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. 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. I want to have the freedom to buy what I want without drawing from a pool of money my father-in law left us when he died. 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.”
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 assessment and may begin to resent her for thinking this way given he’s 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. I’m 100% focused on the marriage vs other powers that may make life difficult. Marriage 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. But it’s the year 2017 folks, modern up!
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, when 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.”
Since we first met, I’ve always wanted to give my wife everything I could conceivably offer. From paying off her college loans 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 financial help from me as a self-made financially independent woman. She enjoyed a fantastic 13 year career and was able to negotiate a severance in 2014 with some coaching by yours truly. She continued to work for two years after I negotiated my severance, even though she didn’t have to because she felt a great sense of accomplishment being her own financially independent woman. But after two years, I was too bored at home and wanted to spend more time with my best friend.
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. 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 and gave it back a couple weeks later.
We have separate bank accounts along with a joint bank account to provide maximum flexibility. We loved encouraging each other to save aggressively while we were both working. Now as business partners, we share profits evenly and always remind each other to mobilize our capital each month. We talk about all large financial decisions like buying a car or a house before doing anything, and for everything else, it doesn’t matter.
Whoever happens to have more cash in their wallet, pays. Whoever gets served the check, pays. Whoever wants to feel more of the provider that day, even though it’s one team, pays. If she wants to buy a new pair of shoes, great! If I want to buy a new watch, awesome. The small stuff does not matter, and that is a beautiful thing in a relationship!
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 the median income of your city. And 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 along with contributing to a joint account. You can always link up your accounts in a free financial management platform to track your joint progress. 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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My wife and I share joint accounts. We each earn almost exactly the same income… maybe our income equality is why shared accounts haven’t been an issue.
Set a dollar amount that neither of you can spend without “permission” first. That has worked well for us.
Having equal incomes definitely helps, along with having a rule book before spending past a certain amount. It’ll be interesting to see if the dynamics change if one decides to be an entrepreneur and make no money in the beginning or a stay at home parent.
Married 28 years, I’m 56, he is 61, 3 kids, one is autistic and will live at home for the forseeable future, one just graduated from college with no debt and one is about to start high school. Joint accounts all the way. We are one team, one family, one financial unit. Our goals are the same. We both know our standard of living, we don’t live paycheck to paycheck and unless we are spending a large sum of money, we don’t consult the other before spending. It works for us. I could see “giving” each spouse a certain amount of money to spend without question if you were really into watchng every cent, but we don’t argue about money and we meet our financial goals. Yes, I suppose it is possible he is hiding money somewhere, but he could be doing that if we had separate accounts too.
Sounds like a fantastic marriage you guys have. Congrats on lasting for so long!
Any tips you have for making the marriage last you’d like to share?
I think she already answered your question – “We are one team, one family, one financial unit.”
My husband I operate the same way. If you can’t operate as one unit (including being able to work out your different financial priorities), then you probably shouldn’t be married in the first place.
I work as a financial planner for high net worth individuals and the couples who have been happily married 30+ years all have joint accounts (even if only one spouse earned most/all of the money).
Congratulations for being a financial planner. Many will benefit from your services. We also have joint accounts both locally and in our long term investments. We trust each other, consult on major investments, have have nearly fifty years of a very happy marriage with no arguments on money. I attribute our wealth to my wife’s hard work and frugality. It has been a joyous trip through time.
Thanks for the great article, Sam! I want to be financially independent no matter how much Mr. FAF will make in the future. In fact, I want to make MORE than him. I want him to have a great income which he will, but I also like being the breadwinner of the family. Believe it or not, money means power, even in a relationship. And I don’t mind having more power in decision making than hubby. ^.^
>>Believe it or not, money means power, even in a relationship. And I don’t mind having more power in decision making than hubby.
Yikes! To each their own, but that does not sound like marriage to me. “Power” should never be on either side of a marriage.
To deny money doesn’t have any power is foolish IMO. Go speak to hundreds of couples about money, especially those couples where one is the breadwinner to gain more perspective. People put up a good front, but from all the feedback I’ve gotten over the years, not feeling like you have your own money to spend is detrimental to many relationships.
How long have you been married and how do you construct your finances?
Sam, money IS power (control, decision making) in life. Ms. FAF referred to using money (as power) in marriage as a spouse. A marriage is not about controlling a spouse.
Having money AS A COUPLE and using it to control your lives together… yes. Having money as a separate entity in a couple TO CONTROL the other person is SICK AND TWISTED. IMO.
I have more money so I can control my wife. I have more money so I can control my husband. No thanks. That’s crazy. Like… you need marriage counseling crazy. IMO.
