comments
Your Take: Joint or Separate Coupled Finances?
 Print
|
Next Monday, JD and I will be discussing the topic of coupled finances on the Personal Finance Hour. We briefly touched on the topic a few weeks ago when we learned that JD and his wife Kris keep their finances separate whereas my wife and I keep around combined. We know it’s a hot topic with both sides having very strong opinions but when we learned that we each approached it different, we thought it would make for a fantastic topic.
Here’s where I need your help. Do you have any questions you want answered by either one of us? If you want to know something about how JD handles their separate finances or how I handle combined finances, please ask it in the comments below or call in when the show is live.
I’d also like to hear how you handle coupled finances or would handle coupled finances (for the non-couples out there). Nothing is off limits and please feel free to debate one another, the goal here is to learn (but please be civil!).
Thanks in advance!
{ 85 comments, please add your thoughts now! }
Related Posts
 By Jim |
 Stumble It! Bookmark reddit.comTags: Coupled Finances Apr 10, 2009 | Read more in Your Take |
Like this article? Get all the latest articles sent to your email for free every day. Enter your email address and click "Subscribe." Your email will only be used for this daily subscription and you can unsubscribe anytime.
I always thought that not having joint accounts was a sign of mistrust in one another. My parents have joint accounts and it’s all I’ve known.
But recently I’ve had my eyes opened up to other possibilities. Having sep accounts also requires trust. My fiance and I will probably end up with joint accounts because it’s simply easier to track expenses, but I no longer believe that is the only way to do it.
That’s a common argument against joint finances, the trust issue, but I don’t think it’s fair to say that in all cases (though you do say it’s merely a “sign”).
I think a lot of the only-having-join-accounts mentality spurs from the newlyweds going from their parents’ houses to their own with very little in between. It’s the same as traditional wedding gifts being household items.
As more and more people have their own extended lives between leaving their parents and getting married this kind of thing will become less and less common.
We started out with our finances separate.
After a few months, we switched over to combined.
Our shared expenses were pretty unbalanced. Since she worked later, I was usually the one getting the groceries or other misc. expenses.
It took about two or three months to switch over to combined, and we have not regretted it.
What was the impetus for the change? Would you be interested in sharing your experiences on the show? (live, or you can just leave them here and we’ll just talk about it).
My husband and I have had combined finances from the beginning and we love it! We figured that if we were going to be sharing every other aspect of our lives together we ought to also be sharing our finances. It does not matter who makes more or who spends more. We discuss all of our spending together anyway. I personally do not understand why a couple would want separate accounts. It seems to me like that would turn into some sort of competition–”I have more money than you!”, “You make me pay for more things”, etc. The only time where I think separate accounts might be helpful is when one person spends much more than the other on “extra” things. In this case, I think it would be smart to have most of your money go into a joint account, but also have two separate accounts for spending money. Actually, I think it would be better just to have a joint account and then give each person a certain amount of cash each week that he or she can spend however he or she wants. However, if your income is large and you would prefer spending money accounts instead of cash, then that would work too.
Well said Olivia. My husband and I do the same. I couldn’t have said it better.
We’re getting married in 5 months and have already set up a joint account to pay for our wedding expenses. This account will eventually be our main bill paying account. We plan on keeping our individual accounts and depositing “allowances” (say, $100 a week or whatever we eventually agree on) for each of us into them each paycheck. That way, we have the joint account to pay the majority of our bills but still feel like we have some financial freedom to buy things without feeling like we have to ask permission first.
I think this will work particularly well since I tend to be a saver and my hubby-to-be is a spender. It’s like agreeing to an acceptable level of extra spending each month and anything more than that needs to be discussed.
That’s another problem. So even though you both work and pay bills you still have to ask permission to spend $100 on the MLB Extra Innings cable package?
saladdin
Also “allowances” are for children. Not grown up working adults.
saladdin
Uhh… you took my wording of “ask permission” too literally? Grown up adults in a marriage discuss their finances and what they spend their money on.
Would it make you feel better if I were to replace the word “allowance” with “budget”? Responsible adults make budgets which are essentially allowances you set for yourself in different spending categories.
And since you asked, I would have no interest in the baseball package so that could theoretically come out of his “extra spending budget” account without us ever having to discuss it.
I know a couple that does the allowance thing – the wife gives him an allowance, as she is the one handling the finances. Neither is complaining about being a child, but they’ve been married for over 20 years and plan to stay that way.
