# Combining Finances: How do you manage your finances with your significant other?



## TK.61 (Mar 27, 2012)

I am curious for opinions on this topic as it is a bridge I will be crossing soon. I have a good idea how we will do our finances but still curious to hear what has worked and not worked for others.

In most households, one partner earns more than the other. So in situations like this do you still split costs evenly? Does the higher income earner contribute more to expenses?

Some common approaches I have seen: 
--All income goes into one account, the household CFO pays all the bills and divvy's out an allowance.

--Keep totally separate accounts, bills evenly split 50/50, once bills are paid I can do what I want with my left over money and so can you.


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## Mukhang pera (Feb 26, 2016)

We have always had but one account. One person pays the bills from that account, it being easier for one person to keep track of what has been paid and what has not. No one gets an "allowance". Being two responsible adults, we each take from the account what we need and charge to our joint credit cards as needed, as the case may be. No notice is paid to who earns more or less or each other's spending. Not an issue as we both live well within our collective means. Just one pool and it's all "ours".

Totally separate and equal billing is, I guess, common. Distasteful to me. One upon a time I had as roommates a couple who did that. They kept all bills, receipts, etc. in a shoebox, with a note on each of out of whose pocket each was paid. Once a month she would sit down and do a reconciliation. The result would be one having to cut a check to the other to keep things even to the penny. I found it unpleasant to watch. For example, sometimes they would decide on takeout food for dinner. He would go out and pick up. On returning with the food, he would say to her something along the lines of: "Ok, my dear, you owe me $18.33 for your dinner." I think I'd rather live alone than like that. But I recognize that the "modern way" is based more on the maxim: "I know what's mine."


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## Plugging Along (Jan 3, 2011)

I think it really depends on the couples situation and their spending habits. Most important is how the couple communicates through rather than the actual system.

When my spouse and I got engaged, we opened a joint account together for the wedding costs but kept our own accounts. He paid for the the apartment mortgage and the main bills because they were already under his name, and I paid for all the food, and most of the furnishings. 

We kept a joint account and seperate accounts for the longest time. When we bought our main house (which we live in now). The mortgage came out of the joint and most of the bills, we still had our own accounts, primarily because we were too lazy to switch over. When we had kids, and I was on mat leave, there was a really good promo, so I closed out our individual accounts and consolidated most of our accounts. 

We have pretty much since getting engaged looked at all money coming in as OUR money. We have a company where is seperate which my spouse has put more in because he is a Contractor, but it's still our money. there have been many times that my spouse was laid off, and times where her was making more than me. So in the long term for u, it all balances out.


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## wendi1 (Oct 2, 2013)

We started out dividing everything 60-40 (that being the ratio of our incomes), but lately DH cuts me a cheque for half his take-home pay and I use it and a similar amount of my own to pay the bills.

Each of us has a credit card and bank account in his/her own name - we share a common credit card for household expenses like groceries and car expenses. That way you each still have a credit rating, and can buy a birthday present for the other without ruining the surprise.


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## OnlyMyOpinion (Sep 1, 2013)

I agree with PA, it depends on the couple. 
What is probably more important is to do some planning when you begin investing in taxable accounts. Presumably that doesn't happen until both of your TSFA's are max'd out and your RRSP's topped up. But after that, once you are saving and investing in a taxable account, the income earned (whether it is interest or dividends) must be attributed to the person who provided the capital when it comes time to pay taxes on it each year. 
So it is often suggested that the higher income earner pay monthly expenses to allow the low income earner to invest most or all of their income. The idea is to consider and optimize each of your the after-tax incomes. You don't want the higher income earner stuck paying taxes on all of the investment income at their higher tax rate because - oops - they contributed all of the capital while the low income earner was paying bills with all of their capital.


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## AltaRed (Jun 8, 2009)

OnlyMyOpinion said:


> What is probably more important is to do some planning when you begin investing in taxable accounts. Presumably that doesn't happen until both of your TSFA's are max'd out and your RRSP's topped up. But after that, once you are saving and investing in a taxable account, the income earned (whether it is interest or dividends) must be attributed to the person who provided the capital when it comes time to pay taxes on it each year.
> So it is often suggested that the higher income earner pay monthly expenses to allow the low income earner to invest most or all of their income. The idea is to consider and optimize each of your the after-tax incomes. You don't want the higher income earner stuck paying taxes on all of the investment income at their higher tax rate because - oops - they contributed all of the capital while the low income earner was paying bills with all of their capital.