Control in any form or fashion in a marriage is toxic. You should be partners. The only minor exception I personally allow for is a pre-marital agreement if one of the people is a wealthy person marrying someone without money. WHILE you are married, you should both talk about money matters and everything is COMBINED. If you get divorced, the wealthy person before marriage should have some kind of protection. I used to not have this opinion, but as I’ve gotten older (50) and acquired more wealth, it’s an unfortunate truth/need. Note, I did NOT have wealth before I married the 2nd time, so I personally have no pre-nup.
Other than that, you are PARTNERS in marriage. You decide on goals and money-matters TOGETHER or you don’t do it. If two people have two separate money goals, you’ll end up in two different places (and not together).
I have been married a 2nd time for 8 years. My first wife was literally crazy. And I dated my current wife for 4 years before marrying her. We are both equal in decision making. It doesn’t mean we don’t argue points one way or the other, but at the end of the day we are EQUAL. We make major money decisions together. If you make money GOALS together, you can easily make money DECISIONS together. Accountability is easy, because the GOAL is the major deciding factor.
Thanks for sharing. Sorry the first marriage didn’t work out. What were some of the reasons why it didn’t beyond just her being crazy? Did you guys have joint or separate? What were some of the things you’d do differently before getting married to the first wife?
Does your current wife work or stay at home?
>>What were some of the reasons why it didn’t beyond just her being crazy?
Sam, I purposely use the single word “crazy”, because most people WOULD NOT BELIEVE ME if I explained everything I went through:
1) She attempted suicide twice
2) She pulled knives on me a number of times
3) She sped down a road trying to kill us once until I pulled the e-brake and spun the car around to stop
4) She had two affairs
5) She would intentionally do things to abuse me like wake me up during the day when I was working 3rd shift, turn a TV off while I was watching it, grip my arm and dig her fingernails into my forearm, ripped my eyeglasses off and twisted them so they were unusable
6) She called 911 once during an argument and screamed “he’s beating me” even though I hadn’t laid a hand on her and she was on the other side of the room. Yes, I got arrested, hand-cuffed in front of my neighbors and 3 year old, and put in the back of a police car. This is the one and only time this has happened in my life.
Shall I continue?
She was F***ING crazy. I hung on for 13 years, because I had a son with her early on. I came from a very religious background, and I was going to “love her for better or worse”.
>>Did you guys have joint or separate?
Joint. When we divorced I gave her everything (all bank, cars, and retirement accounts) just so I could keep my business as my business even though it hadn’t made any money and had a negative net worth.
>>What were some of the things you’d do differently before getting married to the first wife?
1) I was young (20) and naive. Don’t marry that young. Wait until at least 25 (preferably 30).
2) I did not date her long… two months. I only knew her two months, too. See #1.
>>Does your current wife work or stay at home?
She works with me in my software business. She does sales/orders. I do development and support. I’m the multi-millionaire Jeff who commented a lot on your post https://www.financialsamurai.com/how-to-create-next-level-wealth/. I mentioned some of this in that post. I’ve had a very unusual life.
Gotcha! I guess it was one of those “what was I thinking” moments. The good thing is that you must LOVE and truly appreciate your current wife and situation so much more, thanks to your first wife!
Always looking on the bright side of things.
This is a very idealistic viewpoint. I prefer a more reality based approached where we courageously call out some realities of life. Money is power. Sorry!
In a democracy, everyone is equal in the eyes of the law, but there’s only one president. I know it should be different in a marriage, but is it really?
You should see how he feels about that.
He might want to make more money than you and be the breadwinner in the family. This may also cause some tension too which I’ve seen first hand with a few relationships.
You addressed every possible reply, Sam. I fall on the “if you’re married, finances should be combined”. If you can’t talk with your spouse about your needs (whether it’s money or not), you don’t have a marriage.
In general, a husband who pushes frugality is not a bad husband. He is focused on financial independence. If they can stay married, the wife will REALLY appreciate his frugality once they get near retirement (whether that’s 50, 60, or 70). Having money and peace with finances in your laters years, I’m beginning to treasure more and more. We have a world full of people who spend, spend, spend and will have really limited options in their later years. Most young marrieds in their 20’s into their 30’s can’t appreciate financial independence until they are older.
