• moneyIn the nineteen years that I’ve worked with couples, finances often come up as an issue.  It can be especially sensitive when the models you have are few and far between. For many heterosexual couples the model of the “male” and “female” role can play a big part in your interpretations and your expectations.

    Here is what I say about managing money in a relationship where the couple lives together.   You will need four things and in this order:
    1.  Itemized Household Finances
    2.  Household Checking Account
    3.  Partner Personal Account-1
    4.  Partner Personal Account-2

    Suze Orman’s expense-tracker is awesome to set up the financial plan.  The plan generalizes and is not intended to cut spending (in this case) but instead is used to determine how much money needs to be in the account at all times to manage household expenses.

    Determine the annual net income of each partner and based on their percentage, calculate the share needed to cover expenses.  If partner-1 makes 100k while partner-2 earns 75k then the calculation will be:

    100k + 75k = 175k total annual net income
    100k/175k= 57%
    75k/175k= 43%

    Take the plan you completed and multiply the total by each percentage. This is the monthly amount due to the HOUSEHOLD ACCOUNT.  Here is an example of a household with expenses totaling $3,750 a month-including insurances. average maintenance etc.
    $3,750 * .57 = $2,137.50
    $3,750 * .43 = $1,612.50
    This calculation determines the monthly contribution of each partner and the remainder becomes their own money.  (It’s important that each have “their own” money). I recommend, if possible, that each should pay an extra month to fund the household account to start.

    Financial planning starts with agreements and all agreements are valid as long as they are agreements.

    In cases where one is the income producer and the other contributes in other ways, perhaps by managing the home, children or whatever agreement you’ve made.  Here is an alternate recommendation on handling money.  When calculating the financial plan include an adequate allowance for each partner.  The household account then “pays out” the allowance. Each one equally and each one puts the money in their own account.   Other agreements can be made for additional income based on circumstances. One such circumstance is the partners agree to have additional means of bringing in personal money and they agree that that money is the property of the one who brings it in.  An example of this:

    Partner -1 does some consulting on the side for additional income.
    Partner -2 does some graphic design on the side for additional income.
    Both partners keep the additional income they produce, provided the household account is “never” lacking.