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Money can cause conflict in any relationship. It can be a challenge when two people merge into one household. But, with some planning and communication, conflict can be reduced. Here are some tips on how to merge your money to reduce conflict and make a happy home.
Here are 3 common options for how to structure your bank accounts:
All the money that is made in a household goes into one account and all expenses go out of that one account.
Pros: Openness between parties about what is earned and spent. This can make it easy to run one household which has children and numerous shared expenses that go with a family.
Cons: If the two people have different ideas about money, it can cause conflict on how money is spent. If there are multiple people with access to one bank account the account can be overspent unless a good spending plan is in place. Bills can miss being paid if there is not one clear manager of the finances.
Works well: This generally works well if the partners have a similar idea about how money should be saved and spent.
All money earned deposited → Household account → All expenses paid from account
Each partner has his/her paycheque deposited into his or her own personal account. Each partner then transfers a specific amount into the household account. Household bills are paid through the household account and the rest is left to the individual.
The amount that is deposited into the household account can be equal contributions (50/50) or proportional contributions if income that is not equal. For example: 60% of household income is earned by one partner and 40% by the other, so bills would be split accordingly (60/40).
Pros: Each person has his/her own money to spend independently, so this avoids many financial disagreements between those who have different money personalities.
Cons: Individuals may see the separate accounts as a way to have no communication about finances. Just because the money is separate, communication is key to maintain the right amount in the household account. Also, one partner may feel he or she is contributing more than their “fair share.”
Works well: This option works well in situations where partners have differing views on how money should be saved or spent, or when partners feel more comfortable with some of their “own” money.
Partner 1 account + Partner 2 account → Predetermined amount deposited to household from each account → Agreed upon household expense
Each person has his/her own bank account and is assigned expenses that are their responsibility to pay.
Pros: Each person is responsible for their own finances. Money is not an issue because everything is separate.
Cons: Unless you are very clear about who pays what, bills could be missed. If there is no plan for unexpected emergencies, they may be put on credit. For example, who pays for a new hot water tank for the house?
Works well: This option works well for families with equal income who want to maintain their own finances or in blended households where it makes sense to keep things separate so each person can fulfill his/her financial obligations.
Regardless of the way you split your finances, talk about money. Set aside a time to talk about the mutual goals you have, issues that come up and changes to your circumstances either yearly at tax time or monthly when the bills come in.