Sam,
I am an avid reader, but first time commenter. I think you are dead wrong about marriage, but I also have a strict interpretation of ‘for better or for worse’. It does not mean ‘for better or the same’ or just ‘for better’. If you have a marriage with a solid discussion of what ‘for worse’ constitutes — for us it was physical abuse and fear for life or limb — as grounds for divorce. If you accept gambling debt as worthy of divorce — then I think your argument is well founded. If you truly want to spend your life forever with that other person, with any and all their future flaws, then you make that choice in marriage. Rarely do we see sane, functional adults with jobs ‘divorce’ their kids because their kids drive them crazy, lie, do drugs, or mooch excessively. Don’t our spouses deserve the same, especially because they were hand chosen from a nearly limitless pool where one can also choose to abstain for choosing at all? Imagine if society didn’t take parenthood seriously (I’m talking functional adults with jobs, etc) — and had an insurance policy in case they didn’t like their kid. If you have doubts and need an insurance policy before you get married, you probably shouldn’t get married (for love). This excludes all financially or culturally motivated marriages (taxes, quid pro quo healthcare for housekeeper/chef, or other traditional norms of marriage).
As far as financial dependence — that’s where working as a team is great and 1+1>2. You share a mortgage, utilities, cell plan, etc. You can makeshift with one car if the other is in the shop, and cover for each other at home as work emergencies pop up. Meals are cheaper prepared for two or more, and you’re less likely to just eat whatever is around all the time once kids are involved. If you can’t depend on your spouse, and we all know you can’t depend on your employer or the government, you’re forever going to be alone and unafraid. I’m not saying true independence is bad, but there is something quite special about having that dependence on another and trusting them implicitly. In relation to your hobby — playing doubles vs singles in tennis. Doubles is great if you can trust your partner, are in sync with each other in the game and financially, and you’ll probably beat the single guy across the net. But if your doubles partner falters, you can step in and cover (no rules to which side or half you have to stay on) until he/she gets back on his/her feet. Over time, and on average, a doubles pair will defeat the single unless that single is far superior. I’m not saying finding a great doubles partner is easy, but once you found them, you shouldn’t try to take their shots cause you don’t believe in their ability, because they you’re just playing singles again when others around you are playing doubles.
Choose a doubles partner you trust, and then play like you trust them.
Do you mind clarifying?
I believe marriage is about love, happiness, freedom and building a wonderful life together, what exactly is wrong with that?
How long have you been married? I have a hypothesis about which spouse will disagree with my thesis the most and also what age range will disagree the most as well, but I don’t want to reveal it yet until I get some more data.
Thx!
Sam,
I agree with B. Your arguments are wrong in this article. In my opinion, the main reason marriages end up in divorce are because people treat marriages like a courtroom. He did this and she did that. People are keeping track of the wrongs done to each other instead of accepting the other person the way they are. That’s what causes marriages to end. Hillary and Bill Clintons marriage is a prime example of a healthy marriage. Hillary had every excuse to leave Bill because of the Monica Lewinski scandal. Did she? No. From what I remember, the media condemned Hillary for not leaving her husband. How could she stay with someone so unfaithful? They were looking at the relationship from a courtroom perspective. Instead of admiring how accepting Hillary is of Bill and working towards a better relationship via conversation and understanding. Sam, how would it feel to you if I told you: Sam, as your friend for life, I accept you for who you are. No matter what you do I will always care and have my door open for talking and helping you out about any matter?
How much would you appreciate having someone with that perspective in your life?
I love the Bill, Hilary, and Monica example. So fun!
I think it’s because I strongly believe in giving, and never taking, which is why I’ve always encouraged my wife whom I’ve known for 20 years to achieve financial independence. I will do the same for my daughter and make sure I instill in her the power of financial independence.
“Sam, as your friend for life, I accept you for who you are. No matter what you do I will always care and have my door open for talking and helping you out about any matter?” – I feel very lucky to experience this now from my wife and give her the same.
How long have you been married and do both of you work if so?
Bill was such a smooth operator. Thx for bringing him up!
Bill and Hillary in a healthy marriage? Haha, that’s a good one. The number 1 reason she stayed was for her career. She would not have been able to parlay her senate seat, secretary of state and presidential nominee if she divorced him. Nothing wrong with that, in fact good for her for taking advantage of her husband’s name to catapult her career. But don’t for one second think that’s a healthy marriage. Need proof, just look at the body language. These two are still married because of strategy, not because of love. I’m glad I read the comments section of this article, thanks for the good laugh.
Nooooooo! Say it ain’t so! I always heard that Hillary secretly really hated his guts for all the women Bill slept with while he was in power, and that she was putting up with it for both their careers’ sake.
Could the rumors be true that she’s only with him due to optics and power? Hmmm.
@B –
“Imagine if society didn’t take parenthood seriously (I’m talking functional adults with jobs, etc) — and had an insurance policy in case they didn’t like their kid.”
It’s a beautiful dream :) Now that kids can divorce their parents, looks like we’re heading that way. Now if only parents could give kids back instead of carrying them until they (the parents) die or finally giving up on them and letting them become homeless.
