I am always surprised by one thing when reading personal finance blogs. Here are all these people who have a lot of sensible things to say about finance, and a lot of them seem to be making the same mistakes when it comes to money and relationships: completely combining finances with their partner either upon moving in together or getting married.
Why? Why do people do this? Look at pretty much any survey taken since, I don’t know, Roman times? And the same thing comes up over and over again as the number one reason that couples fight: money. Issues surrounding money are always going to be fraught and loaded with deeper problems, so I always scratch my head when I see people blindly combining their finances for seemingly no reason at all other than ‘that’s what you do’.
But it doesn’t have to be ‘what you do’. I don’t. FruGuy and I have a joint account together that bills, rent, groceries etc gets paid out of, and joint savings accounts, and all our remaining money stays in our individual bank accounts. From there it gets spent on whatever we want – I don’t have to explain what I spend my money on each month and I don’t have to see the amount he spends on beer and… sports type stuff (whatever that is). As long as we are on the same page financially and have a plan to reach our goals together, why would we want to combine everything together? It makes no sense.
All that happens when you can see every penny your spouse is spending their cash on, is that you can easily judge and gripe about it when in a bad mood. Probably you feel like she doesn’t need another (almost identical) pair of shoes and he spent how much on that boys’ weekend? It sets you up for arguing and nit-picking unnecessarily.
Even if one person in the relationship makes far more money than the other, I think it is really important to have your own access to your own money that is yours and no one else’s. You can easily figure out a way to divide outgoings and decide who pays what according to how much each person earns. The only conceivable way I can think it might be necessary if between you you decide there will be one breadwinner while the other person stays home to raise children or write that novel, but even then I would say it would be preferable to agree on a set amount that would be transferred into the stay-at-home spouse’s account for spending on whatever they wish. You need to have that little buffer of freedom to not feel like you are looking over each other’s shoulders all the time.
The most important thing is to work toward your goals together, communicate openly about money and make sure each person is pulling their weight, but other than that, when it comes to money and the little things, isn’t it a little case of what you don’t know can’t hurt you?
What do you do with your finances? Separate or joint?
{photo: Smile Kerry}
Absolutely 100% separate, and wouldn’t have it any other way. Madness.
I’m actually in that last example, where I’m currently the “breadwinner” (what an old-fashioned word!), while my wife-to-be looks after the baby full-time. I pay a set amount each month, leaving her “complete freedom”.
At least that’s the idea…
In reality, we’re just starting out with this scheme and each month the amount I pay has been going up by £50 a month, as she realises she needs more. Suggestions to check how much she “really” needs have gone to no avail and I have to resist the urge to “pry”! Overall though, I’d agree that separate is best – unless it comes to large financial decisions or pay commitments.
I think it’s tough to have a one-size-fits-all solution for money with different people. I think people could fight just as much if their finances were separate. What if Joe doesn’t put his amount into savings as agreed, because he blew his wad on video games? That would be a fight in my house for sure. We have our finances together, and have a small allowance for whatever we want. Sometimes this does lead to the nitpicky arguments of which you speak, but I don’t think keeping things separate is the key to avoiding money fights. There’s a show on Canadian TV called Til Debt Do Us Part (about money and relationships). Many of the couples featured on the show keep their money separate, and they in a heap of trouble, both financially and in their relationships.
Joint, with a separate spending allowance for him (which we’ll always have) and separate savings (which we’ll merge after marriage).
I don’t think keeping money separate is necessarily the key to success, either – I know for us it would be a disaster. That requires both people to be equally adept at handling finances and be both totally on the same page. But my fiance has very little interest in handling his money, and having me take care of most of the details works perfectly.
What if you have children? This where we find it hard to keep things seperate. I find I am always spending “my” money on the children. How much would you put in your joint account for their needs?
Very interesting perspective; however, I don’t believe that maintaining independent finances is necessary for marital bliss. There are clear advantages and disadvantages with either approach, but at the end of the day, some 90% of divorces are on account of money – regardless of whether shared or independent. There are more fundamental money principles that couples need to follow such as communication (not secrecy). You might want to check out this article for some other solid advice: dinklife.com/topic/money/money-and-couples-101
Well not sure about the advise. It all depends on the concerned couple, I guess. We got married a while back and I have been handling joint finances ever since. My husband gets pocket money every week and the only extra cash he needs is to top up the Oyster Card. This is a hassle and stress free arrangement for both of us. Dear Husband gets to concentrate on what he wants (reading most of the time) and I know exactly where each and every penny of ours has gone.
Oh DH has access to all the accounts. He holds the credit card while I hang on the debit cards.
We do it a little bit different.
We put together all money in one account, and nobody asks what we are doing about them. I do believe that MONEY IS NOT THE POINT.
When you start arguing it is just exploring weak points and using them as leverage in the conversation.
However what we do have is a family budget – when you spent something you have to record it. At the end of the month we can see how are we doing. It is generates very interesting statistics, which I publish.
The other thing – deduct you mandatory savings first and you can decide what to do with the rest.
We have a system similar to eemusings above. We have a joint account but give ourselves an allowance (currently it’s $100/week each). That way we can stay accountable and at the same time have fun money to go hang out with the guys, or buy shoes, or whatnot.
I think separate accounts have no accountability on what’s spent. Having been tracking our spending for quite some time I can tell you that we now add 50% more per month to our net worth than we ever did under separate accounts and we feel more freedom to buy what we want with our $100 allowance (the misses loves it).
To each their own, and if you feel the need to not be held accountable for what you’re buying then a joint account may not be for you. But I’m sure joint accounts and separate accounts both have success stories.
Yes! Separate, with a joint account for shared outgoings is the way forward. I find it hard to see why people would combine, but then, my girlfriend and I don’t have kids. Anyway, I found it refreshing to hear your views on this. If anything should happen to our other halves, let’s get married and have completely separately accounts. I’m just putting it out there!
@Ash, well it took three years but I think that’s my first ever prospective marriage proposal on this blog. I’ll keep it in mind