Some people keep it as a bit of a mystery, but managing money as a couple, married or not is a part of life which needs some talking about. And I want to talk about it now because of a comment directed at me by a colleague who is known to have strong opinions on everything, without background for anything. Therefore before I get into the finances management, this is what he said. The conversation left me somewhat bemused and below is a fairly accurate transcript. Let’s call him A.
A: So what did you do this weekend?
Me: Not much, the boyfriend and I ended up buying a washing machine if you are after the lowlights.
A: You mean you pointed a finger and he bought what you wanted?
A: You know, you say you bought it together but you were the chooser and he was the payer. (smirking)
Me: Are you confusing buying white goods with a first round on a first date?
A: No, it’s just how some women are.
Me: Are you telling me that you see me as some sort of a gold digger?
A: You said it, not me.
Me: So you are confirming that you think I am a gold digger.
A: That’s not what I meant.
Me: What did you mean? And by the way, the hole you are digging is already at the basement level.
A: I just mean that I expected that your boyfriend paid for the washing machine.
Me: You know nothing, Jon Snow.
A: So did you pay for it?
Me: We went Dutch.
Moving on from that, going into a relationship most people don’t go on a first date thinking about how their finances will look like with that person 10 years down the line. Most people only have one direct example of couple finances too, being their parents.
I have gathered here information from three different couples in different life situations to illustrate the breath of different approaches.
An unmarried couple with separate assets:
This is my own situation.
My boyfriend and I live together, in a property which I’ve purchased before we decided to live together. We are not married and have no plans to get married anytime soon. We have no human dependants, but we do have two cats together. We both work professionally and keep our incomes entirely separate.
Because I own the property and pay the mortgage on it, he is in effect my tenant and pays me a monthly rent a little below the market level.
We share most bills 50/50. The ones which we do not share are property associated costs i.e. mortgage, service charges, buildings insurance, ground rent. We also keep our individual mobile phone bills, personal subscriptions such as new services and costs of going out and travel which don’t include both of us separate.
All other bills, including groceries, vet bills, utilities, date nights etc are shared equally. We log these shared expenses in a google sheet – it’s practical and easy to update and importantly it means that we have absolutely no need to combine our accounts unless we wanted to, and we don’t.
Most of the expenses are paid through an Amex account. My partner holds the main card and I hold the secondary one. We do this as we both like to travel and this was the best account for Avios.
The first reason why we don’t want to combine our accounts it that we’re both independent, responsible adults who trust one another, but who don’t feel the need to look over one another’s finances constantly. We do however communicate about money – both the money we make, we hold and we intend to spend whether it is as a couple or as two individuals.
The second reason is that we both had financial lives before we got together and hold separate portfolios of assets which the other person has no business in. Such assets include personal pensions and property amassed independently before we got together and which, in absence of children, we might want to benefit our respective families should one or both of us pass away unexpectedly. We’re trying to stay alive, trust me.
The first reason will stand if we get married, so it is debatable whether we’d ever combine our accounts at all.
A married couple with shared assets:
My friend and his wife who got together in their early 20s and built everything as one are my next example.
They started dating in 2008, when he was 22 and she was 20. At the time they were both working in a patisserie and making the minimum wage. By the time 2009 rolled around, they were living together in a house we shared with one more person, also a close friend. By the end of 2009 she was planning to start university and he was looking for a better job. They had both worked incredibly hard (London is not a kind city otherwise) and ended up moving into their fields of interest – fashion for her and IT for him, in which they still both work to date. She completed university in 2014, studying part time over 4 years and cash flowing the cost. It’s still cheaper to do so at most universities in London as compared to full time study. The couple started combining their income and accounts at the end of 2015, moved to another country at the start of 2016 and married in August 2017.
Since combining all their accounts in 2015 they share a budget and all income, including retirement account
After they left England in 2016, for a period of approximately 3 months she was the sole earner. She again became the sole earner for 2 months in early 2017 when he suffered with meningitis and needed to be hospitalised. She is the higher earner in the relationship.
Their wedding in 2017 was part funded by the couple and part funded by the couple’s parents with the split being approximately 40/60.
When they purchased their apartment in 2018 they decided to use up all his annual leave and refurbish it themselves – they spent close to two months working on it, him full time and her in the evenings and weekends, until it was ready to move in to. They purchased their property with 15% down 30-year mortgage, cash-flowed all the work and retained a healthy emergency fund in place. This is the only debt they have.
It took them approximately 6 years of saving together to make the move, wedding and apartment possible.
They use debit cards attached to a shared account and cash for payments. They have one main savings account and a small number of other accounts for specific purposes. Neither of them uses credit cards and they really stick to their budget.
If either of them needs a bit more to what’s in their shared budget, they roll up the sleeves and make money on a side usually by reselling tech equipment on eBay.
This particular couple could be seen as a great example of Dave Ramsey’s cookie cutter couple if it wasn’t for the mortgage they opted for.
A married couple without shared assets:
The final example is of an older married couple who opted to combine some, but not all of their accounts.
They are both once-divorced, he has three children from previous relationships which he supports diligently. She has no children of her own. They both came into the relationship with previous assets and debts and for a number of reasons they opted to keep most of these separate.
The list of debts included:
- A voluntary payment agreement on a large mixture of debts (him)
- Three mortgages (one her, two him)
- Close to £15k of credit card debt
- A tax bill (him)
- Two personal debts to friends (her)
The list of assets included:
- Three properties (one inhabited by them, one tenanted, one inhabited by the husband’s children and their mother)
- Her savings and retirement accounts
- A car
- A bicycle
They work in professional environment and he makes approximately double of what she brings in. However, he is what one might call not financially responsible.
Therefore, to avoid her having to pay at any point for his and his ex-wife’s debts, this couple opted to share a current account and life, but nothing else. They also signed a prenuptial agreement to safeguard her from his lenders.
The couple have decided to start clearing their debts approximately 3 years ago and so far did the following:
- Sold two out of three properties
This included her property, which wiped out the mortgage and made a tiny profit allowing her to clear one of the two personal debts as well as and his property. Profits for the latter were consumed by the mortgage, clearing of his portion of the credit card bills and the tax bill
- Completed of the five-year voluntary payment agreement which allowed him to clear his and his ex-wife’s six figure consumer debt mountain
- Cleared all shared credit card debt
- Financially separated his household form his ex-wife’s one (she too now remarried)
- Sold the car
- Kept the bike
They don’t budget in too much detail but since they do share the current account, they communicate about money and make large decisions together.
They chose not to combine their retirement savings – as a loving father he decided that should he pass away these will benefit his children only.
The couple still use credit cards but in a different way to previously. Their current account has been connected to a shared credit card account and based on his terrible credit history, their bank agreed to only issue them with a card at £500 limit each. They both admit that with this strange agreement in place, they can only do limited damage and as of recently they actually started saving in individual accounts. As their income is so different they both put aside 10% of the combined income to avoid the feeling of resentment or inequality.
They do have a small shared emergency fund and a health insurance as they are both in their 50s and their health is no longer as stable as it used to be.
Although this couple does not have a written budget, they communicate about money openly and are able to resolve issues if any come up.
I hope that those 3 examples have shed some light onto how different couples manage their own unique circumstances. If you are feeling brave and would like to share your story, please leave it in the comments!