Your point about marriage tells me you take it way too seriously. It was never about love, but property. In much of the world it still is. Having (at least partly) independent lives in why people in arranged marriages stay together.
Mrs. Freaky Frugal and I’ve been married for almost 33 years. As you can imagine, we’ve been through a few money-sharing plans.
Plan 1: When we first married, we each had our own account and then a single account for paying common expenses. This worked for awhile, but eventually I made so much more money than her that she owed me money. :) I decided this is crazy and we combined accounts.
Plan 2: We had a single account that we shared and we discussed any expenses over a certain amount. We never discussed what that amount was, but I guess it was around $200.
Plan 3: We each had a small separate savings account called Fun Money. Every month a $200 or $300 deposit was automatically made into the account. The idea was that we could spend Fun Money any way that we wanted without discussing it with the other. This sort of worked, but eventually I had a big pile of Fun Money and she had very little.
Now we are back to Plan 2. This is based on the fact that I finally fully trust Mrs. Freaky Frugal’s judgement about money. As long as there is a great Happiness Return On Investment (HROI), we’re good.
I’d be totally for a separate “fun money” account each if it didn’t mean bank fees. I can’t see a fun money account maintaining the necessary balance to make it free and paying $15+ a month for each account is a total waste. Did you just accept this expense?
I bank with Ally so I can open as many sub-accounts as I want with not extra fees. I think Capital One 360 works the same way. Not sure how it works in Vancouver.
What bank do you use? I’ve never had to pay a bank fee to open up another account. For ref, I have accounts at Citibank, Bank of America, Chase, USAA, and Fidelity.
I’m in Canada and basically none of the “Big 5” banks (Scotiabank, BMO, TD Bank, CIBC & RBC) offer free chequing accounts without maintaining a minimum balance, which is typically around the $3,000+ mark. Some smaller credit unions may have free chequing but I didn’t dig that deep. Unlike the US where there are hundreds of smaller banks, Canada generally only has the big 5 (which are some of the strongest banks in the world and a big reason Canada was little affected by the GFC). They all charge fairly high fees if you aren’t careful and their profits are staggering at around $10billion per quarter combined.
I see Tangerine does have a free chequing account option so I could explore that option if we go down that route.
Man Sam. What a great article! My wife and I share accounts. She is a SHAM and previously was working and then in school. I am frugal and working hard to pay off our debts (my school and our home) so we feel the money crunch despite a very robust salary.
We had the same recent issue with massages. She wants one. I encouraged her to get it. She still has not made the appointment. Reading your post I see that I should either make the appointment for her or buy a few sessions.
My mom feels the same way to. She retired a few years back while my dad still works. I help her out with a few hundred bucks a month and she says it has been great. She can do some of the things she wants without feeling any sort of pressure.
So your article really hits the nail on the hammer. Nice work and I hope you are enjoying fatherhood. Let me know if you come up to Santa Rosa (and when your son is a little older you should go to Train Town in Sonoma!).
Get that massage gift certificate as a weekend surprise ASAP! She will totally appreciate it. I’m talked to so many SAH spouses who feel guilt spending the joint account b/c they aren’t making an income anymore. But it is up to the other spouse to FULLY APPRECIATE how much work it takes to take care of the household! Oh my…. it’s a $100,000+ a year job for sure.
Sounds like a plan regarding Train Town! Give him…. 3-4 more years!
Best, Sam
Tough topic.
My wife and I are totally mingled and also do rough budgeting. That is as long as what we spend in the month is below a defined threshold we don’t care. If it goes above we look at why. If either is going to buy something “crazy.” Like $500 or more, we inform the other (don’t ask for permission)… It’s a heads up with option to challenge :).
My wife has been a SAHM for 6 years and as you know it’s really hard to earn money and take care of kids full time. I’m also not a fan of figuring how much that is “worth” in terms of money.
The key to this is that we are partners. I HAPPEN to earn the money, she HAPPENS to stay home and take care of the kids. If she felt she had to justify spending and I didn’t, that would be a problem. I think too many people see money they earn as “theirs” regardless of what their partner does. California divorce law says otherwise :).
Of course all this only works because we see eye to eye financially. We never fight about money even when we didn’t have any :).
However, I think each couple needs to do what works for them in order to have trust and satisfaction. If that means separate finances, that’s fine. I think problems come when people think that there is ONE perfect solution and everyone else must follow that magical formula or prove there must be something wrong with them.
I use the ‘how well does the decision let you sleep at night’ test as a great measure for what is working. Things that haunt and stress you at night eventually kill you; so it’s good to use that as a starting point for making changes.
Good topic!
Indeed. I’m all for doing whatever works best for your marriage and household.
But I have to admit, I LOVE getting judged for what I do in my household because that makes for some more good writing material!
