This is a personal thing that’s different for everyone, especially couples. Dave Ramsey is old-school and biblical in his approach– everything is OURS. I also follow some personal finance “gurus” that are more progressive and believe that everyone should have finances separate. This stems, in part, from the very real issue of financial abuse. I understand both sides, and we’ve created a method that blends both.
Most of our money goes into joint accounts, checking and a money market savings account (MMSA). We purchase things primarily on a credit card that has travel rewards, and we use our checking account to pay it off every month. I don’t recommend this approach unless you clear your statement balances each month. If you’re paying interest, you’re cancelling out the benefits.
The mortgage also comes out of the checking account.
The MMSA acts as our Emergency Fund/Savings Hub. We keep a base 3 month Emergency Fund of $15,000 and then distribute excess funds to a Sinking Fund savings account and investments like our Roth IRA and brokerage account. We have more in there now, as we were preparing for my husband to start a small business. That’s on hold for now, so we’ve got them just sitting there while I try to keep from dumping them into our Roth IRA.
Out of my paycheck, we allot $500 monthly per person for Fun Money. With fun money, we don’t have to “check in” with the other person like we would with a joint account. If I want to go out for a drink with a friend, I use my Fun Money. If my husband wants a new guitar, he uses his Fun Money.
We also have multiple investments accounts, which are all under my name with my husband as a beneficiary. He’d get everything if I died anyway in our state, although I do want to start talking wills soon. I’m also planning on helping him get a Roth IRA set up this year if we have extra after we meet the contribution limits on mine.
This works for us. It’s changed over the years, and I could probably find a more efficient way to do this because our financials look different. But it at least ticks the boxes for “teamwork makes the dream work” in primarily working from our joint account, but we each have the freedom of our Fun Money to spend as we wish or save for certain goals.
How do you handle your finances with your partner?
-K