The Case for Separate Finances
It’s a sad fact that money is one of the greatest sources of tension between couples. As consumers, we tend to equate greenbacks with our success, status and, frequently, self-worth. Therefore, a lot is at stake when you decide to merge your finances with the one you love. Everyone has different ideas regarding where to spend and where to splurge, and that’s when couples run into trouble.
Some opt to duke it out, while others prefer to keep separate bank accounts to avoid some of the hassle. While no solution is foolproof, take into consideration the following factors when determining a plan that is right for you.
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However, 50 years ago, enormous debt and child support payments weren’t common. With dual-income households and student loans in most household equations, how you split your money is becoming less about advice from Grandpa and more about individuality and autonomy. No one, including your parents, your church or your financial guru, should be telling you the “right” way to handle your finances.
Fitting Room
A couple’s money-management strategy is a comprehensive solution that should be based upon the different variables each brings to the union, such as kids, debt, inheritance and ownership. Common approaches to finances include separate accounts, joint accounts and a mix of the two. But remember, decisions about your bankroll don’t have to be all or nothing. Whether you choose to divide your finances proportional to individual income or split them down the middle in a joint effort, or have the breadwinner donate an allowance, the key is to create a plan that is fair and flexible for both of you.
If you choose to hybridize or isolate completely, identify the spendthrift and the saver in the merger to determine who is best suited for the ruling role – because there must one. Since the saver is probably better with money (and most likely a little more organized), assuming the treasurer responsibility should be welcomed by that person. The spender will most likely be grateful that someone with a little more money sense is taking over. Of course, there’s the possibility that there will be a little resentment that there is a new boss in town.
Divide and Conquer
While a shared account assigns one spouse the burden of bookkeeping and budgeting duties, separate accounts require both parties to retain some accountability while offering independence. Separate accounts allow you to buy those golf clubs or those perfect heels without a permission slip or even approval from your better half. If you are the cautious type, separate finances can render a safety net for the “just-in-cases.”
It’s no wonder why a growing number of couples are expressing some disenchantment with mutual money management. Having separate finances is forgiving, allowing each party to make mistakes or poor choices without draining the other. The separate system admittedly works best for those who have no children, roughly equivalent incomes and an established way to split the bills equally.
There is no obvious or apparent answer to how to divvy up your cash, as you need to decide what works best for you and your partner.However, talking, dreaming and even debating about money with your companion opens the door for communication and expectations and, ultimately, honesty.
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44 Comments View this thread in our community
London25
September 13,2008 at 10:08 amGet an agreement before you move in together. You could end up loosing half of your savings if you split. Where I live, if you live together for six months you are considered common law. After that, the "home" is split 50/50 unless there is an agreement. Her debts may be considered yours as well.
Money is the cause of many,probably most breakups. It just ended my x's marriage of 8 months. He just pulled the wool over her eyes.
I hate to say this, but maybe ending the relationship might be the right thing in the long run. It is very hard if one of the partners is expected to save and be the responsible one, while the other just spends.
jayjay
September 13,2008 at 07:35 amSounds like there's a subtext to the situation going on that says she's bucking for more committment than you're willing to make. Also, you might want to think about living on your own for a while, rather than each of you going from living with mom & dad directlyto living with a partner. Feels a little bit odd.
boyd316
September 13,2008 at 04:13 amHere's a scenario I was wondering you guys weigh in on. I've been dating for close to 2 years now. We both live with our parents and I would like to buy a house soon. At this point my significant other would like to join finances. She wants the house to be ours although I would be making most of the payments and have saved a significant amount of money for a down payment. I would like to buy the house and have seperate finances in case we should seperate. While we remain together the house would be hers as well. This has caused many arguments and could be the thing that ends the relationship. I tend to be the saver while she seems to have an unrealistic view on finances. I often get heat for not wanting to go on vacations however I'd like to see her put that money onto her debt. Please help!
That70sMichelle
August 15,2008 at 07:54 pmIt is important to have financial discussions early on. In my last relationship before we moved in together we determined how we were going to divide living expenses. We NEVER fought about money. Because he bought the house we lived in, I agreed to pay the electric, cable, and telephone bill. Because I cooked I also paid for all the groceries. It was agreed that if he wanted to eat out - he paid. It came out to a pretty equal arrangment and worked really well for us.