I’ve acted as a financial confidant for many, many married women leaders before over the past eight years. And I can tell you with full confidence that many stay at home moms have mentioned the financial constraints and the lack of freedom of not having their specific bank account or spending money. They just don’t want to bring out it up with their husbands.
The world has changed since 20 or 30 years ago even. The balance of power and income is more equal than ever before. Therefore, finances and marriage should also change.
It sounds like you guys have a GREAT system going. Open communication is key. Congrats!
I completely agree with both partners being financially independent I also think that there should be complete trust and openness about all finances and spending and saving. As a female I could never and have never not had my own income. A marriage works better if both partners don’t have to stay for financial reasons and one partner does not have to stay silent to make it work.
This idea is not a new idea. My parents (born 1924): when mom worked (very unusual then), he considered that her money, and she had a separate bank account and investments; when only he worked, she controlled the finances 100%. Me (born 1948): I always had a job and money in savings. Sharing our entire finances was a mistake in my case because in the divorce (before community property in BC), he claimed it was all his. Turned out I shared and he didn’t — a lot of it was in his name only. I was very young and naive.
One thing i have observed in households where the woman stays home, is the attitude that dad works so hard, he deserves his toys and some fun (mom does not I suppose as she does not work). Dad makes the major decisions about vacations and toys and food (his interests — fishing, golf, hunting, toys, the food he likes). Mom stays quiet in order to keep the peace.
One more thing about staying home to raise kids, I doubt very many men would ever do it for the same reasons women have a hard time with it. But at the same time, I get so tired of hearing how hard it is. Of course it is hard, very very hard, but you wanted it, and presumably it was no surprize, so now you have it all, so lean in, enjoy your blessings, and stop complaining and wanting a medal for doing it.
Looking back with what I know now, I would say to women is to get yourself a nice stash before having the kids, and then invest wisely to provide yourself with income when you are no longer working. Buy a house, make sure it has a suite to rent out, and invest your financial assets. You will always have an income and you can stay home with kids too. But at the same time, share everything, no secrets and all finances decided together. If you have to rely on trust, there is no trust. Keep it open and honest and in good faith.
My fiancee and I each have our own checking and savings accounts. I actually have multiple so I can go to my credit union in person, and also take advantage of better savings accounts rates online.
We have a joint online checking account that we both contribute to for shared expenses (rent and utilities). Otherwise, we are free to spend our money as we see fit.
Right now, our money goals are slightly different. My goal is FI by 40 RE by 45. My fiancee makes less than me so rent, utilities and healthcare is most of her paycheck. She’s trying to max her Roth which she should be able to do. We’ve talked about early retirement and our financial plans, so we’re on the same page. Once we get married and her expenses go down, we are going to take another look at our finances and figure out what works best for us.
24 years married. So far, mine is the lone “other” vote. Most of our bank accounts are joint, but some are separate because it is financially advantageous (such as enabling both of us to get new account bonuses). When there is no financiial advantage to having separate accounts, and if having a joint account is an option, we opt for joint.
I’m a firm believer in each couple doing whatever works for them.
I don’t equate financial independence with separate bank accounts.
Why you gotta be a rebel and vote other? :)
Makes sense on dividing and conquering to get more benefits. I hadn’t really thought of that.
My husband and I have a yours/mine/ours system: we each have independent accounts (with the spouse as beneficiary of course), and we have what we call the ‘house account’, a joint account into which we deposit money to run our household and financial life. Since we both have careers and income we started out by figuring what we needed to run the family and then depositing proportional amounts each month. What remained went into our personal accounts, and theoretically was each partner’s to use however we pleased. It’s worked well for us for many years. Over time the system has turned into basically 99.9% of our money being joint, but having a separate account is as much about feeling that one is never totally dependent ie asking for permission to spend (me) and feeling that one is always keeping some funds in reserve for a rainy day (him). Recently we purchased a dream vacation/retirement home which necessitated liquidating all of his rainy day money and my savings as well. And now we are just putting 100% of our take home pay into the house account so I suppose we’ve evolved into those ‘all in one pot’ couples.
I don’t really understand the judgmental attitude that is so common coming from the joint account folks. It’s as if they are offended by the idea of grownups, who have in many ways built a whole personal financial structure, not immediately throwing every penny in a pot together as a requirement of a happy marriage. There are so many ways to live life and I think couples who have a system that works for them are the winners regardless of what the system is. Anecdotally (judgy alert) that attitude seems more common among the couples with a WOH/SAH dynamic and (feminist alert) I suspect a lot of it is an attempt on both sides to equalize what is inherently a power imbalance. Regardless of how many times I hear ‘I work, she stays home but it’s all our money’ that can change in a heartbeat and guess what–our money becomes his money while she fights to get some of it. No thanks :)
I love your story Ann, b/c it highlights open dialogue, active communication, and an EVOLUTION of financial team work that are all required in a healthy relationship.
