should not be considered Financial or Legal Advice. Not all information will be accurate. Consult a financial professional before making any major financial decisions.

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