Q&A: His, Hers, & Ours Approach to Couples Finances

Hello FIRE community!

A recent question in a forum and a similar conversation with a friend got me thinking about the common conundrum of “Couples Finance”. The US Census Bureau found that the median age for a first marriage in 2022 was 28.6 years old for women and 30.5 years old for men. With today’s marriages often coming with student loan debt, 401ks, credit card balances and maybe home mortgages, I’ve heard it suggested that modern marriage is more of a corporate merger than a start-up. Partners are coming in with a complex mix of debts, assets, and financial habits. Because taking about money is often taboo in the US, we are left to stumble through this without information and strategies. So I thought I’d offer up what we’ve done, as just one path of many, to navigate finances with a partner.

Q: “My question is, for married couples, when did you guys start combining your income?”

Do you save money for yourself before putting that money to a joint account every paycheck?
What if I’m the higher earner but my partner wants to split 50/50?
Do you think it’s okay for married couples to just not combine incomes?

Scenario: Newly married, mid-20s, no kids, no debts, credit cards paid in full monthly. One partner very frugal and other is carefree but responsible with money. One partner is earning double the other, and lower earner is the more frugal one.

A: My Thoughts On Combining & Managing Our Finances:

His, Hers, & Ours Approach

We view our finances as a whole, but we manage them with a combination of joint and personal accounts. Here are my thoughts on how we looked at finances when we got married, and a few thoughtful questions I would tell my younger self to consider:

VISIBLE: All of our financial accounts—credit cards, mortgage, etc.—are aggregated using a tool like Mint, Empower, Copilot, or YNAB. This ensures all of our finances and transactions are fully visible to both of us. Periodic sharing of credit reports is also a loving way to show your partner that you are disclosing your credit accounts and debts. Even though my partner isn’t interested in financial minutiae and trusts that I’m tracking and planning for us, I want everything to always be disclosed. The responsibility of planning our finances and future should be a shared endeavor.

EQUITABLE: Since I am both more frugal and earn noticeably less than my partner, we work to balance the power dynamics in our financial decision-making to keep it feeling fair. It’s not always easy, but we focus on creating financial security (especially for the saver partner), meeting our saving and investing goals (investing for our future selves and saving for big purchases), and still allow for personal discretionary spending (especially for carefree but responsible partner). We are building our future together as a unit, with room for individual financial choices along the way.

Here’s our approach:

JOINT: We have a joint “operating” account for all expected household expenses, from mortgage to groceries, insurance to emergency funds. This account funds joint saving & investing goals for the future, including short-term sinking funds for things like travel and home repairs, as well as long-term investment planning. Spending from this account is a joint decision and subject to budget review. We review our spending and goals together at least a few times a year. While the proportion we each contribute has changed over the years, the majority of our earned income goes into this joint account.

PERSONAL: We also maintain personal accounts. Each month, a set amount of money is sent to our personal accounts. This is money we’ve allocated for spending according to our individual personal values. This arrangement allows us to spend without stress or concern about the other’s spending, as long as it stays within the budgeted personal amount. This doesn’t have to be equal, but it’s important to avoid economic disparity between partners.

SHARED DREAMS: Whether you keep finances separate, together or a combination… make sure that you looking at it as a whole, and are identifying your shared dreams and goals. It’s easier to compromise when you both are on board with the big goals. One of our key shared dreams is building wealth and financial stability by converting our earned income to passive income via investments. I’ve wanted to follow the F.I.R.E. (Financial Independence Retire Early) path quickly and intently, while my partner prefers to keep working and enjoy more discretionary spending now, while knowing we are also funding eventual retirement. After much discussion, we compromised on a SlowFI path, which allows us to gradually achieve financial independence, (still years before traditional retirement age), while enjoying our journey along the way. For us, this means a bit more spending on everyday luxuries for my partner, and fewer work hours for me after hitting our savings goals. This path balances our desire for financial security and early retirement with our desire to enjoy life now and not be too singularly focused on the future. We regularly review our progress and adjust our plans as needed, ensuring that our shared dream remains aligned with our individual aspirations.