It’s weird that it seems like most of the people who judge are those who have 100% joint accounts and where one is a SAH parent.
I always like to ask: what would you advise your daughter to do?
I instilled in my daughter that regardless of what path she chooses in her life, be it the a single professinal, marriage as a double income family, or being a SAH wife and parent, she should ALWAYS know she can take care of herself financially.
Have seen way too many of those ‘it’s all ours’ SAH/WOH marriages in which the non-working female spouse (and it’s always been a woman) had no clue what was happening financially and then disaster ensued when Mrs. Clueless discovered through divorce or even worse death that she was financially helpless and vulnerable.
My daughter, second generation feminist that she is, manages her money very carefully. She’s 25 with a 401K, Roth IRA, a year’s worth of salary in the bank and zero debt. Tomorrow she is gong in to buy a car to replace a lemon and will be paying for it in full in cash-except for as much as she can put on her CC and then pay off for the points. Very proud of her common sense and hopeful she will remain financially savvy and find a partner who is too :)
I heartily endorse this. Even when the woman is by far the better manager, the husband’s ego requires him to take charge. Why do so many marraiges seem to work only if the husband’s ego is coddled.
Like with most situations, the answer here seems to be “it depends.”
It depends on how your marriage is structured. If you and your wife can sit down and talk about your financial goals, and if you treat each other with respect and like adults, I see nothing wrong with having a joint account. For example, my wife and I have talked openly and extensively about our financial goals and we’ve agreed to try and reach financial independence by a certain age. We’re both involved in our finances and we trust each other.
For the last few years, my wife made all the money (I was in school). There were a few times where I felt like she treated the money as “hers,” but she’s very reasonable and we talked it out. Now I make the money, and because of that experience, I trust her and we treat the money I make as “ours”. We both have an equal say in how it’s spent and I explain where I’m putting money whenever I move money around.
I make sure we go through our expenses each month, so we’re always held accountable for purchases we make. By having to be accountable to the other person, we both agree that we’ve been prevented from making some pretty stupid purchases (although a few manage to slip in every now and again). It helps us save money, and since we’re both on board with the same financial goals, we help each other reach them faster.
Giving my wife money each month would feel too much like I’m giving her an allowance. She’s not a child or employee, she’s my wife, so what’s mine is hers and vice versa.
Now if you’re married to someone who doesn’t share your financial goals or who isn’t as reasonable, then yes, I’d consider splitting up your accounts. However, telling people how to handle money in their marriage can be a very touchy subject :) I’d say to just do what works best with your marriage. Every situation is different so the “right” answer would be the one that leaves you two feeling as comfortable as possible with your situation.
Very thought-provoking post, Sam, thanks!
Sounds like you guys have really talked things through and have supported each other during times of non-work. Well done.
“By having to be accountable to the other person, we both agree that we’ve been prevented from making some pretty stupid purchases” – This is an example of #3: The Financial Trainer.
My wife is very frugal, so she has totally challenged me to be more frugal. If my wife was spendy, I would be much, MUCH more spendy b/c I have excess cashflow. I have told her many times to remind me how STUPID I felt as a 24 year old when I bought a brand new luxury vehicle, every time I get this urge to buy a new car. It’s worked! I kept my 2000 Land Rover for 10 years, and then bought a Honda Fit.
We just tied the knot on June 24th, but haven’t yet merged any finances. We’re in the process of building a home, and muddying the waters with our financing by merging accounts now just seems like more of a headache than it’s worth (they’ve been watching us like a hawk since we signed our contract a while back).
After things settle down our plan is we’re in it together: everything. Both my wife and I will work and contribute, and there may come a time where we agree one of us could quit their job (as I make about twice as much as her, it’d be her first most likely) but we make those decisions together.
We do plan on having essentially an ‘allowance’ each month that is fun money that we can spend however we want without judgement. If I want to go drop $100 on stupid video games, I can (as long as it comes out of that account) and she can’t judge me for it. In theory it sounds good, and of course we’ll tweak as needed.
Marriage and money is a complex topic and has so many differing opinions. I admire your well-thought-out arguments for more financial independence, but at the end of the day everybody’s marriage is different and they must do what is right for them. If people can have totally combined finances and be just as happy and successful and fulfilled as those who split things or have a combination, who am I to tell them they’re wrong???
Congrats Dave! When you guys buy a house together and don’t have too much left over, you must go all in together. It’s like a battle for survival to recover the savings buffer!