Saladdin,
Your response is narrow-minded and, frankly, pretty rude. Jessica’s just describing a system that works for her and her husband. Lots of couples share their money to meet the obligations, and then have an “allowance” of some kind or another that they can spend without having to clear it with the spouse.
I would argue that making major purchases from a joint account w/o “asking permission” is begging for trouble.
My wife and I have a similar system. She does a majority of the grocery/household/clothing purchasing, but abhors bookkeeping. I pay most of the bills. For us, it works well for me to give her an “allowance” (i.e. “budget”) for the expenses she’s responsible for. It’s what she prefers, and it promotes harmony in our marriage. No one is treated, feels, or acts) like a child.
So anyone who has a different take on things is rude. Now who is narrowminded? Try the mirror.
saladdin
I give myself an “allowance” for frivolous purchases. How does that make me a child? Yes, you could word it as me budgeting it, but an allowance is a much more fitting term in my mind.
Neither my husband nor I would spend a significant amount of money without asking the other. “Significant” means $50 or more on a discretionary item. An ongoing service like cable TV is a big deal, because it’s the recurring expenses that destroy financial wellness.
We couple our finances, but it may be more due to my anal retentive nature – wanting to bleed a little more from the turnip. Also, since I make the vast majority of our income and side income, I would be handling the majority of the bills anyway.
Also, I am coming from the standpoint that we are married. I would never even think about coupling our finances if we were not.
Perhaps it’s because we have not done it differently, but I feel like it is easier for us to communicate about mutual goals and aspirations this way. I also feel like I am able to have some teaching moments, since I think I’m a bit more astute with our finances (I’ll say a few Hail Marys now for humility – mea culpa).
With that in mind, here are a couple of questions that come to mind for separate and coupled finances:
How do you set long term financial goals?
How do you deal with a partner who is not as astute financially as you are?
How do you decide who pays what bills, especially when there is a disparity in salaries?
Separate finances may be okay when it’s just the two of you, but what happens when kids come along?
In what situations is coupling preferable? Separate?
Would it ever be advisable to couple finances when you are not married?
I’m sure there’s more, but at least it’s a start.
Thank you for the questions and your perspective, those are definitely some questions we’ll discuss during the show!
My wife and I have a joint account that both of our paychecks are direct deposited into. We then transfer a set amount per month into our separate accounts (we both get the same amount). We can spend that money however we choose or let it accumulate. We use it for gifts for each other and separate expenses. The joint account pays all the bills. It works for us. – Todd
My wife and I are combined, since I pay all the bills and manage all of the household finances.
I have a very good friend who has split finances with his wife. He has a significantly higher salary and pays most of the bills in the house, and has roughly $25k in personal and CC debt. His wife pays all of her own bills (car payment, cell phone) but almost none of the household bills. She spends the balance of her paycheck on whatever she wants to because its “her money”. She mostly spends it on going out to eat, new clothes and girly type things.
I personally find this to be completely baffling, but who am I to judge.
That’s the recipe for a financial implosion if either income stream is lost or reduced.
I’d be willing to bet that this “arrangement” exceeds finances also.
saladdin
I would be interested to see if there are any statistics on separate finances vs divorce rates.
Also, do those people who have separate finances also have pre-nups?
That would be a fascinating statistic but I doubt it exists.
Yeah
Another question then, I wonder how much of this behavior is learned? As in, for the people advocating joint or separate accounts, how did your parents do it?
For me, my parents always had joint accounts so that’s why it seems natural to me.
I’ve always been taught that all money is “family money.”
In fact, most of my accounts now actually have one of my parent’s names on it. They don’t actually use it, but I feel safer knowing that if something did happen to me at the very least they could access it.
I think all of it is learned, I also grew up with the idea of “family money” and I think it’s all based on upbringing.
Are you married? If so, your other doesn’t mind mommy or daddy on the account?
saladdin
Infidelity vs divorce rates would probably be just as insightful.
Also, pre-nups do not cause divorces. What if you had a famil farm that had been in your family for 100 years and had been left instructions it never be sold and only passed to children? Pre-nups do not cause someone to jump in bed with a 20 year old while on business in Chicago.
saladdin
Funny thing about pre-nups… from talking with lawyers about whether my fiancée and I should have some drafted, a lot of people want one that basically says what the law does about marriage properties without realizing it’s a pointless document.