I didn't care what he spent his money on as long as his responsibilities were covered and he never asked about my spending as long as my responsibilities were covered.
ladychef
August 15,2008 at 04:57 pmHello there lisapisamomisa! LOL. I love that name! I've been reading these posts and it's very interesting to see the different points of view. But, I have to differ on one thing. When I married my husband, he had a child from his 1st marriage. He paid child support weekly as ordered, no problem and no hassles. When we got married, his ex-wife tried to get more money because of OUR household income and she was turned down flat in court. His child support is not MY responsibility. Now, that may differ from state to state and we were in CT but I find it hard to believe. I just considered it part of our monthly expenses and never quibbled about paying it because, at the end of the day, she's his daughter and it's his responsibility and I had no problem with it at all. Now, here's the rub (there always is one isn't there)? His child is now all grown up, done college and married with children of her own. We had 2 kids together and were married almost 20 years when I filed for divorce. When we divorced, our youngest was 9 but our oldest was 18 and already in college. (long story, never mind). Anyway, we both actually made the same amount of money so the child support order for him to pay for our daughter was very minimal. I refused spousal support point blank because I worked full-time our entire marriage. I never fought it, I was fine with it. My main concern was that we were there for our daughters. So, I'll cut to the chase. I had a job whereby I had a 401k and I bought the house we lived in together. We had refinanced to do a lot of work on the property and I added his name when we were married 15 years. Idiot move on my part. So, at the end of the day, we had to sell the house, he got half that he never invested in, half of my 401kand he's been in court so many times for non-payment of support that the courts think I'm a lawyer when I show up. I don't even have to go thru security anymore. Pathetic isn't it? So, bottom line is this. If, and that's a BIG if, I ever get married again, all finances will be separate. If I sell my house and he sells his house and we buy another one, it's 50/50 all the way. I know I'm a cynic but once burned, twice shy. I have no regrets about making sure his ex-wife was able to support his daughter. What I'd like to know is why nobody gives a good damn that I put my oldest thru college by myself and our youngest who is now 15 gets everything from me like support, dental, medical, etc. And, she usually spends summers with him but this year he told her "he couldn't afford to see her". IDIOT It all comes down to money and torture in the end doesn't it? Not torture for me, it's only money. It's torture for the kids.
Anyway, whomever suggested putting money in for monthly expenses, utilities, etc. hit the nail on the end. After that, it's free game to invest as you see fit. But, I'll have a pre-nup next time around but I doubt there will be a next marriage for me. I'm too tired! LOL
lisapisamomisa
August 15,2008 at 07:25 amI agree with you, LeahPharmD. I think I meant to suggest that the accounts be kept separate in the case of child-support issues only in the first paragraph.The "separation" of fundscan be achieved precisely as you have suggested--by separating out an account reserved for child support only. That said, a lawyermight counsel you(or a potential partner) differently bydemonstrating to you just how easily a motivated ex-spouse can convince the court that, while the child support account might be separate, the "new" couple's assets are not, and therefore the couple's shared assets (salary, portfolio, etc.) should be part of the court's accounting. It's easy as pie for an ex-spouse to petition the court to change a child support agreement to account for a rise in salary, a marriage, a merger of accounts. So while the separate child support account idea is wonderful, a motivated ex-spouse (and his or her legal counsel) would make hay of that idea in a snap.
It's not a pretty scenario, but then divorce can be messy when you toss some vituperative parties into the mix.
In the following paragraphs, of my post, I meant to suggest that there should be communication, trust, respect, and agreement--that is to say, the very same things you, too, assert. To me, the most important point is communication--whether that means discussing whether it's fiscally a great idea to buy a new flat-screen tvwhen the phone bill still needs to be paid (and for some folks, that's a reality--not everyone's budget can support a splurge all the time), or whether that just means planning together to save for a new kayak or a new house(as both your parents and mine evidently did, save the kayak).
I, too, tend to make more than many men I have dated--including the man who became my husband. And the conversations about money don't seem fraught or unnatural, they just seem like the course of everyday conversations as the issues arise. In other words, mostly finances are a non issue because we see the world of money in the same way.
Thanks for your comment, and I'm glad I have the chance to clear up my meaning, and to point outthat we largely agree.
Thanks, LeahPharmD!