Just continue to have open dialogues. Things will change over time.
Yep! I’m looking forward to how much we can bolster our savings after the house. Between the wedding and house it’s a very expensive 2017 for us. Ready to move the needle back in the other direction.
I think if you are keeping separate accounts the stay at home spouse should be getting half of the working spouse salary. Whats up with valuing their time like a nanny or housekeeper?
Sam, what is your opinion on marriage in general in today’s world? Is it necessary? I know there are tax benefits (in some cases) and insurance benefits, but otherwise is it even necessary if there are written agreements in place to protect both parties and any children?
Totally merged here. Similar to others I believe it depends on the couple. We discuss expenditures beyond a certain point.
I think separate or joint accounts is typically a question for which you can’t give a correct answer that fits everyone. It’s just like how long should you be dating before you get married? What’s the ideal age difference? How many kids should you have? Does different religion matter?
My wife and I only have joint accounts (as far as I know, haha) and I would never change it as it works for us perfectly. For another couple it might be a disaster. When we decided to join all our accounts, that was a 2 minutes conversation. Simply because as long as you love and trust each other, it does not matter. Be honest with each other in your finances just like in every other area in life, no matter if you have one, two or ten accounts.
My wife is a SAHM but she homeschools our five children. I think she works a heck of a lot harder than I do and deserves to get paid more than I do in my opinion. Society doesn’t see it that way. With a household of seven, expenses vary widely from month to month.
The best thing we have found to help our saving rate and money management is to pay ourselves first each month (as in saving for retirement or other goals). That is the first item to go out just like a mortgage payment or the electric bill. After that my wife and I discuss any purchase over $100 and other discretionary spending.
We obviously want the best for each other and we are both frugal in nature so that strategy works well for us.
I could see the separate account thing working if one spouse had a spending problem and actively sought help from the other in controlling that spending. In that case, the breadwinner might need the smaller account (if he/she is the spender) and the SAHP could manage everything else.
If I went to my wife and said,”Honey, I’m going to give you the average income in our city.”
I don’t think that would be received well, as in, sleeping on the couch. I don’t want that anyway.
Questions that would also arise for us would be:
Where do the kid’s expenses come from?
Who pays for what expenses like healthcare, water, electricity, retirement savings, mortgage?
How do you make those expenses fair?
What if I have some big expenses all in a row and I need to spend more like when home insurance, life insurance, and other annual expenses come up?
Who should pay for life insurance? The spouse is the one benefiting?
For our situation, it would open a huge bag of works that would only result in judgment and animosity.
We’ve had a lot more success discussing our financial goals, taking out the important expenses first and then having an open dialog about the discretionary spending each day, week and month.
When I married my wife, I wanted everything that she had to offer, the good and bad. Management of money is only a small part of our relationship. If we are giving ourselves to each other fully, the money has just been a natural extension of that and isn’t really much of a problem.
Just like with any marriage, selfishness will destroy it whether its physical, mental, or financial selfishness. I think once you are truly living to serve and love that other person, the money part comes pretty easy and joining finances in every aspect will extend from that.
Maybe I’m an idealist but that is what I strive for in my marriage.
Tom @ HIP
We have completely combined our finances (newlyweds under 30), but we recently added a separate business account for my husband. We’ll be doing the same for me once mine starts. We have the fun money aspect included, but I definitely look forward to increasing it in the future because he likes to spend more money than I do and I never want him to feel confined by me. This article was so much fun to read!
I agree with some people commenting above that it really depends on the situation whether to have separate accounts or not.
There are definitely times when joint accounts make sense (such as for common bills, mortgage payments, etc.) but I think it is also important to have personal accounts.
Either way, I think being open with your partner about your finances is crucial so it doesn’t become a burden and there is no secret spending or anything like that.
Great post!
Hi Sam,
I’ve been married 21 years, together for 27, and we have never had a joint account. We realized early on that I’m the saver and she’s the spender. Our goal was always for her to be a stay home mom, than a stay at home wife. Kinda old fashion I guess but that’s what we both wanted. I take pride in being the provider, she takes pride in being the nurturer.
I give her a certain amount of money each paycheck knowing full well that she will spend every penny of it. She doesn’t spend it all on shoes and purses. “I know what some of you are thinking.” The majority goes for groceries and house related items. The rest is for whatever else she wants. My money goes for savings, investments and the larger expenses. The rest I spend on whatever I want. Neither of us check each other accounts nor do we question what the other person purchases.
In 27 years I can’t think of a single argument over money. Sex and eating too much bacon yes, but money never.
Whether your accounts are joined, separate or a mix of both I think its more important to come up with a solution that works for both spouses. Separate accounts just happen to work for us.