We have shared accounts. It’s worked out very well, for the most part. I’m mostly in charge, since he doesn’t want to think about money. We talk about it when he wants something expensive. At any rate, we both usually get what we want; he buys one or two big things each year, and I buy lots of little things (mostly books or a day at the spa) throughout the year. It seems to even out. We figured that “his” and “hers” in our relationship led to finger-pointing and recriminations. For us, “ours” works better.
How is you being “mostly in charge” translate to a 50/50 marital relationship?
saladdin
We have a shared account for household expenses and personal accounts for fun stuff. We put a set percentage of our earnings in each account. This way our hobbies/dinners with seperate friends/etc don’t compete with each other and we have sufficient funds to cover household expenses.
Great topic. I’m planning to marry my boyfriend as soon as his divorce is final. It has dragged on for 2 years, and the lawyers have taken all of his and his ex’s savings for the most part. They also have a 9 y/o son together. (Note his ex works and makes a good salary). We are both in our 40’s, however I have never been married before. I have saved a fair nest egg (in excess of $1m liquid) through hard work and sacrifice, putting myself through grad school instead of buying clothes, vacations, etc.
I’m concerned about my funds being commingled with his and his ex somehow being able to profit from my years of hard work and savings (she was the spender in their marriage – and still is on clothes, makeup, etc).
I would prefer to keep a “household” account and beyond that my accounts stay separate. I’d be interested in hearing comments from anyone on how they have handled finances in second marriages if this has been a factor.
Ann,
I think your situation is common beginning for those who like to have seperate finances. It makes sense when you enter a relationship with a lot of assets (liquid or otherwise) that you may want to keep your savings, etc. seperate.
I have a family friend that she and her husband split the household finances equally (no matter their pay differential) and all other money they keep seperately. I believe this works well for people who bring a lot into their relationship, e.g. older couples who have established careers. They also split all “couple” gifts/vacations and other joint responsibilities.
I also believe that in your situation that it would be fair to sign a prenup. You can designate in a prenup that way if something happens to your husband that all the finances that you brought to the relationship cannot be used as aid for his ex. Does anyone know if it can be handled through a prenup or is that better taken care of through a will?
Ann,
By far you are the smartest commenter on this topic. See a lawyer, please.
saladdin
So glad you commented Ann – I was beginning to think we were the only ones with 2nd marriage / older couple in the mix. When I married, it was my first, his 2nd marriage. Two kids by previous marriage, he was responsible for full support, since X refused to work. In the divorce, she got all the assets, he got all the debts, with the exception of his pension. I owned my own company and had for years, so I had my own assets. With complicated financials, we had good reasons for wanting to keep our finances legally separate. We chose a his/hers/ours system that by pre-nup agreement kept certain assets out of the marital pot. It worked fine for us.
We split the financial responsibilities. I’m responsible for keeping the household budget and making sure we’re within it, since I’m usually the one buying stuff. He does the monthly checkbook balancing. I track the overall portfolio performance and manage that, while he does most of the stock research. We both agree on budgets and portfolio allocation.
Twenty years later, both our kids are in college (paid for by us, since X still won’t pay for anything), and I’ve retired from the business. We’re in a different place now, and when we move in a few months, we’re going to be consolidating accounts to make things a bit simpler. I’ll still keep a separate small account and one credit card, since those pre-date my marriage and I’ve had older female relatives learn the hard way that women’s credit disappears in marriage if you don’t keep something separate active. I use the personal account for internet purchases (so if anyone gets the account info they don’t have access to very much money) and little things.
Separate finances worked for us for a long time. I think combining finances will work for us as well. The key doesn’t seem to be how many or how few accounts you have, it’s whether you can agree to live within your means.
One shared account since getting married and it is wonderful. Built in accountability, required communication, brings us closer as a family, especially with children.
I would love to here what people think that negatives of fully combining finances once you are married. The only one I can think of is divorce and I wouldn’t plan my life around something like that.
One joint account where all cost goes into from paychecks, rebates, refunds, gifts, etc. This is for bills, house spending, joint spending items.
Each of us have a “Private” account that the other is on in terms of death benefits but not to access and see spending. This is for bad spending habits.
Savings Accounts. We have two savings accounts. One that is attached to all other accounts for overdraft and only keeps a few thousand. One that is an online savings with higher interest.
All accounts have auto-debiting each month for savings, personal accounts.
I am recently married, and we have been using joint accounts for about 3 years.
