AJ: We’ve mentioned this before but Kirby and I were very young when we started dating (18 and 19, actually), so we had the luxury of being completely broke together. We both had savings accounts that we began as children, both maintained part-time jobs at various points, and both had our own cars, but aside from that, we didn’t own diddly. We lived together for almost four years prior to marrying and maintained separate checking and savings accounts, splitting bills “evenly” based on our salaries. Kirby made more than I did right out of college but never let me feel like he was contributing more. The odds of a couple making the exact same amount of money and having exactly even expenses is beyond unreasonable. When I bought clothes or gifts for my family, they came out of my account, Kirby did the same and it worked beautifully. As our wedding date approached Kirby broached the subject of merging finances for all the standard reasons but ultimately the one that sold me was – it just makes sense.
But what if it doesn’t make sense? What if you’re not 18, have assets worth mentioning, and know that your partners’ views on money don’t at all align with your own?
I feel strongly that regardless of what you choose to do – merge or remain independent – that so long as you are honest about your spending with your partner and you communicate regularly about your independent and financial situations you will be just fine. A few recommendations on where to start looking for the right solution for you and your family:
- AJ: Put all of your money into one big pot, agree to budgets by category and commit to staying within budget. Caveat: this requires that you all show each other complete respect when one person decides they want to spend money outside of the agreed upon budgets. I.e. just because one person thinks you NEED drapes does not mean the other person will agree that you NEED drapes in the same month that they NEED a lawnmower. For example. So be flexible. Buy one this month and one the next month without implying that one is more important or necessary than the other. Remember, you’re partners.
KJ: For many couples, this is the best way to get on the same page about what they make and what they spend. The main drawback to this approach though is that you can often lose the ability to ‘surprise’ the other spouse with a nice gift. As such, you can lose some spontaneity or can encourage extreme creativity. Angela recently surprised me with a watch for Valentine’s Day using cash she had stored over several months to avoid me seeing any charges on the credit card. I was surprised and Angela loved that she pulled it off.
- AJ: Keep your money 100% separate. Yours, mine, no in between. You pay for dinner on Thursday, I pay for dinner on Friday. We each agree to have a salad, an entree and one drink at a similarly priced restaurant of our choosing. (Can you tell this option doesn’t really float my boat?) The problem I see with keeping everything completely separate is that you physically share space and stuff. You’re not roommates paying equal parts of the rent or a couple who is dating that can rely on whoever did the inviting to pay. This requires serious tracking and a dedication to holding each other accountable. If this works for you, please, please, please tell us how you’re doing it. I would love to know more.
KJ: While some couples may be able to make this work, I have not seen too many instances where this is the preferred method. The main positive of this method is that it allows for independent goals (I want to save for that flat screen TV and Angela wants to save for the updated flooring) and secrecy in planning surprise gifts or gatherings, however, it often leads to secrecy and trust issues as one spouse is bound to spend more (and it may not be the one who makes the most).
Somewhere in between
- AJ: Find a middle ground like we did right out of college. If you make $30,000 a year and your partner makes $20,000 a year, you pay 60% of the bills out of your account ($30,000 divided by your combined income of $50,000), and your partner pays 40% of the bills. OR agree that one person pays for the bills and daycare while the other pays the mortgage and grocery bills. I’m personally fond of this solution because we had good success with this system. I think it allows for a certain level of freedom while still trusting the other to handle their equal share of the responsibilities.
KJ: Having some independence as a couple is important, and this can be a way to find that middle ground. You identify your common goals, income, and expenses, and you allocate those scarce resources in an equitable manner..fair isn’t always equal though! Some couples keep a joint account and then each have their own separate account. As long as the foundation of having separate accounts isn’t to hide expenses or income, then this may be the happy medium you were looking for.
AJ: Regardless of which method you choose, you have to be prepared to compromise. When your washing machine dies unexpectedly, you have to agree to find the money to fix or replace it from somewhere and it can’t always be one person who is compromising while the other blissfully spends away your slush fund. Be the keeper of your own destiny: track what you spend, track what you save, and be prepared enough to know that you can’t prepare for everything.
When two people have very different money styles, sometimes this is the only way to have harmony and let each person retain some independence and autonomy.
KJ: The topic of finances can be very difficult to discuss with others. Most people would be more open to talk about their sex lives, the struggles with their ‘lost teenager,’ or the neighborhood gossip about so-and-so who did such-and-such. With the number one cause of divorce being money problems, it’s all the more important that when it comes down to it, working through your finances is something that should be done as a couple, regardless of how separate or together your assets are.
Sure, there are valid legal and planning reasons you may wish to keep some assets separate from others – maybe you inherited some money from a parent or grandparent that you would prefer to pass along to your children first – but that doesn’t mean you have to communicate any less about your assets. It’s when you work together that you find a cohesive approach that can work for the two of you, and my experience has been that those interested in saving for a goal and bettering their financial lives (so they can improve their personal lives too to live the life they want to live) do so by merging their finances. When you’ve come to the relationship with more than some Ikea furniture, please consider discussing with a licensed advisor the tax, legal, and planning implications of merging your finances.
- What do you and your significant other do with your finances?
Are they separate, combined, or a mix of options?
Tell us why you chose that method.
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