On Combining Finances
A few months ago I discussed the idea of combining finances when a couple gets married and this guest post by Pinyo of Moolanomy is very appropriate since my wife and I are currently on our honeymoon!
One of the last things that most couples think about before getting married is money. Unfortunately, one of the most common reasons why couples go through a divorce is also money. I have to admit that when I got married, money wasn’t the first thing on my mind — it was love. Although we each have our own financial quirks, I have to say that we are lucky to be about 99% financially compatible.
Combined Finances Is Best
For the most part our money is combined; except for our IRAs and my 401k, all of our accounts are joint. However, I don’t meddle much in our Citibank account, which was originally hers, and she still considers it hers (that’s where she deposits her paychecks). And for the most part she doesn’t meddle in our brokerage account, which was originally mine (that’s where I deposit my paychecks).
We operate semi-independently — i.e., we each pay our own bills, more or less. But the nice thing is that I can always ask her for money if I am short, or vise versa. In general, I tend to be the one who’s short on cash because I pay most of our household expenses — i.e., mortgage, property taxes, utilities, etc. (that how it was before we got married). Basically, we each have our own little financial domain, but in truth we give to each other without hesitation and without keeping track. Well it probably doesn’t matter for her, since she told me more than once that what’s hers is hers, and what’s mine is hers.
Separate Finances Is Best
As much as I want to say that the way my wife and I handle our finances is the best, I couldn’t. My parents have been married for over 30 years and they kept their finances separate. They each have their own accounts and don’t meddle in each other financial affairs. Actually, my mom doesn’t let my dad mess with her money, because she thinks he’s irresponsible. For me, his only quirk is his kindness and generosity.
So, there’s evidence to suggest that this method works too.
Which Is The Right Answer?
The answer is, I don’t know. But here are a few things that seem to help — whether you combine or separate your finances:
- Share financial information openly.
- Create and work toward common financial goals.
- Agree on basic ground rules — i.e., what each spouse can spend without consulting with each other.
- Be supportive (both financially and emotionally) when your spouse is in need.
- Don’t keep a tally, especially for little things. In fact, don’t fret the small stuff.
In the end, I don’t think there’s a single right answer, and each couple has to make it works for them. Although I do believe that the worst thing any couple can do is not talking to each other about money.
This is a guest post from Pinyo. He can be found at Moolanomy where he writes about investing, wealth building, and other personal finance topics. If you enjoyed this post, please subscribe to his RSS feed!
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Tags: Coupled Finances, Pinyo Moolanomy, Wedding
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11 Comments - Share Your Thoughts
Actually, the reason for divorce is a lack of communication about money, not money itself.
The key to a happy marriage is - and perhaps, always was - honesty and communication in all facets of the marriage, financial issues, et al. Now on separate finances? Again, as lon gas you both are honest with each other. If one digs a hole, will the other divorce? Possibly - because of the lack of communication about their finances! To try and play it as a financial issue is moot when it’s obvious the problem there-in lies in the lack of communication, with the thinly laid veil of “financial misunderstandings” when, if they discussed their separate financial issues, it would’ve been brought to light before it was an issue.
Of course, this opens the door to “gambling addiction” and “true love” and many other topics, but this rant’s getting a little long as-is
The way I do it is we combined our paychecks into one account and have seperate accounts where we pay ourselves an “allowence” each week. Because we are both pretty frugal this works for us. Our money is for doing what went with. Its the money we do not have to account for, and I think that is important in a marriage.
My wife and I have been married for 13 years, never once have we fought about money. We talked about money before we got married (actually when we started to live together). When we got married, we split the bills based on how much we each made and adjusted it accordingly as things changed (except for cars, we could buy whatever priced car but that was included in our bills, my taste for cars was a bit more expensive than hers so that’s not fair to her).
she can (and does) by shoes, shoes and more shoes (i don’t care as long as her bills are covered) … i buy toys (electronic) and she doesn’t care….
People think it is very weird. We don’t care. We don’t fight about money and have no debt because we don’t like debt and both share the same basic philosophy.
It works well if done properly and fairly and you COMMUNICATE!
I’ve always been torn on this as well. The biggest problem I had with combining finances was not having my “own” money, in terms of buying gifts, or not feeling bad when I bought a video game.
I like the idea of one main account and then paying a monthly allowance from that account, but my worry is keeping track of how I pay for things. For instance say I go to Target and buy a video game and $50 worth of household items or groceries. Then when I paid my credit card out of the main account, I’d have to transfer over money for that video game from my allowance account. And that seems like that could take a lot of effort to keep track of every month.
