In the 5 years that my husband and I have been together, we’ve always agreed that keeping our finances separate made the most sense for our specific situation.
Ever since date #3, we’ve known each other’s whole financial back story, income and debt. Since we’ve been together, we’ve communicated openly and honestly about money, and we’ve trusted and consulted each other on financial decisions.
We got married 1.5 years ago, and even after tying the knot we STILL felt no reason to suddenly combine accounts.
I personally don’t see anything wrong with either joint or separate accounts, or a combination of joint and separate accounts. Each approach has its own individual pros and cons, and I don’t think there’s any right or wrong way.
Lately, I’ve been reading through numerous posts and opinion articles about how not combining finances when married is a “recipe for marital disaster”. (LOL, sound judgey much?)
Here are some of the “top reasons” I’ve read from people speculating why a married couple would want to keep their money separate:
- They must be on the verge of divorce.
- They are just trying to avoid tough conversations around money in the relationship.
- They don’t want to grow up and be adults.
- They’re fundamentally selfish people. They clearly only care about their own financial situation and would never want to be responsible for their spouse!
- One or both partners must be trying to hide something – maybe they’re covering up an affair or dreaming about having one? Why else would they want to be so secretive about how they’re spending money?
- One or both partners have an out of control spending problem. If they don’t want to combine accounts, they must be trying to hide their horrible spending from their partner.
- Basically, the whole marriage is just flawed. Only idiots would want to keep their money separate when married.
- Insert other amusing, yet unfounded judgments here…
All of these reasons are entertaining to read through, but none of them resonate in our relationship.
I have several friends who are married that also don’t combine finances, and I doubt a single one would cite any of the reasons above either.
I can think of many reasons why it would make sense for a married couple to keep their finances separate. Here’s a few I can list off the top of my head:
1) You don’t enter a marriage with combined finances. It can be an extensive and sometimes costly process to combine them, depending on the complexity of your individual situation. If there’s no problem in the relationship related to having separate finances, why go through an extensive process to share them?
2) If one or more partners are entering the relationship with significant debt, you’ll need to consider how this impacts the other partner’s liability toward that debt.
3) Everyone thinks that they’re the exception to the rule when it comes to divorce and that they’ll always be happily married forever, but a large percentage of people do end up divorced. Keeping your finances separate helps alleviate the messy work of untangling them in the event that this happens to you.
In our case, neither my husband nor I think we’re headed to divorce, but we realize we’re no more divorce-proof than the next couple. It might be an unromantic, unpopular sentiment, but I’d rather be realistic and practical. If it happens to others, it could happen to us, unfortunately.
4) If you are remarried, and have children from a previous marriage, for estate planning purposes (trust creation, inheritance divvying), you absolutely might want to keep your accounts separate.
5) Perhaps one or both partners have been burned by their partner financially before. Maybe they’ve experienced the fun of having a joint bank account cleared out after breaking up. Personally, that would sour me against ever combining finances in a future relationship.
6) Maybe there’s a history of forced dependence (i.e. in my case, growing up in a cult), where now it feels extremely important to the person to be financially independent in the marriage, and completely accountable for individual expenses, debt, and savings/investments.
7) Maybe either party doesn’t want to feel like they’re asking “permission” for personal expenses which should fundamentally be their own decision. Again, it goes back to financial accountability and independence. This could be critically important to someone who has a history of being controlled financially as a kid (raises hand) or as an adult.
I’m sure there are tons more reasons why one would prefer not to merge finances after getting married. Regardless of the reason, people should really stop judging others and realize there is no right or wrong approach.
It’s the 21st century and it’s silly that we’re still perpetuating old fashioned stereotypes about marriage and money! Let’s all lighten up a little and stop being judgmental because some other couple isn’t managing their finances the exact way that we do.
How We Keep Our Finances Separate:
Here’s what we keep separate in our marriage financially, and what we combine.
- We do track our net worth together, but our individual investment accounts and liabilities are held in our separate names.
- We are each 100% responsible for personal expenses incurred.
- We are each 100% responsible for our own debt (i.e. student loans). We own the house jointly down the middle, and split the mortgage payments 50/50.
- We split bills that are jointly incurred 50/50 (i.e. property tax, home insurance, car insurance for our 1 car, utilities, etc.).
- We also split food 50/50 even though my husband is a man-giant that eats 3-4 times as much as me. I take one for the team and subsidize his food costs ;o)
- Wait for it………We absolutely DO pay each other back if one of us covers the other’s personally incurred expenses. If I pay the entire grocery bill, for example, my husband will transfer 50% of the cost to my bank account. The horror!!! If there’s a hell for married people, I’m sure we’re headed to it ;o)
- Our 401ks through our respective jobs are held in our individual names.