This is a very important item that a lot of people pooh-pooh.... Attribution of income is law per the Income Tax Act. That is to make sure taxpayers who are contributing the funds to an investment are accountable for the income that is generated from it. IF CRA asks, one needs to present the paperwork that shows the paper trail on how each person contributed funds to a particular investment. IOW, it is follow-the-money.

It is very hard to demonstrate that IF all earned income goes into a joint account, and then some funds are transferred out for investment purposes. Whose money was transferred out? The best way to do that is to have earned income go into each individual's bank account, and then for each individual to transfer 'household operating funds' whether 50/50 or some other combination into a joint account from which the bills are paid. Then when he transfers out money to an investment account, the income from such investments is 100% attributable to him for income tax purposes. Same for her.... where she transfers money out to her investment account on a 100% basis. These do not need to be individual accounts. They can be JTWROS accounts, but one has his name on the account first and is 100% attributable to him, and the other has her name first and 100% attributable to her. This is the way my spouse and I did this for decades.

CRA is definitive on these things. Just because they may not have come calling for 10 years does not mean that they won't. To reinforce the point, this is why there are things like spousal RRSPs and spousal loans. They are there to allow for income splitting over time....but they have to be done right.

I agree with OMO that one legitimate way to "income split" is to have the higher paid (higher taxed) spouse disproportionately fund household expenses. That leaves the lower income spouse the opportunity to invest money in taxable investments and have the income then be attribuatle to that spouse, presumably in a lower income tax bracket.


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## Daniel A. (Mar 20, 2011)

My spouse and I have separate bank accounts in different banks.
We split the expenses that are joint in a very rough way as she pays more attention to the regular bills, if she wants me to throw her money she just says so.
If I wanted to know how much the bills are I'd have to ask, don't know how much any of the bills cost per month.
She spends her money any way she wishes and I do the same. 

She does not want me questioning what she spends money on and I feel the same way.

An example.

I drive a Van plus a motorcycle and have a travel trailer these are mine to cover insurance,repairs, gas.
She has one car that she covers.

We split the mortgage, she covers all the monthly bills Hydro, gas, phones, cable, I cover most of the food stuff unless she happens to shop which is not often and I do most of the cooking. I do know how much the food costs only because I buy most of it somewhere around 700.00 per month.


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## TK.61 (Mar 27, 2012)

Mukhang pera said:


> Totally separate and equal billing is, I guess, common. Distasteful to me. One upon a time I had as roommates a couple who did that. They kept all bills, receipts, etc. in a shoebox, with a note on each of out of whose pocket each was paid. Once a month she would sit down and do a reconciliation. The result would be one having to cut a check to the other to keep things even to the penny. I found it unpleasant to watch. For example, sometimes they would decide on takeout food for dinner. He would go out and pick up. On returning with the food, he would say to her something along the lines of: "Ok, my dear, you owe me $18.33 for your dinner." I think I'd rather live alone than like that. But I recognize that the "modern way" is based more on the maxim: "I know what's mine."


I know a couple who do totally separate billing. They split expenses 50/50, the big problem to me is that one makes about 85k and the other makes about 40k. So once they split the bills 50/50 one partner has little left to spend on herself, while the other has a brand new truck, a second 'summer' car, a motorbike, dirt bike among other things. I see that as very unfair, but if it works for them, that is not my problem.


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## TK.61 (Mar 27, 2012)

Plugging Along said:


> I think it really depends on the couples situation and their spending habits. Most important is how the couple communicates through rather than the actual system.


I agree it totally depends on the couple and what they find as fair. Communication is key.


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## TK.61 (Mar 27, 2012)

OnlyMyOpinion said:


> I agree with PA, it depends on the couple.
> What is probably more important is to do some planning when you begin investing in taxable accounts. Presumably that doesn't happen until both of your TSFA's are max'd out and your RRSP's topped up. But after that, once you are saving and investing in a taxable account, the income earned (whether it is interest or dividends) must be attributed to the person who provided the capital when it comes time to pay taxes on it each year.
> So it is often suggested that the higher income earner pay monthly expenses to allow the low income earner to invest most or all of their income. The idea is to consider and optimize each of your the after-tax incomes. You don't want the higher income earner stuck paying taxes on all of the investment income at their higher tax rate because - oops - they contributed all of the capital while the low income earner was paying bills with all of their capital.