For now, I pay all our expenses. I then add up me and my wife’s income, subtract our total expenses, and then have my wife transfer a certain amount so in the end, we both have an equal amount of “spending” money at the end of the month. I put it all into Excel so it works quite well.
First, thank you Jim! I am glad to be able to write guest post for you.
Yes, communication is very important. My wife and I talk about all kind of things (money included). I like the idea of allowance and splitting up spending money too. A lot of good ideas here.
@MP - I had to laugh when I read your comment. Sometimes I feel the same way…how many shoes, outfits, and purses does one woman need?
A guess the answer is on a “case by case” basis for each couple, but something just rings “odd” to me when married folks are responsible for a bill and the other is responsible for that bill and neither “meddle” in each other’s finances. If you are dating, it makes sense, but if you are married?
There is just something I can’t quite figure out, why a married couple wouldn’t have a joint account to pay joint bills. You both live in the house, you both are a “team”, why not do so jointly? Not saying you can’t have an additional checking account with a few bucks in it to save for something or to buy coffees with, but I don’t like that everything would be kept separate?
I mean are car notes done separately as well? Is a spouse gets a credit card offer with a $25K credit line, is that discussed? Are purchases discussed if accounts are separate?
If you do discuss everything, why not just make everything joint?
My wife and I have a dozen accounts together. Everything is out in the open, nothing is hidden, we work as a team. If we are having a rough month, we both know where money is at.
I guess different strokes for different folks, but I wouldn’t suggest getting married and keeping everything separate.
I’ve been married for almost 25 years. We have always fished out of the same pond. One checking account for bills and we both know where and how to access all other accounts (savings, retirement, etc).
If there is a big “want” purchase we talk about it. If there is a big “need” purchase we may or may not. (If I find the water heater has sprung a leak I have to buy a new one so talking about it is pointless). It would be odd for us to do this any other way now.
We have differences about money. I’m a bigger saver than she is but she has been more consistent with her money habits through the years than I have. I tend to go on binges where I think being a consumer is a mortal sin. She smacks me around to reality after she has put up with it for a while. The bottom line is this for us. We are best friends and we trust each other so the disagreements are very small and very few.
My husband of 27 years and I have always had separate accounts. He and I both can go crazy shopping at any given time and max out a credit card. I’ve had to say to him, “Do you know that you’ve already spent $1000,” and with amazement he’s said ” Have I, oh my God lets get out of her.” Visa Versa. It really gets bad when we do this at the same time and there’s no one to give us gravity. He pays his bill after he get a “Don”, disconnect notice. I like to pay my bill before there due. I save for things like home ownes association fees on the time share, car repair, and insurance over a period of 12 month so that when they’re due I can pay them without stress. He stress at the last minute. I like knowing how much money I have and how much I can spend and everything is fine, just as long as I don’t need his money or he needs mine…I highly recommed separate accounts
My husband and I have been together for 5 years. I know this is not as long as some of you but we have a system that really works for us. We also are totally open about our finances and have seperate savings, but our checking account is in my name only. This is because I pay all the bills, do the grocery shopping etc. Although I tell him what bills are due and their amounts, he couldn’t tell you the name of the electric company! He was very irresponsible with his money before we got together and I am helping to keep him on the straight and narrow. Not to say he doesn’t get what he wants, we each do, he just never has to think about what is due when. I prefer it this way, because I never have to worry about if something got paid.
Great post! As a financial advisor to young America, I get this question all the time. I am often the first advisor young people see when they are going to move in together. And not just couples. I’m talking roommates too.
I actually just posted a new article about this on moneysmartblog.com. It address the moving in issue, whether it’s romantic or just a friendship. You should check it out. I would live to hear your thoughts.
Perspective is a funny thing. I don’t really consider the author, or most of the commenters above as having “combined finances”, even though they clearly claim to. If you have any accounts that are “in my name”, then you’re not combining your finances. If you’re holding anything back from the communal financial pool, then you’re not combining your finances. If, in your mind, you have any separation between “theirs” and “mine”, then you’re not combining your finances. My wife and I contribute both our paychecks to a single checking account. There’s no division of “her bills” and “my bills”. There’s only “our bills”. We both sit down and make out our monthly budget every month. We both have an equal vote on what goes where, and how much. We each have a budgeted “Blow” number each month that we each get to spend independently, but it has no relation to what each of us earns. The idea of “borrowing” money from my wife is anathema. We own everything communally. There’s no need to borrow when everything is given freely completely.
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