Evolving Dynamics in Financial Management: Here’s How to Budget Efficiently As a Couple

Navigating financial matters can be equally daunting for couples in the early stages of dating as well as for those who have been married for years. According to data released by the UK’s TSB bank, only one in eight couples share all their expenses and about two in five couples keep their finances entirely separate. However, budgeting as a couple is important. But with changing norms of relationships, budgeting for couples is also changing.

Dynamics of modern-day budgeting for couples

Historically, it's one partner holding the couple’s purse, but in the modern day, this has drastically changed, at least in most of the Western countries. Political wins of women such as gaining the right to own money or to earn a wage have contributed to a more equal division of the household budget. The shifting dynamics of marriage and the increased number of non-heterosexual relationships are further contributing to a shift in traditional financial dynamics.

"Having that joint account because you're going to get married at 20 and you're going to stay with that person for 60 years…that doesn't happen as commonly as it used to," said Alice Haine, Personal Finance Analyst at Evelyn Partners to Euro News.

Here’s why couples prefer to keep their finances separate

According to the report, one of the reasons why couples may want to limit asset sharing is because of past financial trauma that they might have experienced in a previous relationship. About 16% of adults in the UK say they have been subject to economic abuse, meaning they have been prevented from freely managing their money, according to the official government data. Abusers may also force their partners to take on a loan against their will. This can leave the survivors of abuse financially crippled for years and make them wary of any financial collaboration in the future.

Further, dishonesty surrounding money is another concern preventing couples from pooling their money. It is easier for one person to make large expenditures without informing the significant other and lying about the use of the pooled money. This was evident in the 2023 data published by law firm Weightmans, which revealed that 17% of the people surveyed in the U.K. said their partners had lied to them about debt. Further about 9% of respondents said they had more than £1,000 ($1,283.52) in secret savings.

Importance of financial awareness

Financial advisors warn against the traditional practice of one partner managing all the joint finances. "You need to make sure that both sides of the partnership understand what big financial decisions are being made, what debts you possibly have, what savings you have, and what your investment strategies are," Haine said in the report. This allows each partner to have full information on their finances and prepare better for any hardships in the future. This can be done while maintaining autonomy over finances in many ways.

Here’s how to budget efficiently as a couple

Go over all the aspects of finance including, income, savings, investments, assets, outstanding debt, individual financial goals, and more to have a complete idea of each other’s financial situation. Getting a copy of credit reports from trusted credit bureaus can come in handy as well.

One way to budget together and maintain individual autonomy is by creating a three bank account model, one for each partner and one joint account for the household. Then, creating a household budget will make sense as it will draw the needed funds from the household joint account. Further employing different budgeting strategies like the 50/30/20 rule where 50% of the combined income goes toward necessities, 30% goes to “wants” and 20% goes to paying off debt can be used to use the funds efficiently.