Methods for Merging Couple Finances

Merging couple finances can be quite overwhelming, whether you’re deciding on fully joining your accounts, joining them but keeping some wiggle room, or wanting two separate accounts. Luckily, First Federal Bank has prepared money management tips to make these decisions easier based on how your personal relationship is built.

Joint Account Methods

Choosing to join your finances is not a one-size-fits all decision. There are many different methods available that can work well with how your partnership is set up. As with your relationship, communication is key to making sure these decisions work best, so only choose a method that you and your partner are comfortable with.

1. Complete Joint Accounts

Fully joint accounts for couples consist of one account to deposit both of your paychecks and likewise; therefore, all money is available to both partners. This method is known as complete commingling and means that you will be merging all of your finances into joint accounts, including all bank accounts, credit cards, investment funds, etc. This joint account option isn’t right for everyone, so explore First Federal Bank’s checking and savings accounts and see if this might be right for your relationship.

2. Joint Checking Account for Expenses

If you are comfortable with making purchase decisions together, you may find it useful to have one checking account to share for major purchases. This frees up your personal checking accounts to be used independently. For this to work, both you and your partner will transfer portions of your separate checking accounts into one joint account on a scheduled basis. One way to make these transfers simpler, is by setting up automatic payments through OnLine Banking.

3. Proportional Method

The proportional method of joint accounts consists of the partners paying their bills at a rate proportional to their income. This makes individual spending more evenly distributed because instead of simply splitting the budget in half, spending depends on your personal income. This is a great method for those who don’t like the pressure of matching what the partner is contributing. However, on the flip side, the partner with the lower earning paycheck may feel restricted on what they are able to spend.

4. Raw Contribution Method

The raw contribution method is the opposite of proportional, in which both partners pay the same amount without consideration of income. This eliminates one partner feeling limited with what they can spend if there’s a significant difference in incomes. Another benefit of this joint account method is that it also brings up necessary conversations over how the budget will be affected if one partner loses their income all together.

Separate Bank Account Methods

For some couples, it works best to keep their financial lives separate. If money is a common argument between you and your partner, or you simply enjoy having your own sense of freedom with the income you earn, these methods would probably work best for you.

1. Using One Income

This method is a great way to save money towards long-term financial goals like buying a house or buying a car. With this approach, you and your partner will choose which income you would like to use for your everyday checking. If you choose the one with the higher income, that is the income that will be used for all purchases (for the time being). Meanwhile, the partner with the lower income would contribute their paycheck exclusively to the savings account. If the two of you are able to live off of one income, this is a great way to boost your savings.

2. Mutual Savings Account

The idea of entirely separating your financial life from your partner’s may appeal to you; however, you may still be interested in a method that allows shared purchases to remain a team-effort. For instance, perhaps you and your loved-one’s dream is to stroll the beaches of Greece. Surely, this decision will require saving efforts from both of you, which may lead you to using a savings account. This is a savings account in which you and your partner can contribute towards joint goals, but at the same time remain private for all personal purchases. If you’re seeking privacy in your relationship but at the same time in need of an organized way to save for shared payments, this approach may be perfect for you.

3. Everything Remains Separate

If money causes tension in your relationship, or you simply want to spend and save independently and your partner wants to do the same, you can choose to keep your financial lives completely separate. This method works well for couples who are able keep their financial life and relationship life separate, or who have drastically different spending habits.

The most important part to consider when it comes to being in a relationship is having open communication, and that includes your finances. Learning which method is best suited for your relationship is a great way to build and make it stronger. Whatever option(s) you choose, feel free to reach out to First Federal Bank with any questions. We specialize in helping couples & families in Ohio, Michigan, and Indiana achieve financial harmony.

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