A good point of discussion on Monday would be the need for a seperate “fun” fund, or what we call the Adult Allowance, for each of us to blow through.
Ironically, we have separate accounts set up for this very purpose. Rather than “taking out” and separating personal funds, I guess it’s not a far cry to approach it from the opposite direction and “put in” to a common fund, with the rest as play money.
In the end, we end up in the same place…
You are the only one I’ve ever heard of to share this view with me! The only difference is the direction the money flows. Otherwise, it works out the same.
As you see from my above post my wife and I do have our Adult Allowance accounts. We call it our “Private” accounts. I payed for my pool table and netflix and such from this account. I will also use this account whenever I put an item on credit. If I cannot pay off my credit at the end of the month with my “Private” account, then I don’t use the card.
It is, I think, a healthy way to have “your” money and buy presents without having the other person see where you are shopping. It also helps us budget our personal fun expenses.
We have a compromise arrangement. Each pay period a certain amount from each of our paychecks gets deposited into a joint checking account from which we pay the mortgage, utilities, etc. From joint checking we transfer a certain amount each pay period to cover the annual or semi-annual bills (homeowner’s insurance, property taxes, and car insurance). Whatever is left over in each of our paychecks is ours to spend or save as we like. As for groceries and incidentals, we pretty much just pay for those out of pocket as we go, and it seems to work out pretty even, or at least no one complains about it.
My husband and I have both a joint account and separate ones. It seems to be the best of both worlds for us because we are able to work on shared goals and yet still feel free to do with the rest of our money as we please. We were both married previously and had joint finances in those relationships, and it was nothing but trouble.
My husband and I lived together for over 5 years before marrying, and when it was clear to me that our relationship was permanent (before the marriage), I added him to my bank accounts. In fact, it makes me nervous not to have both of us on an account. That is what happens initially when I open an account, because I am the one opening the account while he is at work. It only makes sense for both of us to be on an account, if something happens to the other, but I manage the money. We both have full access, but my husband prefers not to use his access without my knowledge. He doesn’t like to “do” finances. This is actually a big part of why we have a comfortable and satisfying relationship – we each do what we are suited to, and what one of us lacks in abilities, the other makes up for.
“we each do what we are suited to, and what one of us lacks in abilities, the other makes up for.”
I love this comment. One of my Marriage and Family teachers in college referred to this as a “synergistic marriage”. You are each able to handle tasks individually but you specialize in tasks that you are excel at. Regardless of the task (finances, home care, automotive repair) it’s more efficient and yields higher relationship dividends. Good for you!
My husband and I lived together for 10 years before we were married and we’ve been married for over 10 years now. Before we were married, everything was separate and after we married everything was joint. It was important to me that we make that commitment, but that’s just my emotional issues talking, I don’t think that couples who keep their finances separate are necessarily any less committed.
Since we have a lot of experience doing it both ways, I feel comfortable saying that both methods are very workable, just use what feels right for you. One thing we found helpful when keeping our main finances separate was to have one joint checking account and credit card. We each would deposit the same amount into the joint account and then joint expenses would be paid from that account. It made it a lot easier to handle little both things like groceries and dinners out together and big things like joint vacations.
For couples (married or not), should joint expenses (e.g. rent, cable, etc.) be split 50/50 or based on percentage of income? What are the pros and cons of each methodology?
See my situtation comment below. When the husband and I were making the same amounts, it was no big deal. 50% meant equal 50%. When he did get a raise and his salary went up by 5k, we had to then talk about it and decided no matter who make how much money, it would be 50% unless the difference was really stark like say more than 30-40k which I do not see happening in our lifetime
!
I’ll give a non-answer to your question and say that it should be whatever the couple can agree and be happy with.
That said, we split everything 50/50. I like it, because I have a bit of a hang up for always being responsible for myself and pulling my own weight.
For the first 18 months we were married, we had separate accounts and a joint savings account. DH was a student and was resposible for his education expenses. I was working full time and handled the bill paying.
When he graduated and we relocated for his work we *had* to get a new bank so we combined at that point. [Up to that point we had student credit union accounts from our respective home states]
We have also tried to have a global view on our retirement savings to insure that we have the asset allocation that makes sense to us.
Our goal has been to always live on one income to enable SAHPing, protect ourselves from layoff, opportunities for career change, etc. For us this means having “our” income now, so in the future there’s no “mine” and “yours”.
My wife and I have our accounts combined. We haven’t had any trouble at all.
