What Are the Best Ways to Handle Money in a Long-Term Relationship?

People who always argue with their partners about money, budgeting, and personal finances in general can rest easy knowing that they aren’t alone. Around 44% of couples in long-term relationships argue about money. What’s more, money issues cause such a strain on the relationship that they avoid not only talking about it, but also resolving it in a constructive way. That’s why more than seven million Americans fessed up to hiding money from their spouses.

Ideally, couples should argue about inconsequential things and resolve them quickly. However, since most couples don’t live in a utopian world where the money’s plentiful and all there is to address is the argument of which show they’ll be watching, that isn’t possible. Everyone argues about money. Unfortunately, not everyone does it the right way.

Most couples wonder what the best way to handle money in a relationship is. The number-one problem that most of them run into is not seeing eye to eye and, consequently, not taking the same approach to solving financial issues.

Bridging the Gap

Both partners enter a relationship as fully realized individuals. That means they have already formed personality traits, habits, and world views. Unfortunately, that also means they have some money habits that the other partner might see as unreasonable or ineffective.

So what’s the best way to resolve this issue? If both partners have had bad experiences in the past, the best thing they can do is talk about money right away. As soon as the relationship starts to take on the form of a serious partnership, both parties should put the topic of finances on the table. 

Furthermore, both partners should make sure to talk about money honestly but not emotionally. Sometimes, money can be a catalyst for a fight that quickly escalates because of a lot of underlying issues the couple isn’t discussing or resolving on time. That’s precisely why people in long-term relationships should pick a neutral time to talk about money. 

In other words, an incident where one partner spent $1,500 on something that wasn’t necessary and lied to the other person isn’t the ideal time to sit down and have a long, hard talk that will result in planning a budget. No one will be able to make sound decisions at such an emotionally charged time.  

When it comes to money, especially hard-earned money, people tend to get a bit stubborn. It’s easy to see things from a personal perspective only. However, that’s not the right approach or the answer to the question of how to handle money in a relationship.

Being able to see things from another person’s perspective is a feature of every healthy relationship. “My way or the highway” doesn’t work in a partnership. That’s why both parties have to try to work on financial issues together. Positioning themselves against the problem, instead of against each other, will quickly lead to resolution (albeit with a few dozen compromises along the way, of course).

Is There One Ideal Way to Handle Money in a Relationship?

Unfortunately, there’s no single right answer to the question of how to handle money in a relationship. Some couples say that joint bank accounts are the only way to go, while others claim that their financial independence (and separate bank accounts) are what’s keeping their relationship afloat.

Pros of Joint Bank Accounts

• It’s a show of respect and trust — Having a joint bank account symbolizes the union between the partners and shows that there’s absolute trust in the relationship.
• Budgeting is easier — When all the money one couple has at their disposal is in one place, budgeting and planning for expenses become easier. What’s more, joint bank accounts offer more transparency when it comes to the real financial situation the couple is in. 
• It promotes teamwork and equality between the partners — With a joint bank account, there’s no “my” and “your” money. Everything becomes “ours,” which eases the financial strain on the relationship. Sharing money becomes a piece of cake. That is especially important if one partner is earning significantly less or is a stay-at-home parent. 

Cons of Joint Bank Accounts

• There’s no financial autonomy — Many people have waited a long time to be financially independent and aren’t too keen on letting that feeling slip through their fingers. 
• Partners can have different money habits — When one is a saver and the other a spender, there’s a disparity in the relationship. Due to that, the saver might be unwilling to merge finances. They might want to save or spend their money in any way they see fit. On the other hand, the more “reckless” partner might not want the other person to constantly be on their case about how they spend their money. 

So where does this leave people? There is no single perfect way to handle money in a relationship. What every couple needs is open communication and an open mind. The only way to come out of the “money battle” victorious is to make agreements and stick to them. Here are the best tips on how to achieve that.