Very interesting angle.


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## TK.61 (Mar 27, 2012)

Daniel A. said:


> My spouse and I have separate bank accounts in different banks.
> We split the expenses that are joint in a very rough way as she pays more attention to the regular bills, if she wants me to throw her money she just says so.
> If I wanted to know how much the bills are I'd have to ask, don't know how much any of the bills cost per month.
> She spends her money any way she wishes and I do the same.
> ...



Do you have fairly similar incomes? In a previous post I mentioned friends that split evenly and keep separate accounts. They have a large gap between salaries and one partner has a bunch of discretionary spending power, while the other has virtually none. I could see resentment forming in this scenario, but if they are both ok with it then I see no problem.


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## AltaRed (Jun 8, 2009)

The key is household expenses don't have to be 50/50. It can be whatever the couple agees it is. It is more like 60/40 to 65/35 in our household due to disparate incomes.

The more important thing as I (and OMO) mentioned upthread is the paper trail of money provided/allocated for purposes of taxable investment accounts for CRA purposes.


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## Daniel A. (Mar 20, 2011)

TK.61 said:


> Do you have fairly similar incomes? In a previous post I mentioned friends that split evenly and keep separate accounts. They have a large gap between salaries and one partner has a bunch of discretionary spending power, while the other has virtually none. I could see resentment forming in this scenario, but if they are both ok with it then I see no problem.


We were both high income till I retired, after me being retired for five years she decided to retire, we both do odd jobs now.
We don't have a 50/50 split if I had to guess its more like 60/40 as my pension is better, by the time we hit 65 its going to be more like 65/35.
I would not want a situation like your friends have, both my wife and I agree that we share a lifestyle that both incomes provided.


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## fraser (May 15, 2010)

We have always had joint accounts. Never separate accounts or bill payments. The one exception is registered accounts for tax purposes and in the last several years separate investment accounts, w/spousal loans, strictly for tax avoidance reasons.

We just take whatever we need and we do not justify our spending to each other. But at our stage in life travel expenses have replaced many of our previous consumption expenses.


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## AltaRed (Jun 8, 2009)

fraser said:


> We have always had joint accounts. Never separate accounts or bill payments. The one exception is registered accounts for tax purposes and in the last several years separate investment accounts, w/spousal loans, strictly for tax avoidance reasons.


What kind of a paper trail do you keep to ensure attribution is defendable? Clearly you do something because you use spousal loans to handle attribution of income.


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## fraser (May 15, 2010)

We have demand loans, signed and witnessed. We transfer the interest from one account to the other each year prior to Jan 15 to create a paper trail in the event of a CRA desk audit. It is very straightforward if you follow CRA guidelines.


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## RCB (Jan 11, 2014)

I think it depends on whether you view the relationship as a family, or two people just living together. As a child of a single-income family, and a stay at home mother of 20 years, if my husband had a separate bank account, I'd send him a bill for 20 years of family management, child-rearing, housekeeping, cooking, and financial management. To not have joint accounts (other than registered which don't allow more than one induvidual) is a huge slap in the face to a spouse that gives up their career or future earnings potential for the benefit of the family. Even if that's 5 years instead of 20.

Joint everything here, except TFSAs and RRSPs.


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## AltaRed (Jun 8, 2009)

As long as income tracking can be managed with respect to taxable investments....to satisfy CRA requirements for Attribution of Income, that is perfectly fine. Just because there are separate accounts to satisfy CRA requirements does not mean that.....his is his.... and hers is hers. 

We found it easier to have a suite of JTWROS accounts, but to separate them for financial tracking purposes. One set had her name first and we could track all funds flow as belonging to her, and one set had my name first so we could track all funds flow as belonging to me. It was simply too difficult to keep track of aggregated funds. The household joint operating account was always fully funded from funds transferred from the other accounts. It is simply a matter of the effort one wants to take regarding the paper trail.


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## fraser (May 15, 2010)

We have never had separate accounts or his and hers bills. Even when we we working the notion of one of us writing a cheque to the other was never thought about let alone considered. 

