Financial independence is the best. Financial dependence is the worst.
If you plan to get married, then you better not get divorced. Otherwise, what’s the point? You’ll end up wasting money on lawyers. You’ll absolutely disrupt your finances. And if you have kids, they might have to go to therapy in order to make better sense of the cruel realities of the world.
According to a Kansas State University study of more than 4,500 couples, it found that arguments about money was by far the top predictor of divorce.
Approximately 7.2 million Americans (4.4 million men and 2.8 million women) have hidden a bank or credit card account from their live-in spouse or partner, the report found.
What’s going on? For one, if you are constantly feeling financially constraint, there’s no surprise that your relationship will suffer. Therefore, making enough money to live a comfortable lifestyle is important. Then getting 100% on the same page when it comes to spending and reaching financial targets is the obvious next step.
But even rich people go through breakups all the time. So clearly there’s something else going on after a couple starts earning a comfortable income as the hidden bank and credit card accounts survey indicates.
Welcome to the terrible world of financial dependence, where no matter how much your household earns, you’ll never feel free if you aren’t earning your own income.
Why Every Spouse Should Have Their Own Bank Account
One of the best gifts you can give your spouse is the gift of financial independence. I’m not talking about showering your spouse with riches once you get married. I’m talking about supporting your spouse in making his or her own fortune in addition to contributing to the family fortune.
After all, financial independence by definition includes being financially independent from each other. Many of us remember the sheepish feeling of having to ask our parents for money growing up. The same feeling still exists as an adult without your own bank account.
Over the years, I’ve had over a hundred spouses tell me how they wish they had their own money to spend freely without fear of judgement from their spouses. Many have told me the financial dependence they had on their spouses ruined their marriages.
Let me share three specific examples.
Husband of a heiress who lives in a mega mansion.
“Sam, the reason why I spend so much time trying to become a published author is because I want to make my own mark. Right now, I’m seen by strangers as just some chump who married into money. No matter how much I tell people I married for love, nobody will fully believe me.
I want my own identity. I want to eat what I kill. The freedom to buy what I want without drawing from a pool of money my father-in law left would be wonderful. I don’t deserve it.
Never in my wildest dreams would I have imagined a poor kid raised by a single mother would one day be asked to host political fundraisers at his home. I need to right the scale. “
Business school classmate who married a Google engineer back in 2007.
“We live a comfortable life down in Menlo Park. Google’s stock is up more than 4X since we graduated back in 2006 and we feel financially secure. It’s wonderful being a full-time mother of two, but it’s exhausting as you’re now finding out.
I had a great 10-year career working as a chemical engineer until we decided it was best for me to stay home. He made more and the family benefits at Google are amazing. But ever since I decided to be a SAHM in 2012, I miss the feeling of being able to make my own money and spend money on silly things without having to explain myself to my hubby.
Although we are a team, I’m always second guessing whether I should spend on even the simplest of indulgences. For example, when my back and hands were starting to kill me from having to rock my youngest to sleep for an hour each evening, all I wanted was to get an hour long massage.
But instead of charging $120 on our joint credit card where he checks each line item, I decided to just spend $20 in cash on a chair massage at the mall because I was afraid he’d complain that he could easily give me a massage for free! I love my husband’s frugal ways, but his massages don’t come close to what professional hands can do.”
A reader shared one of the reasons why she got a divorce.
“We never made a lot of money, around $85,000 combined, or so I thought. He liked to handle the finances so I just let him do his thing. Then one day I found a pile of ATM withdrawal receipts stuffed in his coat pocket that totaled about $8,000 over the past three months.
When I confronted him about the receipts, he admitted he had a separate account used for playing poker. He didn’t want me to worry, explaining to me poker was just a fun outlet.
It turns out he was actually a great poker player and had over $50,000 in the account! I was pretty proud of his success in the beginning. But, then I realized he wasn’t always going to play poker during the nights he said he was. I won’t get into the details, but I strongly believe that if your partner isn’t completely honest about you about money, he’s probably hiding something else as well.”
Reasons For Spousal Financial Independence
Reason #1: The Release Valve
The common reason for each spouse wanting their own bank account is the desire for independence as all three examples demonstrate. There’s no greater feeling than being free to do whatever you want with your own money.
Because it is impossible to 100% agree on every single aspect in life, having your own bank account provides a release valve when partners don’t completely see eye-to-eye on a particular expense so that pressure doesn’t build up to the point of explosion.
In the massage example, the husband couldn’t fully empathize why his wife would want to spend $120 + tip on a massage he thought he could provide for free. And because his wife doesn’t have a salary, she felt guilty spending $100 more than what she could get for a 25 minute chair massage at the mall.
Over time, resentment builds up by the wife, especially since taking care of two young children is way harder than going to work at Google for 10 hours a day. The husband, on the other hand, might disagree with her views. He may begin to resent her for thinking this way. He purposefully shielded her from all the corporate BS he’s had to deal with.
Without a release valve, the chance for arguments and ultimately divorce increases.
Reason #2: The Insurance Policy
Having independence is just one reason why each spouse should have their own separate bank account. After all, before each partner met, each enjoyed independence for years. The other reason for having your own financial account is insurance.
