Shared bank accounts and split expenses can spell trouble for relationships if you don’t have a plan. Here are tips on how you can start the money talk and keep talking.
1. Pick a neutral spot to have the talk
Ask almost any couple you know and they'll tell you that when it comes to money—setting budgets, splitting expenses and staying on track -- they can't help get a little squeamish. Take the discomfort out of it by having the conversation in a comfortable way. Take the dog on a walk. Go grab your favorite beverage in a relaxing coffeehouse or wine bar. Push the kids on swings at the local park. Even take a drive through the mountains. Whatever you do, try not to have major distractions – like the big game or your cell phone – handy.
2. Start talking
It can take months – even years – for couples to get comfortable with each other's spending habits. One BECU member, Percy, recommended keeping a weekly money chat on the family calendar. Percy admitted that he and his wife don't always use the calendar reminder, but just having the time, and at least checking in weekly, saying, “nope, nothing to talk about,” ensures there is an open dialogue.
3. Assign a money manager
Somehow, it always shakes out that one partner either wants to handle the money, or is better at handling it. Let them! Good partnerships often define roles and stick to them (with flexibility, of course). The money manager takes ownership of the task, and pride in the work. It also simplifies the job – with one person manning all the accounts, budgets and passwords, it can make coordinating the many ins and outs much easier. However, if you have shared accounts, we still recommend that all partners have access to Online Banking and our Money Manager tools, just in case they want to have a peek.
4. Budgeting is the key to happiness
Want to save for the future, first year baby costs, have enough for retirement, go on vacation and even have a little mad money? Make a budget! A budget will help define what “on track” looks like in black and white for you and your partner.
To help determine how to budget, look at what you take home. Not what you earn – what you take home after miscellaneous expenses (taxes, insurance, flex spending, etc.) are removed. Then, start making a list. Some bills are usually the same: rent, cellphone, garbage, car, student loan, day care. Others can vary based on what you consume: water, electricity. Guesstimate how much you'll need for groceries and gas. Then, be realistic about how much you spend on “extras” – try to trim it, too (do you need a latté seven days a week? Can you cut it to four?). Work with your partner. Pretty soon, you'll know how much you should have in your account each month, how much you should have to spend, and how much you can start saving for the fun things in life. And don't forget to take advantage of our free budgeting tools and webinars.
5. Choose your budget method
No way is the best way. BECU has spoken with thousands of couples over the years and most couples take one of three approaches:
- Traditional: Everything goes in one joint account. Pros: no surprises. Couples are aware of what is coming and going, and how much debt is owed. Cons: disagreements on individual spending habits. This is where the “open dialogue” really comes into play.
- Modern: Most money goes in one joint “bill” account; “leftover” money is transferred into separate spending accounts for partners to spend at their own discretion. A twist on the modern is for couples to have one checking account, but individual credit cards. Pros: avoids spending arguments – “you spent how much on so-and-so?” Cons: debt is easily hidden on the private accounts.
- Independent: Partners pay bills separately. One partner pays the bills, and the other partner owes a monthly amount. Often used by partners with no joint assets. Pros: no ties. If one of you has good spending habits, and the other does not, the financially responsible partner does not become mired in the other partner's debt. Cons: Roommates with no ownership (e.g., lease paperwork), can be left with nothing in light of a break-up.
How you split and define your comfort with sharing money is up to you. You'll find that as you grow – and as your family grows – you may find your financial arrangement changes.
6. Acknowledge that it's okay to be scared
Money choices – and disagreements – are often driven by fear. We're afraid our credit scores will be affected when our partner forgets to pay a bill. We're afraid we won't have enough for retirement when our partner doesn't add to their 401(k). We're fearful we won't be able to own a home, pay for school tuition or fund life's goals when another partner accumulates large debt. Try to use “I” statements when conveying these emotions: “I'm afraid our retirement savings won't be enough if we're not contributing ‘X' amount to our 401(k)”; “If bills go to collection, I'm afraid the credit score will affect our future house purchase."
7. Bring solutions, not problems
Go one more step beyond “I” statements – bring a solution to the table: “I notice some of the bills haven't been opened. If they go to collection, I'm afraid the credit score will affect our future house purchase. Can I help with some of the bills? Is there anything I can do to help relieve you?”
While the idea mentioned in tip No. 3 (assign a money manager) is a great one, and often the most effective, sometimes life can be overwhelming. Say the main money manager in your house just changed jobs and is overwhelmed by training and finances; or, they just had a baby and can't care for a newborn and the bills. It's important for the other partner to know when, and how, to step in. Use productive words that avoid blame: relieve, help, assist, be a partner, give you a hand, take the burden off, make it easy in any way, etc. Avoid combative terms: take over, overhaul, do this, manage, figure it out, handle it.
8. Don't be afraid to call in a neutral party
Ultimately, it's hard to hear financial advice from your partner. We want our partners to think we are fantastic and do everything perfect. That is not realistic. Yet, it's still difficult to know that you are disappointing your partner even though, deep down inside, the person doing it – missing bills, having a low credit score, carrying high debt – already knows they need help. They usually react, and sometimes badly. So what to do instead? That's where a third-party is so helpful. Find a neutral voice to step in and offer advice. Be it a friend, a family member, or even financial professional, the important element is that you're keeping the dialogue going.
Seeking a financial professional that's free? You'll find one at BECU. We have a great team of financial guidance counselors who offer this service, free of charge. You can schedule an appointment with them at any time.