The Best Tips That Will Help Couples Handle Money in a Relationship

Honesty Is the Best Policy

When a relationship is still in the blossoming stage, talking about money is considered a big no-no. However, once both partners feel as if they are in it to win it, they should immediately broach tricky topics. Money is undoubtedly one of them.

No Secrets

Secrets are something that can send a relationship spiraling down the drain in a blink of an eye. Hiding a bad credit score or unhealthy money habits can only break a couple apart. Although this problem isn’t an uncommon one, it’s definitely one everyone should work on solving sooner rather than later. 

When starting a partnership, people should always be honest with their significant others. Whether it’s bad credit, debt, or a nasty spending habit, everyone should be upfront at the start of the relationship.

Open Communication

Although someone’s bad credit won’t necessarily affect their partner, their spending habits will. What’s more, if the couple is merging their finances and taking some steps toward securing their future (such as taking out a loan or a mortgage), then both partner’s credit history will matter. No one wants to be blindsided by a harmful piece of information such as a huge credit card debt when they are on the pinnacle of combining finances.

So full disclosure is the only way to handle money in a relationship. However, it’s also important to discuss all the feelings that surface when people talk about money issues. Not everyone has their life figured out, and some people well into their late twenties and thirties are often still struggling to organize their finances. By discussing this issue, the couple can form a common goal and work toward it together. The chances are both partners have some weak spots in the personal finance area where the other person’s input or help will come in handy.

Splitting the Expenses

How people handle money in a relationship depends a lot on their approach to expenses and financial responsibilities. Being financially responsible means not only paying everything on time and keeping up with a budget, but also being aware of the whole financial situation.

A lot of couples have one financially active and one financially passive partner. That means that one person is in charge of everything (with or without the input of their partner). That is not only financially irresponsible, but can also break the couple apart. 

What’s more, it puts the financially passive partner in a bit of a predicament should something happen. In the case of a divorce or loss of a partner, they are left to their own devices. On top of being in an emotionally draining situation, they now have to quickly get a grasp of everything the other person has been doing for years and pick up the slack. 

That’s why both partners must be equally involved in the finances. Both should make financial decisions together. That covers everything from budgeting to creating an expense plan and schedule to talking about finances and similar. 

Equal Isn’t Always Fair

So to handle money in a relationship in the right way, couples should share responsibilities. But what about expenses? 

There are a few different routes people go when it comes to this. Some people split everything down the middle. That means that they calculate all monthly and yearly expenses, and both give precisely 50% of the money. 

However, that means that the couple is effectively tethered to the lower salary, which can limit their financial freedoms. If one person isn’t making enough money for half of the vacation in Aruba, what should the couple do? Not go on vacation? Or should the partner who makes more money spot the other person and cover the holiday? 

Due to these issues, some couples choose a different approach. 

Both people in the relationship rarely earn the same amount of money. One person will always make at least a bit more. That’s why the 50% approach, although equal, isn’t always fair. 

So some people elect to divide expenses according to their financial capabilities. If one partner earns 30% less than the other, then they cover 30% less costs. That isn’t a bad idea. However, it is a slippery slope. Sometimes, the person who’s putting in more money feels entitled or more powerful. They think that, because they are contributing more, they can make all the decisions. Sometimes, they even believe their opinion holds more weight than their partner’s.

That’s the attitude that will kill a relationship. The same thing happens if the couple decides to pool all their resources. Even couples with joint bank accounts often fall victim to this problem. That’s why both partners must try to be both equal and fair when it comes to divvying up the responsibilities and costs.

Overall, the best way to handle money in a relationship is to take the “our” approach. There are no “your” or “my” costs (or money). Everything is “ours.”

Reaching Goals and Milestones

Talking about money does get easier. Once the couple finds a routine and gets over a few hurdles at the beginning, the financial talk will be a piece of cake. 

One thing that will help speed things along is setting financial goals. Doing that is more of an agreement on where both partners see themselves financially in the future. Goals should be both huge (although, maybe the millionaire dream might be too far-fetched for now) and small. 

