When you first looked at this title, what came to mind? If you are married, you may already have decided this question or did you? If you are single, you may have preconceived ideas about how you wish to manage family finances once you start one.
To further complicate things there is always the tradition or religious component.
By tradition, it could be that your parents or grandparents had one spouse handle it and that is how you intend on doing it. By religion, since most of them have patriarchal roots, it is a foregone conclusion that the “man” is supposed to manage the finances.
In addition to that, since marriage, today in America can also be defined by same-sex couples, then who is the one that manages them?
In my case, my wife is more into numbers and I am more of the strategist. She is more of what I consider the mathematician in my household so she’s the one handling or managing our finances.
We’re both accountants by the way but she’s more disciplined when it comes to spending. I have some issues specifically when it comes to spending money buying new golf clubs.
Whatever the arrangement, cohabiting will tend to create a commingling of funds, bills and of course responsibilities.
It was obvious that in many families this task was done by one of the partners while the other deferred it to them. Just bring home the money. Let the other manage it. This includes long-term accounts, such as investments, insurance policies, retirement plans and so forth.
Is this the best approach?
What happens in family finances is that one of the parties is in the dark, which could be a huge problem in the event of the unexpected death of the partner that was handling the money management.
The other is that due to some ignorance of what is really going on with the family finances; this can create arguments, especially during times of low cash flow, such a loss of job, or various other reasons that can cause financial stress.
Some suggestions to consider
First of all, it may be well worth your time to have a behavior analysis done. Find out which partner is the best at keeping books, working with numbers, and your various views on financial management.
Then it would make sense to have one joint checking account that each partner contributes money into to cover the monthly budgeted expenses.
Most checking accounts come with a debit card that you can each have one. That is the one that both of you would use for the shared expenses such as housing, food, utilities, kids clothing and so forth.
After this is established each partner can have their own separate checking or savings account.
It would not be advisable to have joint credit card accounts. This will help keep each person’s credit score truly their own.
Each partner should have their own credit cards and manage their own credit with their own resources from their employment.
Of course, if only one partner is gainfully employed this strategy will have to be modified so that the other partner is not under obligation to pay off the other card.
This would be the same for investment accounts. You can set up investment accounts with rights of survival. Talk to your broker about how this is accomplished.
If you do wish to invest jointly then still make it Joint with rights of survival.
Of course, the precursor to all of this would be to set up a spending plan, as a family. This is known as a budget. I say spending plan so you understand it is your tool to live free, not under bondage.
Lastly, it would be advisable to have a monthly review so that each party knows exactly the status of the entire family finances. Set the ground rules and no arguing. Just adjust as needed as life has a tendency to always be in a state of flux.
So the main thing is to keep it simple and enjoy your life and your chosen partner.