Let’s say something bad were to happen to you and the legal system somehow ties up your assets in probate despite a clearly written will. Or perhaps your life insurance company decides not to pay out the claim you spent 15 years paying. Who knows what snafus await after an unfortunate event. They happen all the time.
If you have your own finances, you can more comfortably wait out the storm while the legal system makes you whole. In other words, your bank account is your worst case scenario. Knowing that my wife has her own healthy bank account let’s me die more peacefully knowing that at the very least, she’ll do just fine without me and our accumulated wealth and vice versa.
Notice how I didn’t write about insurance from divorce. Marriage is about security, and having a separate bank account provides that extra security.
Related: How Much Life Insurance Do I Really Need?
Reason #3: The Financial Trainer
Just like how a workout buddy helps motivate you to do one more set or eat one less slice of pizza, your spouse can help motivate you to earn and save more as well.
By having separate financial accounts, you can clearly see where each of your finances stand. You can challenge each other to see who gets to a certain savings amount first. Or if your starting amounts are vastly different, you can challenge each other based on a percentage increase amount. The number of different challenges and the ways to get there are endless e.g. the many different types of side hustles and investments one can undertake to boost their income.
The ultimate goal is to push each other to achieve optimal finance performance while concurrently building a stronger financial life together. If you completely co-mingle your funds, it’s hard to tell exactly how much you’ve contributed to the household. The more murky your contribution, the easier it is to feel demotivated or be misinformed by how much you’ve contributed.
Keeping separate bank accounts also minimizes the temptation of “cheating” by overly relying on your spouse. Don’t take away your spouse’s sense of pride and accomplishment like the man in example #1.
The Horrors Of Having Separate Bank Accounts
I know by now a lot of you are completely befuddled with the idea of giving each spouse the gift of financial independence. I don’t blame you since for so long, the tradition has been for the husband to earn and the wife to stay at home.
Making a spouse financially dependent on you is a great way to control your spouse. However, we’re in the new decade now. It’s time to modern up and abolish the old ways!
Believe in equality between men and women. Every little girl and boy growing up today should believe they can have a fantastic career and be financially independent on their own. If you had or have a little one, what would you encourage him or her to do?
If you are financially independent, you can weather a breakup much easier. Don’t think divorce won’t ever happen to you since the statistics prove otherwise. If you are financially dependent on a person you no longer love, life won’t be easy.
But to recognize the other side, here are some aghast comments from my post, How To Overcome Money Addiction. In the post I wrote, “I borrowed $10,000 from my wife to invest in an Austin, Texas real estate crowdfunding deal.“
Aghast comment #1
“I will state flat out that I think everything should be shared and that I am a bit alarmed that you ‘borrowed $ from your wife’ although I don’t know your situation, I just want you to succeed, marriage and all, especially with all the baby talk on this blog as of late.”
Aghast comment #2
I hope you don’t take offense, as I have never looked into any surveys or studies on the subject, but I know several people whose marriages have ended and many of them kept separate accounts. It just seems like (to me) the two becoming one should mean everything!”
Aghast comment #3
“My wife and my finances are completely merged. So the concept of borrowing money from her is ridiculous!”
I have no problem with couples 100% mixing their finances together. I’m not sure why it always seems like couples who only have joint acccounts have problems with those who don’t. But let me explain anyway why I used the term “borrowed.”
Why I Borrowed Money From My Wife
Since we first met, I’ve always wanted to give my wife everything I could conceivably offer. From paying off her remaining college loan after my third year of work, to buying a house in San Francisco for both of us to live a more comfortable life while young, I’ve always had a desire to provide. Some might say these actions are the result of true love.
I owe her a lot because she has been with me since the beginning when we were broke college students. During my senior year while I was interviewing for jobs in NYC, she’d wake up at 5:30am just so she could call and make sure I wouldn’t oversleep for a 7am interview.
We have a special relationship because money was never a deciding factor for why we came together. Further, I never want money to ever aversely affect our relationship.
I’m proud to say that she has never needed direct financial help from me as a financially independent woman. She enjoyed a fantastic 13-year career in finance.
In 2014, with some coaching help by yours truly, she was able to negotiate a severance and finally break free for good in 2015.
Because I care for her so much, I felt bad during my cash crunch to ask her for money to cover my investing addiction. I know we are life partners and share everything, but I just hate asking anybody for any money, especially someone I love the most.
See: Never Ask Friends And Family For Money
An Easier Way To Borrow
Conversely, it’s easy to borrow money from a bank because you don’t nearly have the same relationship with an amorphous institution as you do your spouse. Hence, I borrowed the money from her and gave it back a couple weeks later.
We have separate bank accounts along with a joint bank account to provide maximum flexibility. We love encouraging each other to save aggressively while we were both working.
Today, we are parents. We talk about all large financial decisions thoroughly before we proceed. Things like who gets the check or pays for gas doesn’t matter.
The Stay At Home Spouse
So far I’ve addressed separate financial accounts between two working spouses. But how does a stay at home spouse expect to earn his or her own money if he or she doesn’t have a job? Well that’s easy.
Being a stay at home parent is easily worth AT LEAST the median income of your city. In reality, being a stay at home spouse is often much harder than having a day job since it can be 24/7 for the first several years of a child’s life.