What I’m kind of confused by is this: If a couple were to keep them separate, but one spouse/partner ended up in financial trouble (whether through his/her own doing or not), wouldn’t the other spouse end up bailing them out anyway?
In our case, we still talk and know and have access to each others seperate accounts so we try to keep each other out of “trouble”..so I would hope that even if couples have seperate accounts,they still talk about the “personal” spending habits and not hide it from one another. That could be a disaster waiting to happen if one of them is not responsible enough!
Yeah, that’s a good point.
Because if the other spouse didn’t, I really can’t see the marriage continuing…
If it’s a healthy relationship with two responsible adults, yes they would. In my own case, that offer of assistance is implicit and understood. Separate finances is simply another way of managing the books. It doesn’t mean that the couple is any less of a team.
Our approach is a bit different. I have only read about the first 10 comments on here! My husband and I started out making the same amount of money but now he makes about 5k more. So with that in mind, what we do is as a family we have a goal of ONLY spending 50% of our income on regular normal day-day things such as mortgage, all bills, food, car payments etc. So what we do is, we have a direct deposit set up so that 50% of each of our paychecks go into the “common account” that we use to pay ALL bills. The other 50% goes into our seperate accounts that we use to either say, eat lunch, buying coffee etc. We obviously don’t spend ALL of it, and my husband has used it in the past to help his parents pay for his dad’s surgery etc. I have used my money to give to my parents etc for something. We don’t generally fight on who gave what because we both equally feel responsible for our parents (We are not American so its probably our culture that makes us think this is normal). If we have a “lump sum” transaction that is taking place such as paying off the principal on the mortgage or the car etc, we equally transfer money into the common account and pay the account from there. So both our “individual” accounts also act as savings and emergenecy funds etc if something drastic were to change in our financial situation.
This has worked out well for us because both of us are working and make almost equal amounts. We obviously have to re-do things if one of us were to stop working!
Forgot to add that – we constantly monitor the common account to see if we have surplus, if we do end up having surplus, we pay off one of the loans!
My wife and I have a modest joint account from which we pay recurring bills like mortgage, electricity, groceries, insurance, etc. But our monthly contributions to that account (mine slightly larger than hers) are pretty finely tuned and our finances are (in general) otherwise separate. She works outside of the home (as I do) and (in general) spends her money as she pleases. When we’re doing something like travelling or home renovations we negotiate additional contributions to the joint fund to cover those expenses.
It works. People who have been programmed to believe in (cue swelling syrupy-sweet orchestral love theme here) fairy-tale notions like “soul-mate” or similar nonsense are obliged to engage in some extremely energetic self-delusion to keep from noticing that marriages fail at better than a fifty percent rate, and most of those on the North American continent were based on such delusions. We’ve been married 24 years. Our approach to finances is not perfect – we still fight about The Big Three (money, sex and kids, not necessarily in that order) just like any other couple – but she likes being able to make (many of) her own spending decisions and this makes it possible.
Pre-nups don’t cause divorce/infidelity any more than buying auto insurance is a declaration that you intend to be involved in a collision. People who regard a pre-nup as bad are inevitably some combination of maudlin, insecure, hyper-emotional or too young (the latter tending to encompass all of the former!) and should probably just wait until they gain some perspective…
Can you show me which study or statistic that shows those who have pre-nups have the same divorce rate as those without?
I can’t seem to find anything so I’m hesitant to make general assumptions about this issue.
I wouldn’t assume anything about the statistics, but think there’s a certain mentality or circumstance that goes with prenuptual agreements. For us, we did not marry based on how far financially we thought we could go together (marriage for business reasons) and our marriage was a business transaction only as far as getting government approval of our relationship through the license. We want the benefits of the legal agreement/license. However, we weren’t wealthy, so there wasn’t a pre-existing pile of money somewhere that defined our relationship in such a way that we’d think of getting a prenup. The talk here about 50/50 assignment of duties or positions is foreign to me. For us, we are married, and it means we are one. We are really interdependent, and not only do I think that may not be so common (to the extent that we are), but I think it wouldn’t be comfortable for some people.
If I personally were in a relationship where I thought a prenup would be wise, I would simply not get married at all. Marriage equals trust. If trust is lacking in the area of finance (which I can imagine could have happened with me, had I been with someone else), why get married at all?
“There’s a certain mentality or circumstance that goes with prenuptual agreements.”
