When you said “I do,” you were thinking about marriage and babies and growing old together, not whether or not you’d combine your checking accounts or argue over credit card payments. But since keeping tabs on your financial health is critical to your union, it’s important to understand the type of money marriage you’re in. We’ve identified five that all couples fall into, and we’re breaking each one down—along with its perks and pitfalls.
RELATED: We Finally Combined Our Bank Accounts and Here’s What It Did for Our Marriage
This Method, Defined: The minute you signed your marriage license, you also signed over your bank account and retirement information, and you definitely consider separate credit cards to be…weird. (For the record, the idea of a prenup doesn’t exist in your world either.) You got married so you wouldn’t have to nickel and dime each other, and swiping a card connected to one singular account takes the guesswork out.
Why It Works: When you merge everything, it makes it a breeze to calculate the big picture together. (The only real way to know your bottom line is to withdraw from the same pot.) This is hugely beneficial not just for bill paying, but also for long-term together goals like house-buying and college-savings. It also has good-for-your relationship benefits. According to a recent study published by UCLA, married couples that combine their finances are happier in their relationship and less likely to break up.
Potential Pitfalls: Maybe there’s a salary discrepancy. Maybe one of you is a spender while the other is a saver. When cash is combined, the other person’s spending is entirely your business (“You have how much in parking tickets?” “You spent how much on salad?”), or you can feel resentful if you cut back while your spouse splurges. The work-around? Meticulous budgeting, so you both have rough numbers for your max spend per category.
This Method, Defined: Yes, you’re married, but on the financial front, you’re pretty independent: Separate bank accounts, separate credit cards, some level of mystery about who spends what. You divvy up the big stuff (you pay the electric bill; he pays the gas) and take turns picking up the check. But should you want to buy a $750 handbag, that’s none of his business.
Why It Works: Many experts agree that not merging bank accounts is actually a more modern way to show signs of trust in a relationship, especially since couples are now tying the knot later in life and coming to the marriage with more income and savings established. By keeping those accounts separate, you can better maintain your identity and individuality, says Feneba Addo, assistant professor of consumer science at the University of Wisconsin-Madison, in an interview in The Atlantic. Plus, it’s a better way to safeguard your money, should the relationship sour.
Potential Pitfalls: While you know exactly what you’re spending, separate banking makes it harder to know what your spouse is shelling out—which can hinder long-term savings goals. Things can also get murky when children enter the picture, at which point you may need more transparency.
The Method, Defined: You’ve merged your checking account, your credit cards, even your investment portfolio. (Well, you opened a new one together—bravo.) But you’ve each maintained one separate side account to fund gifts, splurges or other stuff that supports you individually rather than you as a couple.
Why It Works: Ah, balance. It feels good right? By having most of your money in a shared account, you can approach finances as a team and always keep your eye on big-picture family goals. But by having some money that’s yours and yours alone, you can still maintain some level of individuality—and have a pot from which to buy gifts and splurges.
Potential Pitfalls: With separate accounts, you’ll need to really define what should come from where. For example, should a spa visit come out of joint when you’re a stressed-out mom of three or should it come from your personal savings? How about your bar tab with friends? Be up front with each other before you buy so you don’t need to nickel and dime each other when the bill comes due.
The Method, Defined: One of you handles all big-picture stuff—investments, retirement accounts, home purchases—while the other handles the everyday spending. Neither party gets too involved in the other’s approach, and as a result you have more time for non-money-related matters.
Why It Works: Delegation is smart in a lot of areas of life, but especially finances, where it can be overwhelming to keep track of everything. This is especially true depending on how you approach everyday tasks: While some people are really good at big-picture thinking, others prefer a more detail-oriented approach. And, according to leadership research conducted by Harvard Business Review, this may be a fact of life for you both: One of you is in a better position to take a step back and do the thinking while the other person is on the front line putting out financial fires that come up on the daily. If you and your partner know this about each other or your circumstances, it can work to your advantage to play to your strengths.
Potential Pitfalls: Just be sure that neither one of you ends up in the dark about the other’s strategy or feels like an important decision was made without consent. (“Wait, we traded in the kids’ college fund for Bitcoin?”). Have a monthly check-in or budget meeting where you each give a snapshot of any windfalls or setbacks—like a big change in your stock portfolio or the cost of a recent car repair.
The Method, Defined: One person—breadwinner or not—controls all the finances. The other person (or minion) either runs purchases past said dictator for approval or simply swipe, swipe, swipes until (eep) the credit card suddenly gets shut off. The minion is generally unaware of big-picture spending, and often has little knowledge of total assets.
Why It Works: We hate to say it, but it kind of doesn’t. Unless you’re in one of those famed sugar daddy/baby situations that always skeeve us out.
Potential Pitfalls: Aside from the icky relationship implications (power dynamic much?), this is really dangerous financially. Should anything go awry, the minion has no control, no big-picture understanding and quite often no money in his or her name. Yes, it’s OK if one person deals with the family finances more than the other, but the two of you are a team and you should both be up to speed on where you stand.