I believe the other perspective is that we both had very similar approaches to spending, credit, investments, etc. there has never been any friction in that regard. It has been this way since I was a poor student through to retirement. This has worked for us.


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## brad (May 22, 2009)

TK.61 said:


> In most households, one partner earns more than the other. So in situations like this do you still split costs evenly? Does the higher income earner contribute more to expenses?


The way we handle it is that we split costs according to our means. I earn a lot more than my partner does, so I pay for the big expenses (mortgage, food, home repairs, etc.) and she covers smaller things like our property taxes, telephone, and electricity. There's no desire to split costs evenly, that would be unfair to her. 

We have separate accounts and finances; we each contribute to shared expenses based on our means; we're each responsible for different bills. It's very similar to how we handle household chores: I'm responsible for cooking all the meals, she usually does the cleanup. I clean the bathroom, she does the vaccuming, etc. We split the responsibilities.

For things like vacations, we usually split the costs: I'll buy the plane tickets and she'll reimburse me for hers; I'll pay for half the hotels and she'll pay for the other half, that sort of thing. It's actually very rare for us to transfer money to each other, we don't do any careful accounting.

This system has worked beautifully for us for 15 years now and we've never argued about money.


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## fraser (May 15, 2010)

We never bothered with income attrition until nine years ago. Prior to that just about everything was in my spouses name since she was in a very low tax bracket. When we realized some significant gains on employer options our accountant advised us to go the spousal loan route. We are now in the process of reversing some of that.


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## cougar (Oct 15, 2014)

We married at 47 and 52, and at that time we had roughly equivalent net worth. We combined all our income/accounts/bills other than RRSP( did some spousal ones) and TFSA-it doesn't matter to us that one of us sometimes earned more than the other-the other spouse cared for our children and house. We agreed that if we were ever to split up we would divide everything 50/50 and our wills also leave everything to each other. I don't expect we will ever split up but I think the law would give us each 50% of the increase in net worth since the marriage anyway so same difference. We are not a nit picky couple. At the time of marriage, my name was on the house deed and we added my spouse, although here you cannot sell a house without your partners consent and they have dower rights to it anyway so the main reason we did it was to make things easier in case of death and probate.


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## AltaRed (Jun 8, 2009)

I agree there is no argument to be had on what happens in a split... Family law (varies by province) dictates that anyway in the absence of a pre-nup or co-hab for anything gained since becoming a couple (even with such documents). That is a different subject from how cash flow is handled as a couple which is the original intent of this thread. Hard not to talk about one without talking about the other sometimes though.

OMO and I just included 'be carefuls' on how assets must be documented individually for tax purposes as a 'heads up' regarding commingled funds. Tax law is based on individuals and assets and income must be treated that way accordingly.


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## cannew (Jun 19, 2011)

Been married for 52 years and we've always had one joint chequing and savings account. For many years we were self-employed and that's when we setup separate accounts and ensured that all savings and investments were split evenly. Even with our investments (two rrif's & tfsa's) they are basically even and all others are joint. Everything we own is also in both names.


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## MrMatt (Dec 21, 2011)

We have to separate checking accounts for the income to go in to, if there was a reason to worry about attribution for tax rules it's very clearn.

Strategically our money is 100% pooled, we do have an "anything I want" allowance, but house stuff we agree on doesntt come out of that.
The allowance is really money we should feel free to spend however we want without having to justify it, which works since we justify every other purchase.


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## Sasquatch (Jan 28, 2012)

cannew said:


> Been married for 52 years and we've always had one joint chequing and savings account. For many years we were self-employed and that's when we setup separate accounts and ensured that all savings and investments were split evenly. Even with our investments (two rrif's & tfsa's) they are basically even and all others are joint. Everything we own is also in both names.


We are almost identical to cannew just haven't been married quite as long, only 45 years! We have a joint acc. from which we pay all OUR bills and take money as needed by each of us, without having to account for every little detail. All our pensions are deposited into said acc. We also have a joint sav. account and a joint non reg. investment acc. The only separate accounts we have are non reg investment accounts in each name and of course RRSPs and RRIFs. Life is complicated enough, why complicate it even further by keeping track of separate chequing accounts and such. Bills and such have to be paid and it doesn't matter who pays them. As far as we are concerned there is only one pot which is being managed by the contributions of two partners. K I S S !!!!