If you don’t believe so, then take the number of hours your stay at home spouse works and multiply it by the average hourly cost for daycare or a nanny. That is the amount of money he or she deserves to make.
Now take that monthly salary and subtract it from the day job working spouse’s salary, and that figure should be his or her income which can be spent however he or she chooses.
Of course, it’s a good idea not to spend it all. The money should be allocated similarly to the way the day job working spouse’s money is allocated in terms of savings, investing, spending, and so forth.
And of course, you don’t have to give a salary / allowance. You can just agree to earmark this money in a joint account as his/her right to spend at will.
If you believe in happiness, then you believe in financial independence for both spouses. And if you believe in financial independence, then you should not be opposed to each spouse having a separate bank account plus a joint account.
The ultimate goal is to create household wealth together, while also ensuring each spouse never loses his or her freedom. Giving financial independence is a gift of love.
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The Average Net Worth For The Above Average Married Couple
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My husband and I have a successful strategy that works for us. After we fill our 401k, the rest of our paycheck went into debt payoff, shared account (strictly for bills, groceries, gas and mortgage ONLY) and $2000 PER YEAR for each of us to do with how we pleased (no judgment allowed on partners spending). In January this year we payed off the last of our debts, and we have yet to discuss what our new yearly “personal account” amount will be. But this three bucket system has worked amazingly for us. With my ex bf we had a similar system of X amount contributed to “household account” for strictly necessary bills, but everything else earned was our own. The system was changed with my husband because we had to work together on getting financially ahead as a team, but the idea of having separate accounts as well has definitely saved us loads of stress and resentment.
I definitely agree with the goal of having a sense of financial confidence and personal independence… and the solution is likely different for people in different relationship and career situations. A couple of good examples that really challenge to think differently about a household’s finances.
Maybe like some of your other posts, the ideal income really is somewhere in the +/- $250k range for a household… in this range no one is likely to be on the wealthier or less wealthy end. Even if that’s one income and the other spouse stays at home… $250k is a great income for an individual, but that’s a mid-career doctor, lawyer, or reasonably successful junior executive in a corporate role, small business owner, etc. People at that income range really need to stay humble as they don’t really have a ton of power, and there are a lot of people with much higher incomes, assets, and power! :)
I think I remember seeing this post when you originally published it, but I love it nonetheless. I think we have a fairly unusual arrangement. We still maintain our separate bank accounts, have a joint savings account, but all investments accounts are managed by me even though they are titled in either my name or his name. In other words, I have a Roth, a taxable account, a 401k, a TSP, a regular IRA, and he has a TSP and a Roth- but I manage all of the them as one giant investment account and just allocate funds to whichever bucket make the most sense. I also have had a more variable income as a military spouse with young kids, so he basically gets an allowance in his bank account, we both spend on credit cards, and I pay all the bills using money from both of our accounts.
We have been married since 1979. I have always earned about 3 times more than her. Almost from the beginning she made the house payment and I paid all the other expenses. The rest of her income went into her account to spend as she wished. This gave her great freedom to buy items for others, the children, and herself. Money was never an issue for us since she had her own account and income stream. Now we are both retired and she still gives me what our house payment use to be each month and she keeps the rest of her retirement check. If you look under your chart for the net worth of the above average couple you’ll see our net worth is in the highest bracket you have for 65 year olds. We saved for 35 years just like you suggest that couples do and as a result ended up with a net worth in line with your projections.
I THINK THE FACT MY WIFE MANAGED HER BUDGET RELIEVED ME FROM HAVING TO DEAL WITH HER SPENDING NEEDS. I COULD FOCUS ON SAVINGS AND INVESTMENTS MORE. THIS ALLOWED US TO MAX OUT MY INCOME IN IRA’S, ROTH’S, 401 K’S AND THE STOCK MARKET.
Loved this article. It is truly difficult to come to an understanding of how best to manage your money as a married couple. However, before me and the husband got married we went for a church marriage course over the weekend. It was surprisingly useful.
When the husband was still on a corporate job, we used to divide the fixed monthly outflow in the percentage of individual salaries to the total inflow. So, if he earned 60% of the total income in the household, he paid for 60% of the joint expenses. A joint credit card has always helped in the clarity on joint expenses. I wrote about it a few months back.
Now, the husband has started a small business where all profits are being reinvested whereas my salary is used to run the household. Somehow, it makes me proud of the fact that my salary is being able to help my husband go for the dream that he totally deserves.
I do not agree with the theory that joining all income and expenses leads to more transparency. Me and the husband are absolutely transparent about our finances and for any holiday or big expenses, wherever inequitable contribution are required, make it so. I strongly believe if the spouse has to cheat financially, he or she will do it even with the joint finances firmly in place. However, seperate finances just make an individual more confident and even more comfortable with managing money.
100% separate finances and taxes, thank God, as my spouse proved to be a fool with money and taxes, and caused me financial hardship even with totally separate finances and taxes. I cannot say strongly enough that if you are naive enough to marry, do not hold any money or assets jointly. I recommend you simply live together with your sex partner/baby mama/baby daddy, in a state with no common-law marriage or palimony laws.
