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How To: Broach the tough topic of 'money' with your life partner

BY Andrew Silsby

3/19/2018
Andrew Silsby

As a banker, I believe there's no bad time to chat about your family finances with your significant other.

Talking about family finances and having a good system for finances isn't the most romantic topic, but it's important for long-term happiness in a relationship. Being upfront and honest about finances with each other, is the foundation for a healthy and lasting relationship.

One thing I've learned after being in the banking business for 32 years is that it is incredibly important to talk about money with your significant other to avoid conflicts down the road. Don't sweep it under the carpet. Problems, particularly money problems, don't just go away if you ignore them. As a mortgage lender for many years, I frequently would discover through the process of taking a loan application, that there were accounts, loans and credit cards that one person in the relationship didn't know about. Sometimes those conversations were very uncomfortable, so maintaining an open dialogue about finances is always a good practice.

Most couples have a preconceived notion that they must combine all their money. I think this view comes from past generations, but it is not your parents' banking era anymore. The use of bank accounts has changed over the generations, particularly in the past decade with the explosion of electronic payment use. Let's look at a checking account as an example. There is only one checkbook, one register, and only one person can have that checkbook at a time. In the past you might have only have written 10 or 12 checks a month and it was easy to keep track of those checks and your account balance. Today, we aren't writing very many checks and we have a lot of electronic payments, including debit cards that create hundreds of transactions in a single month. Managing that becomes a real challenge if that activity is doubled with two people. Just think about it, if both of you buy coffee every day, that alone adds up to 60-plus transactions per month. My advice to most couples is to keep separate accounts. Over my banking years, the most successful money-managing households keep their money separated.

The best approach I've seen is a “yours/mine/ours” account structure. There is always a division of who pays for what in each household. That discussion still needs to happen with this approach, but manage your day-to-day expenses separately. It's just a good idea to keep separate checking accounts and contribute to an “our” account for common household expenses like mortgage, utilities, groceries and maybe even longer-term savings for annual vacation or college expenses. When I say separate accounts, I don't necessarily mean that the account is solely in one person's name. Although some households do that, I actually think the best practice is to have the separate accounts set up as joint ownership. With the primary operator of the account's name listed first, it's clear which account is whose. The joint ownership just allows the other person access in the event there is an emergency, but not for daily transactions. Joint ownership can create a challenge when it comes to gift giving, just because the other person might know what you're buying. If there is a lot of sensitivity to what each person spends money on, you can always keep those day-to-day accounts under a single ownership.

Ultimately, it's up to you and your partner to determine what is best for your financial well-being.

Andrew Silsby is president and CEO of Kennebec Savings Bank.