Finance & Marriage - To Share Or Not To Share?

Money, finance, joint accounts, separate accountsRecently I was forced to reflect on my experience with finances and relationships. I’ve been married twice. In my first marriage money was handled separately. In my current marriage we are a united couple in every sense of the word. But that’s not to say it was or has always been peaches and cream in either case.

Let me be up front in saying I prefer the team approach. Financially, it is an open book, now. All income goes into one account. All bills are paid from this one account and any remainder is distributed to savings and investment accounts. Investment decisions and significant purchases and expenses are discussed and agreed upon in advance. We review our budgets together, reflect on our past spending and work together to make changes for the benefit of our financial future. Frankly I can’t imagine doing it any other way.

This article was featured in the Carnival of Money Stories hosted by The Centsible Life. Please check out this carnival for many other great articles about personal finance.

We know couples however that keep separate accounts, a his and a hers, never shall the two meet. We know couples that split bills, he pays the mortgage, she buys the groceries etc…For some, this approach seems to work fine. Both parties are comfortable with the arrangements. As long as each spouse maintains their respective responsibility there may never be an issue.

Each couple must find a method and approach that suits them. If your friends are happy with split finances don’t try to convince them otherwise, it is their choice. If however you are in a position to consider which path is right for you, I would argue the most efficient and sustainable approach is a commingling of funds for several reasons. But first let’s look at the potential pitfalls of the alternative.

As an analogy, I would use loaves of bread in lieu of money to describe the pitfalls of separately managed funds. One spouse goes to work and collects a loaf of bread for their efforts while the other spouse brings home 3/4 of a loaf. Each will feel a connection to the loaf that they earned and naturally be more protective of it. One loaf will be kept in the cabinet near the sink the other in the pantry.

As life continues both spouses must eat. For some meals (expenses), the couple opens a single loaf and removes a few slices. For some meals they will go dutch, each contributing equal portions. And on occasion one loaf is expected to subsidize the other.

The plus side of this approach is that each person always feels as if they have something of their own. Is it about control or a desire to have personal responsibility? This depends on the individual. But there are just too many negatives. In my personal experience there was always an inequality in one respect or another. Either the smaller provider feels inferior for their inability to contribute or feels substandard as their partner demonstrates greater spending power. This inequality was manifested in pent up anger and resentment. It wasn’t always voiced, but like a land-mine it sat just below the surface just waiting to be triggered.

This divided approach is also inefficient financially. With multiple accounts you cannot leverage opportunities to obtain the best rates of returns on your reserves, you cannot leverage investments and you incur higher expenses if you don’t  meet minimum balance requirements on accounts. You pay more in expenses for checks and processing fees and increase the likelihood of overdrafts.

Combining funds overcome all the negatives that separation creates. You can make better use of your financial reserves, earning more interest of larger amounts. Your costs and complication of having fewer accounts are reduced, few accounts are easier to manage providing a clearer picture of your total financial position.

Commingling of funds, on the other hand, does have the potential pitfall of creating friction if a couple has a disagreement on how financial matters should be handled. But this only pitfall also has the potential to be the catalyst to build a much stronger relationship. With both spouses monetary life dependent on the balance of this financial sea-saw, there are only two possible outcomes, an erratic adventure ending when one rider is thrown clear or a smooth and steady rhythm as the two work together for joint benefit. Emotionally and spiritually combining your resources is the best approach to long-term sustainable relationship.

Chime in and share your opinions about couples and money in the comments below. Do you prefer a separation of finances? What are the pros or cons of either approach that I missed?

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photo by Aunt Owwee

9 comments to Finance & Marriage – To Share Or Not To Share?

  • I have been married twice, too. Finances have been a problem (but not the problem) both times, but I see what you are saying about commingling funds and can understand how it could contribute to intimacy. What I don’t get is how do you decide about pocket money? Do you each get a predetermined amount each month and budget that for your personal needs?

  • The LeanLifeCoach

    We do not have a set allowance or individual budgets. Since we are both in agreement on our mutual long-term goals we both recognize that frivolous spending undermines our objectives. We do, however, feel free and open to questions each others purchased decisions (in a respectful manner). I tend to be a little more direct, “Did you really need those boots?” while my wife is a little more subtle, “What did you spend $800 on for the garage?”

    Having an understanding that it not only OK but important to challenge each other is important to keeping each other accountable without causing turmoil in the relationship.

  • So you carry no cash? And I wasn’t referring to frivolous purchases, just personal ones, the kinds of things that come up regularly and sometimes spontaneously, but can be different for each partner. Like hair cuts, lunch or coffee with a friend you run into unexpectedly, an emergency trip to the drug store for antacid, a couple of bucks for a fundraiser in front of the grocery store, or small inexpensive surprises for your mate to keep things romantic. Stuff like that….

  • Personally, we share. It keeps us connected, and on the same page. I guess it could work having your finances separate, all depends on the couple. But hopefully separate doesn’t mean private, otherwise it could lead to some interesting issues!

  • Matt SF

    I’m a bit cautious on the topic, but I think that keeping finances completely separate can cause just as much friction as completely merging them. So the issues of “you don’t trust me” can become just as big an issue.

    For me and my GF, we do the half and half thing where half of all expenses are paid in a merged account, and we’re left to our own devices when it comes to discretionary income. That way, I don’t get upset with 30 pairs of shoes and she doesn’t get upset when I splurge $100 on a baseball card.
    .-= Matt SF´s last blog ..Should I Ignore My Raise and Save the Difference in Income? =-.

  • The LeanLifeCoach

    @Tracy – We are more focused on our budget. We have no predetermined “fun money” limits for each other. In part because we have managed to eliminate our debt, if she decides to stop for lunch with a friend she does. But we still have a monthly combined budget limit we are both working to meet. If I blow $40 on a new tool for my shop I know as part of the team I’ve got to conserve $40 somewhere else. At first it was hard for both but we have learned over time we don’t need to spend so much.

    @Kris – Good point, private could be a problem. We have relatives that play this game… back to the landmine analogy!

    @MattSF – Hopefully with with the separate monies you have budgets or some other to ensure efficient use of the money! Considering all the pennies and cents over a lifetime the separation of finance will have added costs. If that’s a price your willing to pay and that is what works for you, more power to you! On your death bed you won’t be thinking about the money, you’ll be thinking about your honey!

  • Interesting topic. We used to separate our finances except for mortgage and utility bills. While I’ve been making more cash, I’m also the one who is budget conscious. As a result, I put more cash to the mortgage account but he spent more on discretionary items. I resented that. I finally came up with an approach where we put our incomes and budget together, while still having some degree of individualism by allocating separate AND equal discretionary money.
    I’m satisfied with the arrangement, we keep most of finances together, we have the same amount of discretionary spending and as a bonus, our savings amount has doubled.
    .-= Bytta @151 Days Off´s last blog ..Day 11: Designing Your Life with Savings Snowball =-.

  • The LeanLifeCoach

    Bytta- That rocks! I’d be willing to bet coming closer together on the financial front has helped make the relationship better as well. Congrats on the savings increase.

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