We are not yet married, but I believe we’ll do one joint account for joint bills and maintain our separate accounts. We both love our banks and worked so hard building independence. That said, we currently operate as if our money is joint. If I am tight one month, I know she would help. If I have extra miles and she is too tight that month to be able to afford to fly to me, the miles are hers. We approach life together.
I don’t believe in alimony, common law, dependence for able adults. I told my significant other from the beginning , whatever wealth I brought into the relationship is mine and I will remove it whenever I please. Love and trust are great , try to make them last a lifetime but plan for something to go wrong. If someone is to be dependent there should be a verbal or written in advance as to how it will be handled when/if circumstances change. Unfortunately there are injustices in many relationships but as Voltaire said , this eventually produces independence .
I wrote an article on this same exact thing a month or so ago. I wholly believe in separate accounts. I don’t want Lady Celt to feel like she HAS to stay with me. I want her to want to stay with me. Having her own money and financial freedom allows her to leave if she wanted.
10 years in, she hasn’t wanted that.
OUTSTANDING post. Great points and I completely agree. My dad is an attorney and stated that pre-nups still are not a guarantee things will be divided based on their original wishes and that court could view things differently if they want.
If you live in a community property state (such as CA), and do not have a prenup, your finances and accounts will be shared, irrespective of the manner in which they are maintained. Some people believe marriage involves a complete merging of lives, including finances. Some do not, and those may choose to execute lengthy prenuptial agreements that allow each spouse to keep completely separate assets, income, finances, etc. To each their own.
However, unless you are one of those individuals who has a prenup specifying otherwise, when it comes down to it, any “separation” of accounts is purely psychological, has zero legal effect, and separating accounts will not at all serve as any kind of “insurance.”
If the act of keeping separate accounts is purely psychological, one has to question why. Finances are indeed a major cause for divorce, but so is lack of communication. Separate accounts solely for the sake of keeping certain spending habits hidden (i.e. for the purpose of acting as a “release valve” so one does not have to justify playing poker or getting a pricey massage), then seems like a perfect storm of the two worst risk factors for divorce, in that it allows couples to avoid certain beneficial or necessary discussions about finances.
The fact a husband may be resentful of his SAHM wife getting a pricey massage on rare occasions or that a wife may resent having to defend this decision is probably something that needs to be hashed out with good communication. There may be no clear wrong or right answer – maybe $120 is a bit excessive (or maybe it isn’t), but on the other hand, she should not be made to feel her only option is to get a mediocre massage on the down-low with $20 in cash. Either way, I think it is better for a marriage to discuss these issues instead of sweep the matter under the rug by hiding it with separate accounts.
In the scenarios above, if you live in a community property state, whether you have separate accounts or not, at the end of the day, the decisions to spend money on poker and/or massages will impact both people in the relationship financially. By keeping separate accounts, you are just hiding this fact and/or delaying acknowledgement of the inevitable financial consequence to both in the marriage.
My husband and I have completely merged finances. That means sometimes he might question why my lunch outing was a bit over-the-top, and I might ask “You paid what for that shirt?” It has never resulted in an argument, and I think it’s positive thing to acknowledge even occasional over-spending, because financial success in a marriage depends on keeping each other accountable. In the end, we’ve established enough trust over our spending habits to understand that sometimes I’ll spend more on X and he may spend more on Y, and that’s OK, but the transparency only encourages communication, and I think that’s very important.
I see this as a well thought out article but would have to disagree and say that some of the examples of why the shared bank account had to do with a lack of transparency. One person is usually stronger with finances and having once person take the lead but being completely transparent can lead to greater success in the overall financial picture. You discussed horror stories with divorce, what if one person was accumulating massive credit card debt and doing mischievous things with their money, how would this be known in a separate account scenario? Furthermore, depending on the laws of each state, that accumulated credit card debt would likely be split 50-50 in a divorce punishing the spouse who was making responsible decisions. The course sees everything as shared so why keep it separate? My wife and I have had shared accounts since about 6 months before we were married and its been over 3 years now. We have a shared login with Chase and can each see our checking and credit cards. We each have a credit card we use for small things that the other cannot track which is meant to be used for small surprises like birthdays, Christmas, and what not, but we can each see about how much is spent by checking the paying from our checking account later on if we want. I personally manage everything but we regularly sit down and review our financial goals and successes/difficulties. My wife knows all of our investments, I tell her when we buy more stock, invest in fundrise, etc. She has a login for all of our accounts and can ask questions at anytime. There is no possible way you could achieve the level of trust we have in a scenario where you have separate accounts and can spend significant sums of money without the other knowing. Want to know what I spent on my buddies bachelor party last weekend? Go ahead and check the ATM or credit card withdrawals- all clean. All trust. What is one of the greatest issues that leads to divorce other than financial issues? A lack of trust. What can separate accounts lead to? Both financial issues and trust issues. By being completely transparent and working towards the same financial goals we’re heading towards greater financial success which will lead to greater financial autonomy for both of us as. Combine this with unparalleled levels of trust and a single account system can crush the two or three bank account system in the long run. Great article with great pointers, and it way work better for some, but if you’re looking for ultimate success and not just something that “works” then I think you need to re-think this system. Thanks for the perspective Financial Samurai!