I would characterize this mentality as a willingness to honestly discuss even unpleasant matters with your partner.
“we weren’t wealthy, so there wasn’t a pre-existing pile of money somewhere that defined our relationship in such a way that we’d think of getting a prenup”
This is a very common misconception about prenups: that they’re for wealthy people. Most people are not wealthy when they marry. Prenups are about planning. They can address custody. They can address alimony.
“If I personally were in a relationship where I thought a prenup would be wise, I would simply not get married at all. Marriage equals trust.”
If you trust eachother, than your love can withstand a discussion of even improbable “what ifs.” Many people think of prenuptual agreements as being strictly a division of assets (”this is mine, this is yours”). Prenups can be just as much about sharing assets (”this is ours”) and planning together.
Although nearly half of marriages end in divorce, very few people getting married are willing to believe it could happen to them and hence, large costs are incurred down the road that could have been easily avoided. (By the way, the same “ickyness” keeps people from making a will–which they should! Even if (no, especially if) they’re not rich!)
I think our certain eventual demises are unpleasant facts, but we discuss and plan based on it. We have a will; that is not icky – I think it’s very important.
My psychological makeup cannot withstand the idea of a prenuptual agreement with someone I would marry. I do believe such agreements have their place, but not with me. While my husband and I have talked about many “what ifs” in relation to our wills and heirs and revisions, the idea of a prenup never crossed our minds and was never discussed.
I think a relationship where there is a great difference in resources brings a prenup to mind. Custody and alimony are divorce issues. The potential for problems in these areas should be thought of long before the idea of a prenup. To plan divorce issues such as custody and alimony before getting married would absolutely have an undesirable psychological effect on both parties, in my view. However, I can’t argue with people who have had these agreements along with successful, long term relationships. People should do what is right for them, but not assume that their way is the right way for everyone.
My husband and I both had a couple of marriages behind us before we got together. Having experienced the “separate finances” before, we both agreed that did not promote the partnership we wanted in this marriage. We had both been single for awhile and did have adjustments to make as a couple.
Utilizing combined finances led us to make a couple of decisions to guide us – the first, and major one was neither of us would spend $100 or more without consulting with the other first. The second was since I was better at the book-keeping, I would manage the checkbooks. Yes, we have two joint accounts in two different banks. This has helped us establish joint credit histories and given us more financal options for our long term goals.
We have been married now for over 15 years, and I am proud to say we have developed a true partnership in every sense of the word. We often say our bad relationships just helped us appreciate each other more.
For the household expenses, BF and I are on the same page. But individually our spending habits are different. So, BF and I have separate accounts, plus one combined for household expenses into which we each put a set amount. This works best for us, otherwise I would go nuts with his $5-$10 daily lunch habit, and he would be aggraveted by my hoarding money. This way we don’t have to be accountable to each other for our little idiosyncrasies, but the house expenses are taken care of.
My wife and I sort our accounts into three pots: hers, his, and ours. Ours is money we each put in for household bills and shared expenses. The other accounts are our own, and we manage them independently. We’ve been handling it this way for many years.
We are both independent people, and having control of our own money allows each of us a great deal of freedom to do as we please.
Of course, this kind of arrangement only works if two people talk about money and make the necessary plans, such as setting up our own emergency funds for unexpected events (like layoffs – a very real risk), and adding to the ours pot for upcoming expenses.
Ultimately, I think that hers/his/ours works for us because we trust each other to be careful with money.
For example, my wife earns more than I do and can therefore buy more (and she does; I’m pretty frugal), but I also know that she is a conscious consumer. I’d guess that many couples have a tough time with money because they have very different views on handling it.
For us, keeping most of our money separate seems to prevent the stress that managing money jointly could introduce.
As an attorney, I’m thrilled you’ll be tackling this issue. I’ve heard the view expressed many times (including some in the comments here) that separate finances are in some way un-romantic (as are, presumably, pre- and post-nuptual agreements).
In my view, having a prenuptual agreement doesn’t mean you’re planning on getting divorced, any more than carrying auto-insurance means you’re planning on wrecking your car. There are many benefits to separate finances, as well as many benefits to clear marital agreements for property. Separate accounts can be useful for budgeting purposes, for tax purposes, and a host of other reasons.
Anyway, kudos for the topic!
> … having a prenuptual agreement doesn’t mean
> you’re planning on getting divorced, any more
> than carrying auto-insurance means you’re
> planning on wrecking your car.
