Navigating the intersection of love and money can be tricky, especially if one partner is more of a spender than the other. There is one method of managing finances that can help every couple find the balance between working towards the same financial goals, while also maintaining some level of autonomy. It’s called “splitting the check.”
Splitting the check involves collectively splitting your paychecks into three broad categories of expenses. First, there’s the bills and life category, for all the essential spending, like the rent or mortgage, food at home, insurance, and debt payments. Then, there’s the future and goals category which encompasses saving and investing money for your future selves; from emergency funds to retirement and everything in between. And the last category is the fun and b.s. category, for all the non-essential things that make life feel like life.
There are a few pillars to splitting the check. One is to have a separate checking account for the bills and life money, as well as separate checking accounts for each person for their own fun and b.s. checking account. And remember that future and goals is likely money going into each 401k and other various savings and investment accounts. There is a bit of upfront calculating to understand how you’ll be splitting up your check.
Of course, there are some general guidelines, too, like the 50/30/20 rule, where 50% of income goes towards essentials (bills and life), 30% towards non-essentials (fun and bs), and 20% towards saving for the future. Remember this is just a guideline. Life is dynamic, which means there may be times in your life when you aren’t able to stay within these suggested paramters.
After you have your new accounts set up and you know your calculations, every time you’re paid, you simply split the check into your various checking accounts. Typically, your retirement will be automatically deducted from your paycheck. I recommend automating any other savings or investing as well. Fund your bills and life account so that your essentials are taken care of and then each partner receives a portion of the paycheck paid into their fun and bs checking account.
The beauty of having these accounts separate is that each couple has the autonomy to spend that money as they wish.
Managing spending this way isn’t entirely without flaws - for example, using cash means forgoing accumulating credit card points. Of course, you can use this system with credit cards, but doing so means you’ll forgo the built-in stop-loss mechanism of using cash.
The reason why I recommend couples implement the split-the-check method is that it gives each person the autonomy to make spending decisions without having to consult with one another. Instead of deliberating and debating on how every dollar gets spent, each person gets a pre-determined amount to spend as they please. While, of course, prioritizing saving for the future and ensuring you’re meeting current obligations.
When you implement a system for spending, you set up a process to help you reach your goals while eliminating unnecessary, often redundant, conversations between you and your partner. When you and your partner agree on the process in advance, it’s one decision that gets made today that can potentially eliminate the need to make 100 (or thousands!) of decisions in the future.