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## LBCfan (Jan 13, 2011)

We always went under the assumtion that everything is ours. When DW's last parent died and left her a suignificant sum, we maintained separate investment accounts. This was because my bride ended up being a 'stay at home mom'. I paid the bills, her investments built up our nest egg. That was the plan. Life insisted that I managed (despite our plans) to end up with a lot morethan her. C'est la vie.


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## DayTek (Sep 26, 2013)

I work in banking, so the CFO role naturally fell to me. 

We bought our house in our early 20’s and were both comfortable pooling our income together, even with the 60/40 income difference. 

I have a monthly budget for both of us, being he gets paid weekly and I get paid semimonthly. Because he is paid more consistently and frequently than myself, his income supplies monthly bills, groceries, spending money and some savings, broken down weekly. 

My income supplies the mortgage, loan payment and most savings, broken down semimonthly.

He clears all spending above our weekly allowance with me first. If he wants something extra, he asks if we have the money saved. If we don’t, I tell him I’ll save for it and I do, then he buys it.

His income is like our “living money” and mine is like our “saving/debt paying money”. It works for us.


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## BigMonkey (May 31, 2016)

I'm not in a situation where I manage my finances with my SO since we don't live together. 

But when I get there, I'd likely opt to do joint account for everything since I would view "us" as a team. If I have a nice amount saved up at retirement and my SO doesn't, I couldn't just let them "get by" with next to nothing at retirement. I would assume, she would likely have the same view as well.

But for the sake of argument, what are the main benefits of separated accounts? 
- Concealed spending habits? 
- Potential "protection" where one spouse could potentially drain the account and run off?

As well, for those who share expenses. Do the ladies make the males pay more for groceries? I do probably eat 1.5x what my SO eats lol.


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## wendi1 (Oct 2, 2013)

BigMonkey:

When my parents separated, my mom had no credit rating at all, because all the bills, car, house, insurance, etc., was in my dad's name. If he had died first, it would have been the same problem. You both need credit histories nowadays. 

I don't charge my sweetie extra for food (but he buys his own beer).


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## AltaRed (Jun 8, 2009)

It's not an either/or situation. It is a combination. Have joint accounts for costs that are shared and feed that beast from individual accounts. As mentioned by Wendi1, each spouse needs to be the 'account holder' of at least one credit card (joint or otherwise) to establish a credit rating, and some of the bills should have one spouse or the other as the account lead. They can still all be funded from joint accounts.

The main reason to hold "separate" accounts is for investment purposes....for CRA's Attribution of Income documentation. That applies whether spouses are glued at the hip or not. Even then, they can be JTWROS, but with the spouse to whom the capital is 'owned' for CRA purposes being the lead account holder. Don't know how many times that needs to be repeated. That is a separate issue from how and why spouses manage/own/distribute/share finances.


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## NorthKC (Apr 1, 2013)

At this time as we are not living together, we're holding separate accounts. Once we end finally end up in same city, we'll be setting up a joint chequing account for our joint needs but maintain a couple of accounts separately kind of like our "fun" accounts and allocating a small allowance each, probably $500 per person per month. Yes, he does make more money than me but we take turns treating each other. 

However, we talk about money all the time and even talk about big purchases despite not being married yet as we both view our bank accounts as "our" money. We know how much each other are making and what's in investment accounts, etc so no secrets here. 

We'll keep separate credit cards to ensure we have credit history but all big purchases are communicated first (bearing any emergencies, of course).

The CFO role will come to me (as discussed) as I am an accountant and am a little bit more picky about details but we'll do our weekly review together (not unlike what we're doing right now).


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## Mortgage u/w (Feb 6, 2014)

Family. For me, family is one. If you decide to unite, then unite. There is no 'mine' or 'yours'. A couple or family is 'we' and 'us'. By that principle, separate accounts have no place in a family.

For those who say they need a separate account because they do not want to be questioned on their spending habits - well the problem for me is clear. Discipline, honesty, communication and/or trust is lacking in the union. Once people change their mindsets, who pays for what will not become an issue. By combining incomes and expenses, your family finances will grow twice as stronger. Why limit yourself? 

Number one reason for divorces is Money. Not the lack of money, but the lack of money management. Couples tend to have a hard time of 'letting go' of their independence. If you're committed, let go and start your new life 'together' as ONE.


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