Dr. LB
LeahPharmD
August 14,2008 at 02:23 pmI can certainly see the reason for keeping finances separate if there are ex's and child support issues at stake, but I tend to think that should be the only reason for a separate account and the spouse would only put into that account what was required to maintain those responsibilities. The rest should be shared. My parents have been married for over 40 years and my mother has always done the finances. She leaves blank checks and cash for my dad whenever he needs or wants it and has never scoffed at his desire to buy a boat or a $300.00 fishing rod. If it's a major purchase, they plan for it. If it's a minor purchase, they don't have to check with each other. They both work, they both live comfortably and they trust each other completely. I tend to fear that separate accounts allows for spouses to hide things that shouldn't be hidden. I want to know if my spouse is using large amounts of cash at the strip club - maybe I'll want to go with him, but I don't want him spending more money on a stripper than me! I want to know if my spouse is in so much debt he starts taking out life insurance policies on my life so he can kill me and pay off his bills. I think being married should be a joint venture. (I'm NOT saying this because I don't make good money either, I don't expect to find a man that makes as much as I do.) I think if he keeps his finances separate he can keep other parts of his life separate and I'm not getting the whole story. I am younger than maybe a lot of you but I have my own assets. I would hope not to pick a partner who was selfish and disrespectful of me and the money I make to contribute to our life together. I just think separate accounts opens up a lot of pit falls that could take you by suprise years down the road when you least expect it. Someone in the relationship should be financially responsible, let that person be the one to divy up the dough.
lisapisamomisa
August 14,2008 at 09:14 amThere are some compelling reasons for keeping accounts separate, especially when it comes to child support. If a man (and it's not always the guy) pays child support, having another income added to the kitty can mean that the ex can have the child support readjusted (by the court) to account for the new double-income standard of living. It's probably better just to leave yourself out of the whole child support formula.
Also, I see that some people have complained that they only find out about debt or extravagance once they see their partner's bank accounts. I would imagine that there are a lot of other clues that you can see pretty readily. I mean, if the person has a retail fetish, then the evidence of such habits will show up on feet (shoes?!) or bodies.
So perhaps we all learn something about ourselves--about our own need to blind ourselves to wwhat we can readily see in another, if we'd just open our eyes. We might also be accomplices to our partner's habits if we value, say, how he or she dresses, or if we always pay for things. We might also be making it difficult to discuss things with--has any of you ever said "I hate people who can't manage their finances," effectively shutting down any conversation on managing finances for those who don't meet our own expectations.
I think that the communication should be much more open so that one doesn't wake up one day, "discover" that our partner has a spending problem, and then go ballistic on them. We can play a part in making everything "on the table" by talking, planning together (how about sayingsix months in advance, "let's start putting away X percent of our salaries for a vacation next summer"), or finding other ways of checking in along the way.
Good luck!
brer_rabbit18
May 15,2008 at 12:22 pmThis entire conversation hinges on only one thing: how responsable is your partner with financial matters. I just recently had a talk with my fiance of 4 years about this same subject. We have always had seperate accounts, split the bills etc.. A month ago I suggested taking a trip, and out ofthat conversation came the realization that she was so far in debt through her credit cards that it would be impossible to do anything unless i paid for all of it. She had always made a big deal about keeping the finances seperate, and i always wondered why. Now I know. And being together for this long now makes all this debt legally my resposability. So I would have to suggest that anyone not wanting to merge finances as a couple would usually haveunderlying reasons for it. Everybody has to have personal spending money, but how do you do it so there are no big fights about it. All this has done now is put a big wall of distrust between us. All i hear is "its my money, as long as I pay the bills I can spend it any way I wan't". Like its been said, money matters will break a couple up, because i think this one will....
CatGirl
May 12,2008 at 07:59 amThe term self-sacrificing makes marriage seem like drudgery. My husband and I prefer to celebrate each other's individuality. In other words, he's a guitar player in a band. I champion his cause because I know that music is his soul. Because I am a writer and editor, I have taken to working for a local music magazine so I can share his passion in my own way. On the other hand, I am a figure skater. He comes to every one of my events and has even taken up skating himself so he can share my passion. We have truly integrated our spirits. However, a checking account is a practical matter. As I mentioned in my other post, reconciling every blasted cup of coffee that we bought with our VISA debit cards would be too time consuming and nit-picking. Neither one of us could be bothered, yet the reconciliation of money would be crucial to ensuring a correct balance and we recognize this so we keep separate accounts. We have better things to do with each other's time, like cheer each other on at the rink or the club.
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