ZETA'S GUIDE TO COMBINING FINANCES

1. Understand your expenses.

A single income life has to start with first understanding your expenses. Knowing how much you're trying to spend gives you a sense of whether you can even pursue a single-income strategy. If you find that you can pull it off, decide which of your incomes you'll keep for your expenses and which one you'll direct towards savings/debt.

2. Make your second income invisible.

Once you know which income you're living on, make the second income totally invisible. If you're using it to pay down debt, have it automatically go towards that payment. If possible, don't deposit your second income into your checking account; instead send it directly towards a saving account. The goal here is to make yourselves forget that you've got this second income - you can't miss something you never had!

3. Check-in regularly.

It's good to circle up on your primary income weekly or monthly (we’re fans of having a regular money date - here’s how) and on your second income every 3-4 months. If you're using it to pay down debt, check to see if that still makes sense. If you're trying to invest it all, review the funds or the stocks you've invested it in.

1. Start an open conversation.

It’s important to discuss the imbalance up front - here are a few things to cover:

Plan for how much you’ll spend on shared expenses together (here’s a free tool to help you build a budget together). Decide the percentage that each of you is contributing towards those shared expenses. Be clear on any stipulations you might have about how to handle that money (e.g. just for rent and groceries, or for anything we’ve ever wanted).

2. Select one of these approaches.

Merge everything together.
Some couples with greatly varied incomes still choose to merge their incomes completely. This approach especially makes sense if one partner is staying home to take care of the kids, is in school, or otherwise isn’t earning an income.

Split shared expenses 50/50.
In this approach, couples contribute equally to a shared pool of money and pay for all expenses through this. It’s often easier to do this via a shared checking account, but it can also be done by trading off bills. This works well for two-income couples, but it has limitations when it comes to major expenses (like buying a home or going on a vacation). Some couples solve that problem by offering to do a proportional split for larger purchases but splitting their fixed expenses down the middle.

Split shared expenses proportionally to income.
Couples with this split each contribute a % of their income towards shared expenses. If Partner 1 earns $50,000 and Partner 2 earns $100,000, this means that P1 will pay for 33% of their shared expenses and P2 will pay for 66% of their shared expenses. This approach works well if the higher earning partner wants to spend more without making the other feel like they’re living beyond their means.

3. Automate your system.

Once you know how you’ll be doing things, it’s time to make it run like clockwork. Our happiest couples have set up their accounts to directly transfer money into their shared accounts when they’re paid. And they use Zeta to make sure they’re on track towards their monthly budget. This way, the system works without them having to lift a finger. For any unforeseen expenses, couples can make one-time transfers into their shared accounts to offset the larger expenses, or start with a cushion in their shared account for any overages that might occur.

Should we get a pre/post nuptial agreement?

Generally, if you or your partner have a strong opinion on how your assets should be divided in the event of a separation, you should consider a pre or post nuptial agreement. Some couples don’t like these agreements because they feel like they can create an “out-clause” or make it easier to break up. While there are pros and cons to be argued either way (we wrote about them here), at Zeta we believe that the conversations these agreements drive have inherent value in and of themselves.

These are a few situations where pre/post nuptial can be especially valuable:

• If one partner is bringing significantly different assets into a relationship

• If one partner is projected to inherit a large sum of money

• If one or both partners are the child of divorced parents

• If one or both partners have a history of infidelity