Your big day is quickly approaching and with it comes a great deal of undue stress. You’re busy planning the wedding, the honeymoon and perhaps buying a new home to begin your new life together. One very important aspect of your new life that often goes without any planning is how you will handle your finances as a couple. Most couples simply make a quick stop at the bank and open up a joint checking account and mark that task complete. Although this is easy in the beginning, there is a much better way to handle your finances as a newly married couple!

Married couples will often argue over the purchases of their spouse. What happens when your new wife comes home with expensive shoes that she bought from the joint checking account when she already has a closet overflowing with footwear? Perhaps that new golf driver in the clubhouse is in your sights but you know that spending $500 of the family savings on a golf club will surely start a fight. What do you do?

These types of issues can be the fodder for far too many arguments and they ought not be. The fact is, if your checking and savings accounts are set up correctly from the beginning, there will be nothing to argue about in the future. The secret is in setting up three bank accounts!

Once the engagement ring is on her finger, do not close down each of your own bank accounts! Instead, set up an entirely new account in both of your names. This account will be your joint checking and savings account and will be used for those expenses you both share. The mortgage, electric bill, cable television, vacations and those sorts of expenses that benefit both of you will be paid from this account. Furthermore, you should have a savings account with both of your names set up with a small amount of money to be used in emergencies. If you should suddenly need new tires on your car, this savings can come in awfully handy.

Next, you each will continue to maintain your own personal checking and savings accounts that only the account holder has access to. This is going to be your own money for you to spend as you like. But how can you set this up fairly? It is very rare that two couples earn exactly the same income and can contribute the same dollar-for-dollar each month. Again, this is solved very easily through percentage contributions.

The first step in your new lives together is to decide how much money you need as a couple to pay those bills that you both share in. Easily accomplish this by sitting down together and creating a personal budget. Once your budget is set up properly (use the Microsoft Excel budget on this site), add up all of the common expenses such as your mortgage and individual bills. Then, pad this number by about 15% for unexpected expenses. In other words, if it looks as though you will need $2,000 per month to pay your bills, simply add in another $300 or so to adjust for any fluctuations in expenses.

The next step is to decide how much money you would like to save each month. Are you planning a vacation for next year? Do you need to buy a new car soon? These types of expenses can easily be accounted for in your budget and each month you can both contribute to your joint savings account. In this example, let’s say that you need $700 for savings each month for a total of $3,000 per month for bills and savings.

Now, look at what you each make. If the wife makes $4,000 a month and the husband makes $3,000 a month, you make $7,000 a month as a couple. To decide on the contribution from each so that it is fair, simply come up with the exact same percentage that you will each contribute to your joint accounts. In this example, you will find that if the husband and wife each contribute 43% of their income to the joint account, there will be $3,000 per month contributed and the bills will be paid.

What do you do with the other 57% that you both are not contributing? Clearly, saving this money would be a great idea. Consider setting up a stock or bond account with a brokerage and begin planning your retirement. If you are a little more risk averse, take a look at money market accounts or Certificates of Deposit. What is very important though is that you don’t contribute all of your additional income to these accounts. You need to each have a little for yourselves too! Using our same hypotetical couple, if each contributed 40% of their monthly income to a stock account, they would be left with 17% of their income going to their own personal checking accounts!

So now the husband has $510 a month going to his own personal account and the wife has $680 flowing into her account. This is the money that can be spent any way the husband or wife individually chooses! That golf driver that the husband wants can be purchased through his personal account with his own $510 a month! The wife can go to the shoe store and go crazy with her $680! After all, it is her money!

It is as simple as that! Now personal purchases can come through the front door of your home without a bit of scrutiny from your spouse. Make a rule that no matter what your spouse brings in, you will not critique his or her purchase. This will keep both of you happy and your bills paid.

What happens if one person gets a raise? Again, this is quite simple. Simply go back to your budget that you created and adjust the income portion. If one person is making more per month than before, your individual contributions will decrease. With this system, one spouse earning a raise at work will actually benefit you both! After a raise, you will each contribute a smaller percentage to your joint account and can either have more money for your own personal spending accounts or more money to invest in the stock market or savings accounts.

This conversation comes up frequently when I speak to married couples or newly engaged people. Many of these couples take my advice and rave about the results. Once this system is put into place, those common arguments are a thing of the past. I’d love to hear from my readers on this topic so we can all learn from each other. Are you already using this system? Do you handle your finances differently but with effective results? Please leave a comment below and tell me how things work for you and your spouse.