There are some interesting thoughts here. My wife and I merged chequing acounts, but we keep separate credit cards. Neither of us questions the others cc balance as we discuss the bigger purchases, so each of us knows when the others will be higher than normal. In the end, it’s all about communication and having the same goals.
I’m a fan of decentralization in general. It reduces systemic risk.
I prefer to keep my finances largely independent. Similarly, if I was a country, I wouldn’t link my currency with another country’s currency, like the Euro.
My wife and I have separate bank accounts that the other is co-signed to. This allows her to cover her things and me to cover mine as we both travel and have expenses that have to be paid. The nice part about being co-signed on each other’s accounts is that if, God forbid, anything happened to either one of us, the other would not have to go to probate to be allowed into the account. We also have separate credit cards. This is because of our travel. I have two cards and so does she. One for business and one for personal. If we are out, I normally pick up the check or the costs for groceries. I cover the things on our primary residence, she covers the ones on our two rental properties. This has worked out for the two of us for over 13 years.
I have been married over 20 years and we’ve always had separate bank accounts. My husband owned his own business and didn’t make much money. I’m the more ambitious half of the couple and my income was on the rise in the first few years of our marriage. He’s since working a W-2 job. I think the biggest shock for me was not knowing his annual income until the W-2 came in (it was low). I never really paid much attention because I bought my house before we were married and I paid all the bills. Things have evened out since then (sort of).
We now have one joint account together that gives me signature authority, but my income doesn’t get transferred there.
Because I’ve been the major breadwinner, it’s easier for me to save and control spending from my own bank account. We do this transfer-the-money dance when I feel he’s not pulling his weight, but in the past few years, he pays more and more big bills out of his own account – I don’t even open certain bills anymore. We made a deal that we’d put an extension on our house if he paid the home equity loan. It’s been 13 years and I have not paid a dime towards the additional debt. It’s a matter of working things out.
Financial infidelity is more common than we think it is. That would be hiding accounts and building debt that the other spouse doesn’t know about. Sadly, trust is sometimes an esoteric concept.
My wife and I share our iPhone passwords not only between us, but with our 12 and 15 year olds too. Who cares. My 15 year old does not share hers. But everything is “family” in ours. I do not see any reason wherein it should not be a joint account. But from experience of my mother’s demise, I request all of you to make sure that you have a beneficiary defined for ALL your accounts. Joint accounts are the easiest. it generates trust, maintains it, and makes it stronger.
I think what this post is really about is compensating for fundamental financial vulnerabilities in a relationship. In a marriage with a financially dependent spouse, the dependent one is vulnerable to micromanagement during the relationship, and vulnerable to poverty if the relationship ends. But the financially independent spouse is also vulnerable to the spending patterns of the dependent spouse (and having to pay child support if the relationship ends). For the relationship to work smoothly, there has to be mutual trust that 1) both will do what it takes to make the relationship last and 2) that both will make an effort to spend wisely.
Vulnerability is uncomfortable. It can be scary, especially when you consider the statistics. But it is possible to live in vulnerability.
I am a financially dependent spouse. I respect the hard work my husband does for our family. It took us about 6 years into our marriage to figure out how to use a budget, and when we did, it removed 98% of the conflict in our marriage (which wasn’t terribly conflicted in the first place). We have unified accounts, and a budget in which we both have our own spending category for fun money. We split the money duties in an odd way: he’s the saver, but he doesn’t like to monitor the budget or accounts. I’m the spender, but I am very budget-conscious, so I track everything. (Keeping the budget on YNAB made me into more of a saver because I like to build up the pretty green buffer number.)
I hope to eventually have written a bunch of fun novels that bring in income. Maybe there is a part of me that still wants my own money, or maybe I just want to contribute something, I don’t know. But we’re in a comfortable enough position that I have a hard time thinking of how I would spend a lot of extra money.
I think what matters is not the way the accounts are split or unified, but that it is organized in a way that meets the needs of the two spouses in the relationship. There has to be accountability, but there can’t be micromanagement. There has to be order and priorities, but there also has to be flexibility and room for individual tastes.
My parents had separate accounts. I saw how that worked. I was inclined to do it that way when we were first married, but my husband wanted unified accounts, so I was willing to try that to help him be comfortable. He was willing to make his own changes to help me be comfortable.
I’m probably a little weird, but I personally value the practice of running larger out-of-the-ordinary purchase ideas past my husband. (The threshold can be anywhere between >20 to >50, depending.) I like to have his approval.
I’ve made one big purchase in our marriage that my husband was unhappy with. It was a custom couch, and it was expensive. But I knew it would make me happy, and I knew I would love it. (And I do. It’s really colorful.) I DID clear it with my husband, and I gave him time to get used to it, but he was still unhappy with the price. But he could see that I loved it, and he could see that I would enjoy it for a really long time, so he reconciled himself to it. It was hard to see him unhappy though. But I REALLY wanted that couch. :-)
It may be that my story confirms why people don’t want to be financially dependent, but I just wanted to share that stuff so you can see a little bit of the kinds of attitudes and practices that make it a harmonious situation. Your mileage may vary…
Important topic. I know couples with joint accoints and for some it seems to work. I prefer some privacy – I don’t hide my purchases but does the husband really need to know how much was my glass of wine with friends or how much was the new bike saddle?