- Once our student loan debt is paid off, we’ll each be putting all of that extra income into individual Vanguard low-cost conservative Index Fund accounts. We both already individually have the Admiral VTSAX (Vanguard Total Stock Market Index Fund) account, and we’ll continue to contribute separately to these, and other accounts.
- If we buy a rental property, we’ll split the mortgage payments and ownership costs/equity 50/50. Unless my husband chooses not to invest in the property with me, in which case it would be ‘my’ investment.
The Top 3 Reasons Why We Keep our Finances Separate:
Here’s why we behave like apparent fools and keep our finances separate:
#1 We Already Make Financial Decisions Jointly & Trust Each Other’s Judgment
- All financial decisions really are made jointly between us, even though we don’t share accounts.
- My husband wouldn’t go out and buy something big with his money without consulting with me? Why? Because he trusts my judgment.
- It works the other way too. I would never go out and make a big purchase without asking his opinion? Why? Because he’s my best friend and I trust his opinion. We both care about our money, and we respect each others perspective.
- Neither one of us worry that the other will spend or invest in any significant way without consulting the other, just because we don’t share accounts.
- One example of this is that my husband recently wanted to buy a newer used car. Since I work remotely and travel alot for work, he’s been using my paid off car for the last year to his commute to work. My car is 9 years old, and while it runs perfectly fine, he wanted something a little “fancier”.
- He got all excited looking at different cars that he thought he could afford. We talked about it, and he listened to my opinion that I thought it would be a total waste of money. That money could go straight toward his loan payments, and then ultimately investment accounts.
- Of course he’s a grown man and is free to spend his money as he chooses, but he listens to me and respects my opinion. He decided he didn’t need the car, and used all of that extra money to pay down more of his loans. I would consult with him in the exact same way, if the situation were reversed.
#2 We Never Want to Be Responsible for Each Other’s Individual Debt:
- I entered the marriage with close to 125k of student loan debt. My husband had less than half that amount when we got married.
- I would NEVER accept a dime from my husband (or from anyone else) to cover my debt. My husband feels the same way about his debt.
- My student loan bills are my responsibility. The thought of asking my husband to ever help pay them off is laughable. Why would I ever expect him to do that? The loans paid for MY education, not his. I incurred them, I’ll pay them off, thank you :o)
- We made sure that we did not sign on to each other’s student loan accounts as joint holders after getting married. That way, we’re each only ever liable for our own student loan debt.
- Both of us also wanted to ensure that the other would be protected from having to pay the others debt, in case something happened to either of us. We both ensured that our student loan liabilities were more than covered through a work based life insurance policy.
#3 We Never EVER Want To Depend On Each Other Financially:
- Let that statement really sink in, in all of its terribleness. I can already hear the disapproval, but I mean every word of it.
- Even though we live in a community property state, where a couple’s income is considered shared (unless one signs a pre or postnuptial agreement), I will never expect my husband to share his income in any way with me, and he has no interest in expecting that from me either.
- I don’t accept a dime from my husband for any of my expenses. The only thing he’s ever paid 100% for me for was dinner out on our first date, and even that was a struggle. I didn’t even let the poor man buy me a wedding ring. Mwahaha. Yeah, I’m a bit extreme in this regard (thanks, childhood!), but I like LOVE paying for things myself. It’s really strangely comforting, given my background.
- Being financially independent and accountable in a marriage is more of a necessity on my side. I grew up in a very controlling cult, and I vowed at a very young age that I would never be dependent on anyone if I could help it.
- Almost every single woman in the cult financially depended either on the group or a man for survival, and almost all of them that stayed considered themselves too weak to leave and figure out how to support themselves and/or their children.
- The downsides of being financially dependent made a huge impression on me as a kid, and I never wanted to end up in the same situation. This is a huge motivator to wanting to achieve financial independence as early as possible, because I can’t wait to feel like I no longer depend on my employer for income.
For better or worse, combining our finances feels to me like losing financial independence.
My husband sees eye to eye with me on this. Actually, a more accurate statement would be to say that he just tolerates my views ;o)
He loves me enough to realize that this approach is important to me, for reasons outside his control. Thankfully, besides always joking that I’m a cheap date, he’s fine with this arrangement.
You might argue that if we had a stronger relationship, we would trust each other enough to combine finances. I disagree. I think it’s because of our strong relationship that we’re fine with a setup that is outside of the traditional ‘norm’.
Even though I know that keeping our finances separate works really well for us, I’m sure that depending on the situation, it might a terrible idea for someone else’s marriage.
I would LOVE to hear, whether you’re married or not, what your thoughts are on managing money in a relationship.
Do you think it’s absolutely necessary to combine your finances with your partner?
Or do you think it would work better to keep them separate, or maybe combine only some accounts?