Best Parental financial advice to give to couples living together

[pcgirl54]

So many couples live together today. My query is what is the best parental advice to give to adult children on managing money and sharing expenses when living together.

I am honored to have been asked for parental advice on the best way to handle shared expenses including creating shared bank accounts. Neither has been good at it in the past when alone. As a couple they have reviewed bills and revised a few things since writing down expenses.

I have gently suggested other things that are important to have in place like retirement plans and term insurance.

Parental instinct is for each of them is to keep seperate accounts for their own sake, learn how to manage an account on their own and be protected should the relationship end at some point. Creating a joint account for shared expenses in addition to the individual accounts is my current thought. Some couples split everything in two or are responsible for certain bills. Rent & most utilites are not in the picture. It would be more for schools loans,food ,travel,city transportation costs and things of that nature.

I want to be supportive and offer sound advice as a parent without seeming negative. They are getting older and now starting to care about these things. They call me often for advice on cooking and travel. I never thought I would ever ask this question. New territory for me. So much easier to plan a trip.

 

[DonM]

They need to have an agreement/ contract whether written or verbal- they need to have an understanding before anyone can give any advice. Are they sharing the costs 50/50? Are they sharing their income 50/50??. Is she doing the cooking?- is he doing the housework?etc. etc. What if they break up? What if they get pregnant? What if they get ill?- they should decide all these things before they can occur, and they should decide how to decide if something happens that they haven't planned.

After they have their agreement, they need to form a budget to ensure that the agreement has a chance of success.

Its almost like a marriage, only there aren't any legal responsibilities.

 

[Steamboat Bill]

spend less than what you both make

 

[Nancy]

Seperate bank accounts

I think they should keep seperate bank accounts. They could have a joint one for shared expenses, but would recommend seperate and each be responsible for certain bills. This causes less problems when/if they split up. If they later decide to marry, then this changes everything.

JMHO
Nancy

 

[Born2Travel]

I think they should keep seperate bank accounts. They could have a joint one for shared expenses, but would recommend seperate and each be responsible for certain bills. This causes less problems when/if they split up. If they later decide to marry, then this changes everything.

JMHO
Nancy

I totally agree with this one - we've been 40 years and this is still our model... no problems or issues with $$ - we each have our own - no questions asked... and we also have an "ours" - works great for us

 

[debraxh]

DH and I lived together for about 8 years before finally getting married (even bought our first house). We kept our individual bank accounts, but opened a joint "house account" and contributed to it equally. We paid all household bills, groceries, home improvement, etc. from the joint account. Cars and personal expenses (i.e. clothes, gifts, etc.) were paid individually.

Since most of that time he was making more money than I was, he generally paid for most entertainment expenses and eating out, but it wasn't a "rule". For vacations or other extras, we usually increased our contributions to the joint account in order to cover or save for them.

This worked out great for us and we never had money problems. At one point we split up, but kept the joint account to pay for the house expenses, even though we contributed less to it than when we were living together. We got back together and eventually married, but still kept our separate and joint accounts. Once our daughter was born and I stopped working outside the home, we closed the individual accounts.

Since I'm better at the financial stuff then he is, I always paid the bills and monitored the joint account (still do). There could be problems if both parties want to be in charge. We didn't have any official/legal agreements but it's not a bad idea to do so. IIRC, I even kept my parents as beneficiary on my personal accounts until we were married.

Good luck!

 

[jlr10]

When we went through our premarital councling we were advised to have 3 accounts, his, hers, and ours. Each person should have their own set amount of personal money and what they chose to do with it is there business. They could save it, spend it, or burn it and the other person had not say.

We set up this plan before we got married: We looked at how much we both made, sat down with the bills and decided who would be responsible for what bills. Then we set up the three accounts. Each account is a shared account, but the his and hers are controlled by him and her, and the shared account is where joint money is stored. Once our son became old enough to understand fiscal responsibility (talks we began when he was 5) we explained the system that worked for us. His response, based on who was responsible for what was "Oh, so Dad takes care of the stuff and Mom takes care of the people." Looking at it he was right. (So that makes Mom responsible for vacations, turned out to be a bigger expense than orginally considered, but is turns out to be the best expenditure, so Dad now saves money for fun things too!) Sometimes one a bill will be paid from one of nondesignated funds/person if something has come up, we have extra money or just to be really nice. As with all things in a relationship, flexability is the name of the game.

It may not be system that works for everyone but it has worked for us for over 24 years.

The difference here is they are not married. So they may not want all accounts shared. It would just depend on their comfort level.

 

[caribbeansun]

Same here - joint "house" account with direct deposit/transfer for each so that there's never that awkward situation of one of them having to ask for the other's share - that can get nasty.

Separate accounts for their own "stuff".

Don't dismiss Bill's posting, it's simple but very important. If they can't do that then they should each have some sort of automatic withdraw into an "untouchable" account for themselves.