Finance & Marriage - To Share Or Not To Share?

Recently 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