We have ended up with a system that works for us but has quite a few accounts. I’m not going into details, but there are 10+ accounts + investments in separate provider. Our salaries come to our own private accounts. We put a big chunk of that to joint accounts – there’s one for mortgage and other fixed payments, one for “normal use” (almost all of our non-fixed spending, like food, travel and kid expenses), and one for joint savings. The rest of the accounts are mostly different savings (joint, kids’ and private), which essentially hide our side hustle money and emergency cash etc so we don’t accidentally waste it.
The split is pretty even as our incomes match but when that changes, we choose a fair distribution. Only super uneven times have been with kid care (each of our kids was home until 1 year and we split the time home in half, both were home 6-7 months so some joint time too) and then of course the working one payed.
I’m the bigger saver and invester so this gives also me a peace of mind. I’m also the one keeping long term plans in excel and updating them. Hubby sporadically calculates expenses and I force him to stay up-to-date ;)
Note that while we have our “own” money, we still pitch in if something unexpected happens – extra expenses on a vacation or so. It’s a joint life. (I heard a horror story how someone had to take bus when hubby took plane to a joint vacation. Creepy.)
In extra family expenses we both just put some extra to our joint account, or sometimes we just pick the bill ourselves. We don’t keep tab on the small things and it was fun to notice in our last yearly overview that we ended up having contributed almost equally past year.
“I’m not sure why it always seems like couples who only have joint accounts have problems with those who don’t.”
I wonder the same about so many things.
Anyway, mostly joint accounts, with separate matching his and hers accounts. We each get an equal allowance each month to spend however we damn well please. We both think we waste our money. De gustibus non est disputandum.
I have a 10 month old daughter. I will teach her to insist on financial independence and reject any other option out of hand without respect to whether marriage is involved.
Wonderful! If I had a daughter I would totally insist on her to focus on being her own woman, earning her own money, growing her own net worth, and adopting a financial independence MINDSET. Not only will it be good for her, it will be good for me too so I don’t stress out like crazy :)
Let’s give the gift of freedom and financial independence to our children, by letting THEM stand on their own too fee, forever.
I was surprised to see how high the fully joint option was in the poll, I really thought it would be more split. I’m in the joint and individual option and that works well for us, but we also both work and contribute fairly equal salaries. I agree with you that it is important to share the wealth, especially if one of the spouses is a stay at home parent. Obviously that it a full time job and it’s only fair that they are reimbursed for that. It just seems crazy that a wife would have to ask a husband for money to buy new clothes or go for a massage.
Unlike the misconception in West that Asian woman are submissive – at least I can tell for sure than Indian women “run” the house, though “behind the scenes”. My maternal grandmother did it, my paternal grandmother did it.
With time, married with children folks realize one thing – Ones who take care of children has the most power. working or not.
stay at home moms or dads, are NOT financially dependent folks. They are SAVING a lot more that it costs to raise a child. And they are providing the emotional needs of the children.
Financially dependent BY CHOICE vs. Financially dependent (because I never went to college) are two different humans….ONLY till one has kids.
But one who takes care or home/kids works at least 5x more than the one who works in office, even if it is Wall St.
My husband and I fell madly in love within a week of meeting at a party (that I attended with a date so we had no one on one time at the party.) I find this discussion about separate or joint accounts amazing. We barely discuss this sort of thing. It just gets taken care of like shopping, meals, laundry, cleaning. Perhaps this is the reason we have surprises when we buy a house, because we see the big picture and ignore details until we move in. I never paid a bill on time until we married; totally reformed when I realized I could hurt his credit score. We treat each other with the same care and respect (and delight) today as we did when we first met 33 years ago. We probably blended our checking and savings accounts on one of our cross country moves. We each have a checkbook, each use ATM’s and each would hunker down if we saw the balance moving south. (It does occasionally.) We both have multiple credit cards, some of which have both our names. Some don’t. We have IRA’s and Roth IRA’s, of course, because that is how it works. Sometimes we discuss a goal while on a trip and I write it down if he is driving; if I’m driving, I have to remember to record it later; we usually reach these goals. We each support the other in any endeavor. I just can’t imagine worrying about who contributes more when we both fully contribute and fully benefit from the incredible beauty of being in love and being part of a family. Older statistics listed the causes for divorce as “MONEY, IN-LAWS, SEX” in that order. Money can be a huge deal if there is not enough or if there are big disagreements about it. We’ve had enough money and been reasonably smart about handling it and both care a lot more about many other things. (Not to minimize how important $$$ can be.) My advice would be if you want love, don’t spend too much time thinking about pre-nupt agreements. People don’t like being placed second to money. Good luck.
We have been married 37 years – straight out of college – and started out 100% joint. Then I went into business & had a separate account for that. The business struggled, to the point of collection issues, so keeping her out of that became a priority. While that is long in the past, we got used to having separate accounts. For a long time now, we each pay certain expenses from our separate accounts & it works fine. Like all the folks who say they have no problems, it all comes down to shared goals & attitudes and trust. If you’ve got that, probably any system works.
We have separate credit card accounts which I pay from our bank joint account. He gives himself an allowance so the amount he spends on personal purchases is predictable, which is all I care about. That way he can spend on what he wants to without me getting into the details.
