Combine finances 5 ways to manage money as a couple

One of the questions I get asked most often is how I share finances with my husband. It's a very personal question, but I completely understand why it comes up so often: It can be really difficult to share money with another person when you've spent most of your life managing it yourself. It can also be a difficult discussion, especially if two people are not on the same financial footing.

While I have tried different ways to manage money together, and I have heard from friends who have dealt with it differently. The truth is, however, that there is no one-size-fits-all solution. Figuring out how best to manage your money as a couple involves a lot of discussion and some trial and error. And as your relationship grows and changes, so will the way you handle money. The most important thing is to have open, honest discussions and change something if it's no longer working for you.

To get you started with this conversation, here are the four most common ways to combine or not combine finances, and why each option can work. Good luck!

Option 1: A pooled account

What it looks like: The couple has a joint checking account and uses it for shared expenses like rent, groceries and food. If you each receive a similar amount and have a similar lifestyle, you can consider each contributing the same amount to the joint account. If one person earns significantly more or prefers a slightly more lavish lifestyle, you may want to contribute different percentages rather than splitting the cost of shared expenses 50/50.

Any time a shared expense needs to be paid, it is paid directly from the joint checking account. They keep all other accounts (including savings accounts) separate.

How to do it: add up all the joint expenses. This can include anything from rent and utilities to shared entertainment costs like dinners and weekends away. If you plan to contribute equal amounts to the joint account, each person should initiate a transfer that contributes 50% of the total amount each month. If you contribute different amounts depending on how much each person earns, calculate the percentage. For example, if one person has 60.000 dollars per year and one person 40.000 dollars per year achieved and the shared costs for the month 5.000 dollars, the person who earns more would receive 3.000 dollars (5.000 x 60%) and the other person 2.000 dollars contributed ( 5.000 x 40%).

Why it works: It's the simplicity. Once you know how much you want to contribute to the joint account, set up an automatic deposit into the joint checking account each month. Plus, you'll learn how to budget as a couple because you'll be forced to sit down and review what you expect to spend each month.

Option 2: A separate account

What it looks like: The couple pools all accounts (checking and savings), but each person keeps an account separate. Each month, a fixed amount of money is transferred from their joint checking account to their separate personal checking accounts. The idea is that this money can be spent debt free without consulting the other person. It's a bit like the adult version of an allowance. If one person wants to spend money but doesn't want to worry about charging the other person or discussing the cost, they can use the money in their separate checking account to pay for it.

How it works: all paychecks are deposited directly into the joint checking account and all bills are paid directly from there. A fixed amount is transferred from the joint checking account to each separate personal checking account on a bi-weekly or monthly basis. The most difficult part of this method is deciding how much each person should put into their own account for monthly payment. Choose an amount based on spending and savings goals and review after a few months to see if it needs to be adjusted.

Why it works: A separate account helps maintain a sense of independence while working toward common financial goals. You can still spend what you want without worrying about how it will affect the other person.

Option 3: Completely combined

How it looks: With this option, there is absolute transparency. All checking and savings accounts are combined and each person plays an active role in deciding how money is spent and saved. For simplicity's sake, one person may succeed in paying all current expenses, but both should fully commit to the responsibility of planning for a shared financial future. When things are fully combined, everyone needs to be honest about how they want to spend money and how they want to handle saving for the future.

How to: It's best to sit down and create a plan to consolidate accounts rather than adding another person to all open accounts. List all of your accounts and consider which accounts you need to keep so that two people can manage the money. You should start with a joint checking account, one or more joint savings accounts, and a joint investment account (if you want to invest your money as a couple). Set up paychecks to be deposited directly into the joint checking account, and set up automatic withdrawals to your savings account.

Why it works: When a couple is on the same page with spending and managing money, this option makes it very easy to work toward common financial goals. It also provides complete transparency into how money is being spent.

Option 4: Completely separate

What it looks like: When a couple moves in together or gets married and decides to keep things separate, they usually decide to each pay certain bills. One person can pay the rent or mortgage while the other person pays food and utilities. No accounts are combined and each person retains complete control over their personal money.

How it works: this option is easy to set up, but requires more coordination from month to month. List all your common monthly expenses (rent, utilities, groceries) and assign each person responsibility for paying a specific expense. If it is important to split everything equally, you can set up a monthly tracking system. This ensures that a person does not have to pay the total bill if there are additional costs in a month.

Why it works: This is a good option for those who are a little nervous about sharing finances for the first time or don't want to share control of their money yet.

Option 5: Live Off One

How it looks: This approach often works when a couple prioritizes saving together for common goals (emergency fund, down payment for a house, retirement) and can live on one salary. This approach makes saving less complicated and also gives the couple the comfort of knowing that they can make ends meet on just one income (just one person losing a job or whether they choose to take a break from work)..

How it works: with this approach, it is important to know your monthly expenses and how much you need to live each month. Aside from knowing your budget, you should also have a conversation about savings goals to make sure you're both on the same page about how that money will be saved and spent in the future. If you know how much you need and why you want to save, open a joint checking account and a joint savings account. The income that most closely matches the amount of money you need to live on each month is deposited directly into the checking account, and the other person's paycheck is deposited directly into the savings account.

Why it works: This approach makes saving easy. If the couple is on the same page with spending and saving, it eliminates the work required to make sure there is enough time each month to achieve financial goals.