The Consumer's Almanac
Consumer Credit Education Foundation
Washington, DC

Money is the Number One problem couples fight about. It's often the spark that ignites bickering about ambitions, fears for the future and the inevitable power struggle. Communication is vital. Talking about how you plan to earn, spend and save money is easier when you agree on the priorities. Regardless of income levels, couples benefit from forming and adhering to a spending plan that includes discussion about making major purchases.

Financial advisors encourage wage earners in two-income households to design a plan that maximizes the benefits of the second income. For lower wage earners, the costs of child care, income taxes, and work-related expenses may outweigh the income benefits of a second job. Even for high wage earners, without proper planning the maximum benefit will not be realized, and in some instances, the additional salary can be a tax liability.

Planning tips for dual-income households:

• Jointly decide if the paychecks will be combined into one checking account, or maintained in separate individual checking accounts. A designated amount from each paycheck could be deposited into a separate household account.

• Decide who will pay the bills and maintain the account.

• Each partner must have a personal allowance. Agree on the amount and make the money available routinely.

• Agree upon a savings and investment plan.

• Make the decision together on how you will finance new purchases such as a car or appliance. Regardless of who the user will be, avoid debt levels that will demand the full earning potential of both wage earners.

• If you file income taxes jointly, you are each responsible for any inaccuracies or errors on your returns. Before signing the tax return, examine the forms and ask questions.

• If you jointly hold a credit card account, you are both responsible for any debts incurred on the account.