I am a stay at home mom. We have joint everything. I would never encourage separate accounts for any couple, unless someone finds themselves married to an addict. Marriage is not a joint business venture. It is so much more. Treating it as a business is dangerous. Every couple I have known except one, who had separate finances, had serious marital troubles, with most divorcing.
Someone mentioned to me, “Isn’t having 100% joint less of a sign of trust since each partner wants to see what each is spending all the time?” That was an interesting statement! What do you think?
It’s good you feel OK being dependent on your partner’s income. So many women do not, and want to make their own money or have their own account.
We held both personal checking accounts that we each had as singles and added the other to each as an authorized user after the wedding, however we do not keep separate credit cards. Our financial roles have been all over the map. Wife as primary income/husband making far below market value (start-up founder), Wife as only income/husband as no income entrepreneur, Husband as primary income at 2x of wife, and thankfully a post-exit couple who are still working their day jobs. Other posters are spot on, define the amount that works for you as a couple that is discretionary (This changes with time and financial position, revisit it.). Define the amount that requires notice to spend (the “hey by the way, I’m going to buy that big ticket item we have previously talked about” things). Wait and discuss other big ticket items as a team before purchasing (sometimes the hardest). This is where the bitterness starts with respect to spending and a spouse’s feelings for either requiring or granting permission. Nobody likes to find out about a new piece of furniture or a new car after the purchase has been completed, that is just rude.
Thank you for the thought provoking articles!
Wow! You really take a beating on here. My husband and I have been married for 7 years, together 11, and have a preschooler. We started our marriage with separate accounts and one joint for living expenses. This worked for us until he joined the military. It was too difficult to manage with all the moves and me being in and out of work. We are now 100% joint. We have an 8 year plan to FI. He is the spender and I am the saver but I slip sometimes too. I like the idea of being 100% joint and all “fun money spending” in cash. We have yet to fully implement this.
Oh, and the parent thing gets easier…just really, really slowly!!!
Ah, this type of beating feels more like butterfly kisses actually. Lovely!
I get more beatings through articles like:
Renters Should Pay More Taxes (to point out government waste)
How To Blame Everybody Else For Your Financial Mistakes But Yourself
Maybe You Don’t Want Financial Independence Bad Enough
So fun!
“Put on your oxygen mask first.” I had already thought of this metaphor.
I sent this to my mom. She’s financially dependent on my dad and hates it. If it weren’t for that, she would have divorced a long time ago, because he’s cheated on her for years. We’ve both cried about it together on the floor.
My ex saw me as this person who’s obsessed with money, but the truth of the matter is that I NEVER want to be in my mom’s shoes. That’s why I make my financial freedom my #1 priority. I feel that I can only really love someone else when we are both of us are 100% (financially and mentally) free to make our own choices and, frankly, are more or less on par with each other. I want to do some fun things in my life, and some of them require money. (Climbing Everest isn’t cheap!)
I’m glad you addressed this.
Thank you again, Sam.
We are Gen X family, both college educated and both working with kids. We keep separate accounts from IRa’s, 401ks, brokerage, savings and checking. It is really the only way to go. We do have an agreement that any purchase over $500 should be discussed. Otherwise it falls under petty cash. We were dating for 8 years before marriage and this may have contributed to our situation but it seems to work for us 20 years latter. Being honest and having the same goals is probably more important than having your money in one account. It also helps to have separate accounts if you are in high risk fields.
My husband and I have separate accounts and have never fought about money. I too have borrowed money from him even though he would gladly give me the money. It gives me a sense of worth, ownership, respect for money and my husband, and most important of all I want to be an example to my daughter to not be co-dependent on someone else.
Thank you for a great blog. It has been an inspiration to me. We are FI and it is great to read like minded people.
Very interesting reading for me. Married 40+ years and always shared everything including bank accounts. I came into the marriage with more but felt what was mine was his. I did not work outside the home. Raised two children on his salary. He retired early and we are still sharing everything, including bank accounts. Every couple needs to decide what works best for them.
I’m not sure how separate accounts will shield anything if taxes are joint. Marriage just about defaults to joint ownership but perhaps this varies state by state. I’d argue that it is more important to keep credit separate. This car in his name and this house in hers. Since ownership doesn’t depend on holding the note, I’ve found this to be a better method for empowering dual incomes. When she stepped out to stay home with the little ones, my credit was still wide open to secure loans and kept us nimble when opportunity struck. BTW, love the blog. Been reading for a few years now.
My husband makes more than I do and we have separate and joint accounts. We’ve been married since last year and are expecting a little one very soon (congrats by the way on becoming a dad!). I couldn’t imagine having everything merged (and he couldn’t either) but we allocate a certain percentage of each of our incomes into the joint account. It works for us as we have our own investing styles and I would feel weird charging a pedicure or girl’s night dinner to the joint account. We both have similar spending styles (he is probably a bit more frugal than I am) though.
We share everything. For our first 8 years together, she made more money although on a small scale. The next 16 though, I made more on a larger scale. I pulled away from corp America and now my wife’s business makes a lot more than my passive income although I am not doing awful. I just believe that marriage means sharing completely. I don’t care what people think or say. 27 years now, and it has worked.