This next part is not what you asked about, but I consider it a big part of financial planning and joining finances as a couple…

LEGAL/CONTINGENCY PLANNING: It’s crucial to understand how marriage changes your legal responsibilities. Unless you have a prenuptial or postnuptial agreement, your marriage is governed by state laws. Generally, this means joint responsibility and ownership of debts, real property, retirement, and savings acquired during the marriage. Even if you manage finances separately, the law often considers them joint. It’s essential to maintain full visibility into each partner’s finances because their finances are your finances as well. Surveys suggest that 25-44% of relationships experience some form of financial infidelity, which can include hiding accounts, debts, purchases, or income. Its hard to believe this could happen, but the stats are showing that it’s a good idea to have systems and agreements within the relationship to openly share finances, such as discussing debt, large purchases, income sources, credit reports, etc.

ESTATE PLANNING: In case of incapacity or death, it’s vital to know how your partner’s finances work. Basic estate planning, such as wills and power of attorney, is crucial. Ensure you have access to passwords and the necessary authorizations to manage their financial accounts. We use a password manager and update a document annually with information on all our accounts, both joint and separate, to avoid scrambling in a stressful situation.

Let’s get curious….

What does “financial well-being” mean to you as a couple? How do you prioritize achieving and maintaining this state in your everyday financial decisions and planning?

What shared financial goals do you and your partner dream of achieving together in the next 5, 10, or 20 years?

How do you and your partner currently manage financial visibility and transparency in your relationship? Are there any changes you could make to improve this?

How do you celebrate milestones and achievements along your path to financial independence as a couple? How can you make these celebrations meaningful and reinforcing of your shared goals?

Are there any financial decisions or habits that you and your partner disagree on? How do you navigate these differences and ensure mutual understanding?

What values or principles guide your financial decisions as a couple? How do these values support your journey towards financial independence?

What steps have you taken to protect yourselves legally and financially as a couple? Are there any additional measures you should consider, such as creating a will or setting up power of attorney?

These are the sorts of questions you want to ask yourself if you want to design a life of abundance, flexibility and freedom. If you want to be able to retire with a comfortable nest egg and a sense of security. If you want to have more options in your life and more control over your financial stability.

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A Bit About Us

Our journey began with humble beginnings. We’ve navigated through the challenges of creating a life and a living we love, while earning low to median incomes. What started as a modest dream of being able to retire someday has turned into a concrete plan. We’ve been on the SlowFI path, consistently saving and investing for 20+ years. Our income over time has stayed roughly in the 50th percentile, so we are truly everyday Americans. We’ve achieved remarkable results through living below our means and consistently investing the difference. Now in our mid-40s, we are in the top 20% for U.S. household wealth for our age group. This has been possible through conscious spending, consistent saving, strategic investing, and a commitment to lifestyle design where we spend generously on things that bring us value and contentment, while cutting back on things we are ambivalent about. It can be daunting when you hear the stories of tech workers or doctors or other people with large income shovels. We want to share how an everyday couple with median US income has built wealth for the future, while also creating a life we love today.

Why Financial Independence?

Financial Independence means having the freedom to make choices that aren’t dictated only by the need for a paycheck. It’s about gaining control over your time and energy, and being able to pursue what truly matters to you. For us, it’s about creating time for friend & family, travel, and the experiences that bring joy and fulfillment.

Join Us on the Journey

In January 2021, I ran some calculations, projected our investment growth, and analyzed our current spending levels. After adjusting our spending assumptions for future inflation, I realized we could replace our earned income (trading time for money) with investment income (our money making money for us) in approximately 10 years. With 90 months left to go, we’re solidly on that path and we want you to join us. Whether you’re just starting out or well on your way to financial independence, Surprising Wealth is here to support and inspire you. Together, we can make every month count and turn dreams into reality.

Thank you for being a part of our community. Let’s embark on this journey to financial independence together!