Each goal that the couple reaches will be another milestone in their relationship and another step forward toward financial stability. Ideally, there should be one big goal — retiring early and moving abroad, for example, or setting college funds for kids and grandchildren — that will always motivate the couple and keep them going.

Work as a Team

Setting financial goals is an excellent way to handle money in a relationship because it allows the couple to work as a team. Both partners need to decide how much money they are spending and on what. But they also need to determine how much they are going to save, which expenses might be excessive, and which days (or which months) they may be able to indulge themselves in some frivolous expenses.

Goals should always be realistic. When a couple has a goal, they are more likely to stick to the agreements they made. So that holiday in Aruba that one partner couldn’t afford because they don’t earn as much as the other party can be one major goal. Other, more significant things, like getting out of debt or investing a specific amount of money and turning a profit, can also be long-term goals. 

Of course, not every partner will be able to give the same amount of input. Sometimes, one party will know more about investments and will need to take the reins when it comes to those decisions. That doesn’t mean they shouldn’t ask for their partner’s opinion. However, in an effort not to steer them in the wrong direction, the more knowledgeable partner might need to make some tough calls.

If Needed, Find Someone to Break the Stalemate

Some couples have a hard time reaching an understanding. Sometimes, it can be hard to see which goals should be a priority. What’s more, even when they do agree on a goal, some couples have issues with deciding on the best course of action that will get them there. 

That’s why, sometimes, couples need a referee. A private accountant or financial advisor can help them shape their goals. They can also help by suggesting possible solutions.

Bound by a Budget

Having a daily and monthly budget is different from setting goals. Budgeting means determining how much money goes for little, everyday expenses. That is especially vital for couples who keep their financial lives separate. 

Creating a balanced budget — one that keeps both partner’s needs in mind and covers everything that a comfortable life demands — isn’t easy. But it’s one of the simplest answers on how to handle money in a relationship. The best way to do it is to find a system that works for both parties and then apply the “divide and conquer” tactic. 

Ideally, both partners will sit down and put all their expenses on paper. They’ll figure out how much money needs to go on expenses like bills, groceries, gas, etc. and how much on savings, emergency funds, and fun money, for example. Budgeting has a lot of responsibilities, and the trick is in dividing the responsibilities so that both partners are equally involved. There’s no need for both parties to go to the bank to deposit statements, but they should both be aware of all tasks.

A budget should be like a living thing. It needs to evolve rather than stagnate. People lose jobs, get promotions and salary increases, and, more importantly, their needs and expectations change. A budget should reflect all that. 

So if a couple has an unexpected surplus of money, they should immediately decide where they’ll allocate those new funds. Is it takeout money? Investment money? Perhaps it can go toward covering a chunk of debt? Tracking the progress of a budget and adapting to changes is a surefire path to financial stability.

Emergency Funds

Couples often forget to include a rainy-day fund into their budget plans. That’s especially true for newlyweds and people who don’t really make much money yet. When one only has so much to spend, saving for a potential emergency that might not happen seems unnecessary. 

But it isn’t. Having emergency funds to fall back on is extremely important. It means that one unexpected situation won’t be able to break the couple financially. It’s also an excellent way out if one partner loses their job. 

Money Talk Isn’t a One-And-Done Deal

Having regular constructive meetings where the couple discusses money is also a fantastic way to handle funds in a relationship. It’s also one step that most couples overlook. They set a budget, set financial goals, and call it a day.

All couples should have weekly or monthly financial meetings if they want to nip all problems in the bud. It sounds like no fun, but generally speaking, it’s the perfect time to catch up. Maybe one partner has some new ideas that will improve the budget. Or perhaps one of the partners is having trouble staying true to their word and keeps breaking the financial agreements. Financial meetings are an ideal way to air all that out. 

Managing a Money and a Relationship

These are some of the best ways to handle money in a relationship that will help every couple, no matter their financial situation, find their way to financial stability. Of course, each couple should discuss which of these tips might work for them and which might need a bit of tweaking and decide together. After all, it’s all about open communication.