I don’t think this is a good comparison though.
Most car accidents happen by, well, accident. They are unintentional.
But no one unintentionally divorces.
I think it’s a perfect comparison.
saladdin
I don’t think the distinction you’re drawing works–comparatively few people marry with the intent to later divorce (excluding citizenship fraud, “gold digging,” etc.). In the relevant sense, most divorces are unintentional.
Well divorces don’t happen for no reason.
There’s usually a change in the relationship where one person starts becoming more and more unhappy.
In most cases prior to divorce one or both people will be unhappy for years before a breaking point. And with appropriate care, attention, or marriage counseling, the relationship can be saved.
So divorce isn’t something that happens all of a sudden when everything is going fine. Unlike car accidents which can happen for no reason at all.
As for whether the other partner is aware of the unhappiness, that’s another matter.
Now I’m not saying pre-nups have no merit, because I do think they’re beneficial in certain cases. But, what’s really messing up the divorce rate is people who are getting married that shouldn’t since pre-marriage counseling has shown to reduce the divorce rate.
Although we are not married, my SO and I have been together for 7 years, known eachother for 12. Own a home together. We keep separate accounts. We are both good w/finances and have very similar outlooks on money. He takes care of all household/car bills, including groceries. I pay the real estate taxes. I give him a check for a set amount every month. We have literally never fought about money. Trust, respect, sharing and autonomy are the cornerstones of our relationship and he is the best thing ever!
My parents were married for 34 years before my father passed away recently. For their entire marriage they had separate bank accounts. Amazingly enough, somehow that didn’t seem to make them love and care for each other any less than people with joint accounts. I plan to keep my finances separate should I choose to cohabitate or marry someone. I also plan to use a domestic/cohabitation agreement or pre-nup. It’s as much to protect my partner as much as me. If for some reason our relationship doesn’t work, I’d prefer to have something in place so that we can walk away without being financially devastated. In my mind, that sounds ridiculously civilized and thoughtful.
We have combined accounts. However, I also have a separate account (which the wife has access to but never bothers to check) which I use to manage my work related travel expenses (~$200k over past 2-3 years).I pay all such bills and receive reimbursements thru that account – if the account balance trends downwards I know I am not getting reimbursed properly and need to crack heads in accounting.
While we both earn great salaries, we don’t get to spend money willy nilly. We don’t really discuss “need” purchases such as food, work clothes etc unless they are big ticket items. We do however discuss “want” purchases (me: electronics, her: handbags) if they are north of $50 or so. We can veto each other’s “want” purchases but give ourselves a $500 a year “veto override” budget where we are allowed to ignore the veto and buy the stuff anyway.
This works great for us. We have never had a money related fight (what netflix to rent, different story), and neither of us feels deprived.
We use the same approach. Setting up a separate account for work expenses was a huge help. Separating work from personal finances helped me track my work expenses while eliminating the big swings in balances that occur between the time incurring and getting reimbursed for work-related expenses. My wife also has access to the work account, but does not check the balance.
For personal expenses, the most important step for us is to agree on a joint household budget that allows us to meet our financial goals. Both of our paychecks go into a joint checking account. If one of us wants to purchase something that exceeds the budget category, we talk it over and make a joint decision. We’re both on our second marriages and have learned from the mistakes of the past.
Even though my husband and I hold everything jointly, I like the idea of multiple accounts. My income is direct deposited into one account, and his in another. Separating funds is something I started when I was unmarried in college, when I opened a second account for college expenses.
Every so often, I change which account to use for living expenses. We actually haven’t used “his” account for at least 1 1/2 years, as that account has served as savings and car maintenance – which has been a very small expense since we bought a new car. We now use “my” account for rent only, and another account for the rest of daily living expenses. Doing things this way seems to help us save money much more easily. When we acquire “too much” money in my or his account, which means $10,000 or so for a checking account, I transfer half to another savings/interest earning account. And there it sits. I think of it as a way to build a money machine.
Right now I am a college student living with my boyfriend (also a college student). I work part time and he gets the GI bill. We both have savings and are totally okay with living simply. He writes a check for a set amount and I take care of all joint expenses (rent, internet, groceries, gas, car insurance). We split things like movies and eating out but we switch off instead of actually splitting the check.
I really can’t imagine having truly joint finances because I really enjoy my autonomy. This really works for me. When the finances are taken care of you can focus on the more fun aspects of being in a relationship instead of bickering over who bought what.