My wife and I share bank accounts. We are glad to do so, but we could not be successful any other way. We don’t make a lot of money (she’s a teacher at a private school and I just became a software engineer) and we’ve had to both be on the same page about tackling student debt. Living in an expensive city where we cannot afford a home currently, if we want to afford one later there is no option but to be completely combined and to have the same goals in mind. We still have cash we take out each month and we can spend any way we want, but our own money and bank accounts may be something that we never do. Having separate bank accounts makes it harder to fulfill financial goals in my opinion.
There is no one rule fits all here. Financial independence is critical for anyone to feel a full hold on their life and decisions. That may or may not translate into a separate bank account from your spouse, depending on your situation.
My spouse and I could each independently run a household if needed. We started off our marriage with entirely separate accounts, but three kids and a decade later, somewhere along the way we ended up merging everything for the sake of convenience. Managing all the details of running this mini enterprise that is called the family is hard enough, with two ongoing careers. It was and will be quite unweildly with separate accounts.
Back again to answer a few questions about marital accounting for couples who don’t throw everything into one pot, ie joint accounts. Again, I’m a woman in a 30+ year marriage who uses a yours/mine/ours plan; we have a joint ‘house’ account and separate individual accounts.
Re. paying for big ticket items like mortgage, vacations, kids, household expenses….that’s what a house account is for! Don’t know why this is so mysterious to joint account folks because as mentioned we (like many couples who don’t do total joint management) have for many years just put a proportional amount of our income in each month to get to the amount we need to run our financial lives. That’s always included money to pay bills and money to save to keep a cushion for unexpected bills. Pretty simple.
As for joint = trust and separate = untrustworthy, that’s nonsense. There’s no relationship between trusting your spouse and how you arrange your finances. In our marriage we each know what the others’ accounts are, and if we want to we can always check on what’s happening in the individual accounts. I manage our finances and since he trusts me, occasionally when I say to him ‘do you want to know what’s happening with money’ he gets a dutiful look and says sure and then I bore him for awhile with details till he wanders off. Let’s not forget there are plenty of situations in which a husband is squirreling away money or a wife is, from those sacred joint accounts ;). It’s the trust that is important not the bookkeeping.
Money is a tool and marriage is complicated, so the basics of love and trust and respect have to be right between two people. Once that is in place, money management follows. Any one who is in a relationship in which s/he is counting pennies and measuring each dollar has problems but they aren’t solved by how you deposit the paycheck.
Final thought: for dual income couples, there is also a forced separation of resources when it comes to retirement accounts. No such thing as a joint 401K, IRA, or Social Security check. Again, a successfully functioning marriage means you figure out together how you are going to deal with all that as well.
You are right about joint accounts not being any guarantee of good faith or trustworthiness. Being in the banking business for much of my career, I heard daily about secret accounts — often secret loans, but also secret deposit accounts. The bank’s auditors require verification of accounts by mailing statements to actual home addresses and this is where the big issue is for many account holders. Staff are schooled in not assuming one spouse knows about the other’s accounts (e.g. making a comment when all the accounts under the name come up on the computer.)
You cannot tell whether a person will do something like this. Some people are sneaky about everything in their lives and very good at playing the nicest person on earth. Others expect honesty so never suspect anything.
Trust is nothing without complete transparency and candidness, scrupulous honesty in every action, and total lack of greed.
Totally agree that true love is letting your spouse be financially independent. My sister-in-law is married to a successful businessman in Romania. He owns several jewelry and convenience stores in their town. When they got married 14 years ago, he gave her ownership of a couple of the stores so that she wouldn’t feel dependent on him for money. Income from her two stores is her fun money.
Its a cultural thing. My father planned diligently to have my mother all taken care of once he was gone. And *whoof*, mother was gone first.
We have joint accounts. The way I was raised, if ever I leave my spouse esp. after kids, I will leave everything for her and kids.
Emotions and culture aside, even when one does not have joint accounts, one must not ignore to identify beneficiaries, have a will, after one turns 40.
I personally do not respect financially dependent people, in my heart, unless its a temporary situation. I come from a country where financial dependence is tied to gender…My father raised doctors in my sisters, so will I in my daughters (doctor or not, but financially as superior as possible).
We have his, hers and ours. Our joint bills are all paid from ours, but we have full discretion on our individual accounts. Neither of us want to answer for our spending choices, he is more of a spender than I am. I choose to save, and I also build in forced savings into our joint account. He can spend his funds how he sees fit, as long as he doesn’t incur debt.
We keep all accounts separate for now. I don’t see any advantage for combining them except giving ourselves yet another administrative thing to do. Plus, I’m damn proud of all the money I’ve saved and invested myself. It’s way easier to watch my money grow when my accounts are separate.
A few things that are key for our system of “no system”:
-We have a shared Mint account where we’ve added both accounts. That way I can see everything.
-We’ve agreed on how much each of us saves each month.
-We’ve set a shared budget
-Neither one of us has a spending problem. We’re both on the same page on what’s reasonable to spend. Most of the time I buy whatever I want, because I use my money. If it’s something big, like more than a $100, we’ll usually just tell the other it’s happening as an FYI. No big deal.
-We don’t nickel and dime each other. Whoever has money at the time ends up paying. I pay more of the travel; he pays more for the food.
No arguments so far, except over $6 tomato sauce :)