When it comes to cash management as a couple, there’s no one-size-fits-all approach. Your financial situation, relationship, and goals are unique to you! A cash management process works best when it fits both of you and your relationship. Merchant Law Group reports that 25% of couples say money problems played a role in their divorce. So, while money management may differ from couple to couple, what doesn’t change is the importance of putting focus on your overall financial health. Finding the right system to manage money together is a big part of that. The right set-up can reduce stress and help you hit your financial goals faster.
There are three main cash management strategies to consider: fully joint, fully separate, or a hybrid model. Each has its pros and cons. Deciding what works best for you means having open conversations, a little trial and error, and revisiting the plans as life changes. Remember, there is no right or wrong way to do this!
Whatever path you choose, it’s essential to start with a solid foundation. This foundation will help with financial decision-making. It starts with effective communication and a clear plan for your finances (aka a budget). Depending on which method you choose, that could be one (fully combined), two (fully separate) or three budgets (partially combined)!
Fully joint
This approach means everything is together, including credit cards. You open accounts that you both have access to. Then, all income is deposited, and all bills and other expenses are paid from your joint accounts. Having joint chequing accounts, joint savings accounts, and credit cards can be a significant shift in finances. According to the Bank of Canada, couples who use joint bank accounts may experience greater transparency. For that to happen, there has to be mutual trust and ongoing money conversations.
Pros
- It can be easier to track and manage money together
- Shared visibility to everything
- Encourages teamwork toward financial goals
Cons
- Can cause tension if spending habits don’t align
- Less individual financial freedom
- More complicated if the relationship ends
- Managing household finances can fall on the shoulders of one person
Fully separate
Each partner pays their share of household expenses from their own bank accounts. You would each keep full control over all of your accounts. This typically means that each of you is covering specific bills and expenses, or a setup to track and split things up fairly.
Pros
- Total independence and autonomy (this could also go in the con column)
- It can mean fewer arguments about spending
- Simpler if the relationship ends
Cons
- Harder to get a clear picture of household finances
- Can create tension and distrust if you don’t have regular money conversations
- No shared responsibility for shared goals
- Can add more money transfers between partners
If you decide to go this route, it’s important to talk about who pays for what. Using tools like online banking summaries and spreadsheets to track how much you’re each spending can help create clarity.
Hybrid model
This is the most common setup I see with my clients. Within this model, there are various options for how much you combine. Here are the most common ones I see:
- You each keep all of your current bank and credit card accounts, but open a joint chequing account. You each contribute to this account to pay for household expenses.
- You and your partner have fully combined your finances, but you also have individual accounts for personal spending. This allows you to collaborate on most things, but still have the independence of individual spending cash accounts.
Pros
- Balance of independence and shared responsibility
- Easier to budget and track shared spending
- Can adjust contributions to joint accounts based on income
Cons
- Requires communication and regular check-ins
- Need clarity on who’s responsible for what
- Can add tension if you don’t make changes as income/expenses shift
A Word of Caution!
Don’t start by merging everything all at once, especially if your credit scores or spending styles are wildly different. Start small and adjust as needed based on how things are working. Consider starting with one shared chequing account or savings account, and adjust from there.
A few extra things to think about
Consider your credit scores. They won’t be impacted when you get married or move in together. Things like a joint credit card or co-signing a line of credit can affect both of you.
Pick the right financial institution(s). Some offer perks like lower fees for multiple accounts or rewards points on credit cards. Depending on your longer-term plans, your financial institutions can make things easier or more challenging.
Don’t assume a 50/50 split always makes sense. If you go with option 2 or 3, determine how you split things so that it works for both of you. It could be purely based on income, your budget, or having a similar amount of money left over each month.
Consider estate planning. Make sure both partners have access to key financial statements and know how to access and withdraw money. Keep in mind that if something happens to one of you, a co-owner on an account can access funds more easily than a “third party.”
Keep it flexible. Your finances change over time, with jobs, kids, homes, or the growth of a small business. What works now might not work in a year or two.
Common Mistakes to Avoid
Focusing only on the budget and not on cash management. You don’t need to be a cash flow budget wizard, but a little planning goes a long way. A monthly or quarterly cash flow analysis (aka seeing where your money went, and where it needs to go in the future) can keep you both in the loop.
Ignoring short-term goals. Saving for a vacation, wedding, or new car? Use a shared savings account and make a plan together.
Avoiding the hard convos. If one person is better at managing the day-to-day, that’s fine, but make sure the other partner stays informed and involved.
Parting thoughts
The best cash management system is the one that works for your relationship. Some couples thrive with total transparency and joint everything. Others need autonomy to feel secure. Many find a sweet spot somewhere in between. Don’t forget, you’re not locked in forever. You can open bank accounts, change payment terms, shift how you pay bills, or make other adjustments as needed. What matters most is finding a way to build financial stability together without burning out or building resentment.
If debt has become a point of friction for you and your significant other, the Credit Counsellors at Consolidated Credit can help. Call for a free, no-obligation consultation where the counsellor will walk you through what debt relief options are available.