My husband and I have always used a joint account for the bulk of our spending, but we initially tried to keep “personal” accounts with a small amount of money (under $200). The idea was that this would be our “own” money to do with what you wanted. However, we recently decided that the personal account were causing too much confusion (my husband actually used the wrong debit card to pay for $400 in tires and almost overdrew his personal account). We realized that the personal accounts weren’t really necessary, because we didn’t really use them. So we’ve decided to move the money into our joint account. It’s just easier to track all of our spending from one place.
I think there should be a joint account for house expenses, but I think each spouse should still keep their own accounts.
I think it’s important to keep one’s identity and it forces each person to keep an active role in their finances.
My husband and I have been married since 1995 and as our earnings and assets have increased our strategies have evolved. We have a hybrid approach, we both have an individual checking accounts. Also, we have 2 combined accounts: one of which is for recurring expenses the other is our remodelling fund. For the combined recurring expenses we deposit 1/12 of our average annual costs for medical/dental, car, vacation, clothes, presents and insurance premiums, then these items are paid out of this account as they come up. (It makes it easier for us to budget.) Bonuses and a monthly amount go into our remodelling account and when we have enough to do a project, then we move forward. Monthly groceries and some bills get put on a credit card that gets paid in full each month and the balance of the bills come out of my account.
I cannot share my main account with my husband, because he prefer to keep a check register in his head, rather than writing it down. (For our joint accounts we have duplicate checks to compensate for this tendency.)
I am an accountant and I keep careful records of my account and our joint accounts. My husband’s account is his business to balance or not.
We do each get an allowance every month, our 19 year old daughter finds this most amusing. Allowance for us means you can spend it absoltuely any way you like, no reconciling to a budget, no questions asked.
While this works well for us, each couple needs to find their own strategy.
My boyfriend & I have each been married to & divorced from spouses with significantly different financial styles.
We live together in ‘my’ house and share expenses, but keep our accounts separate. I have less income, but no debt. He is self-employed and has debt related to his divorce & business.
I pay certain expenses & he pays others, each from our own accounts. I don’t know that I could ever totally combine finances, or whether he could for that matter, even if we were to marry someday.
It is not a matter of trusting HIM, rather not trusting the law to protect me. Living in a community property state and having been stuck with my ex-husband’s debt, I will always be cautious about handling my own finances.
What we are doing works for us at this point, and when it doesn’t we can make a change, if needed.
My wife & I came from different situations. Her parents have separate accounts, whereas my parents have a joint account. We’ve been using a joint account and it works out well with a planned budget and monthly reviews. We looked at going to a separate system once or twice, but it just isn’t practical.
I seem to be in the minority here with separate finances. The first thing I want to point out is that it doesn’t mean we don’t work as a team. We both know the others situation, the amount of debt, savings, investments, etc. If he needed help, I’d be right there backing him up, and vice versa. We’re still in this together.
For us, it’s more a matter of ‘you track your spending and I’ll track mine’. That way neither of us has to figure out what that $7.56 charge from walmart was for. We each have our own budget with vastly different methods. Most of the time, we work on our budgets at the same time and discuss progress, goals, etc. while we work. Just like a joint couple, we work to mesh out joint and individual goals.
Another point is that separate doesn’t mean you don’t trust the other person. It means you trust them in a different way. Joint means you need trust the other to not spend or steal all the money, to stick to a budget together, and to work with you to get things done. Separate means you trust them to be open with you, to manage their money smartly, to be self sufficient, and also to work together to get things done.
I think most people assume that separate means you’re each on your own, but that’s not true. It can, but it shouldn’t. Separate finances can be a symptom of relationship problems, but it’s not the cause. In a solid, healthy relationship, you should be able to use either joint or separate finances without any problems.
I’m kinda late to this discussion, but my take is pretty simple: if you can’t (or just don’t) trust your spouse with your money, why on God’s green Earth would you trust him/her with your life? Money is fleeting – the other stuff lasts forever.
What’s the best way to handle finances and to budget expenses. Who should handle finances? It is more recommended to handle it separately if both have strong opinions about money?
My fiancée and I both have individual bank accounts, and we have joint. It seems like a pretty good mix so far, and probably won’t change much when we get married. There’s enough of an age and choice of profession difference that I’m done with school (for now) and she still has another 10 years ahead of her. We’ll mostly be living off my income for the foreseeable future, so I’m paying the bills and making the budgets.