Thanks, Bill
Thanks Bill. Your story is going against my derivative thesis that couples who have been married more than 20 years mostly espouse joint because one spouse doesn’t work and they are old school.
Good to know that you’ve never had a single argument over money in 27 years! How many years did your wife work a FT job in those 27 years?
Do you think in this day and age when both women and men have longer careers, separate + joint or separate may be a good modern solution?
Hi Sam,
My wife worked the first 9 years we were together. After our daughter was born she stayed home for the next 7 years. Since then she has worked for me in a very limited capacity. Currently 2 days a week for about 3 hours a day.
I doubt our situation would work very often for most people these days. You really have to trust your spouse to go all separate accounts. My guess is a lot of people get burned doing that. On the other hand I think its very important for a non working spouse to have 1 separate account. I asked my wife about this and she said it gives her a sense of security. As her husband I want her to feel secure.
I see commenters say it has to be this way or that way and they are very adamant in their views. I don’t see this issue as black or white. If you pick the right spouse and are both on the same page than I don’t see a wrong answer.
Thanks, Bill
The number one reason I am quite adamant to maintain joint accounts is simply because separate accounts encourage unnecessary spending from both partners. If we have an early retirement goal the idea is to maximize our savings rate (and thus minimize our spending). I want to know we are both doing our best to maximize our savings but I will never know that if we maintain separate accounts. All separate accounts achieve is more spending, which completely goes against the joint goal. A joint account keeps both partners accountable to their spending and thus the joint goals of the family.
I know WAY too many couples who have separate accounts and their savings are pathetic based on their earnings. They spend like there’s no tomorrow on whatever they want. They don’t even know what each partner has in their savings and to me that is not a marriage at all.
To get around the urge to spend we are both allowed to spend $X a month on whatever we want without judgment (ironically I spend my allowance on investing). There is no need for a separate account in order to do that.
Of the 3 reasons you give for merging the only one I can really get on board with is #1, which is addressed with the allowance as noted above. #2 is a fairly minor reason to separate accounts that I wouldn’t worry about personally and #3 is in fact the opposite of what would work for us. Joining our accounts motivates us to save more, separating them would only motivate us to spend more. I don’t know many people who compete with their spouse on earning money either, that’s a recipe for disaster.
I’d be curious to know what % of people who divorce due to money had separate and joint accounts. I’d hazard a guess at the majority being separate.
Thanks for sharing. Perhaps it is true that having joint makes the team work harder to grow the joint.
I like separate + joint because it challenges us to individually do the best we can AND promote the joint, along with all the other reasons I’ve mentioned in this article.
I assume both of you guys work? What are your future working and family plans down the road?
I see your point but shouldn’t people be doing the best they can for their family anyway, rather than for themselves? I wouldn’t be anymore motivated in my personal career/earnings by separating my money from my wife’s and I’m not sure she would be either. Your argument appears to be that people will be more motivated to succeed by separating themselves from their partner financially. To me that sounds a bit individualistic in what should be a joined endeavor.
I think the defining factor is whether or not you can create a joint goal that motivates you both. If you can then combining money will work well, if you can’t then perhaps separating it will result in less arguments as you are both free to pursue your own goals. Fortunately my wife and I both want FI so we have a joint goal and as such a combined account.
Yes, my wife and I both work and our future plans are an early retirement (hopefully early 40’s, we are almost 29 now). We are unsure about children at the moment but I know I do not want to sacrifice our early retirement goal to raise a family. If we can achieve both simultaneously, fantastic, if not then I guess something has to give (or be delayed at least). That being said I know if my wife suddenly has an urge for children it will be hard to say no so who knows!
My husband and I have everything separate, and it’s been like that since day 1. Our reasoning was more for the acquisitions of real estate and being able to finance 20 loans conventionally rather than 10 as a married couple, and separate bank accounts so that we can spend on our money on whatever we want. 10 years together and we have never argued about money. I do believe that values come into play here as well. We both value acquiring income producing assets instead of stuff, so being on the same page is important.
One thing to add, when we were working with an attorney to create our will he let us know that having completely separate property (even in a community property state) could make it a challenge if both of us passed away. So we had to create a community property agreement to be recorded upon death to ensure that all assets acquired during the marriage are to be distributed as part of the will.
Definitely do your research and seek the advice of an attorney when keeping separate property.
Your separate assets here are a technicality. That’s not what’s being “argued” in these discussions. You guys are being smart, and you DO have COMMON FINANCIAL GOALS as a married couple.
Thanks for sharing Jennifer! Another example of a couple with separate finances who have never argued about money. 10 years is a long time! The other example is 27 years.
It’s good you guys have shared goals. That is key.
“We” have been married over 23 years.
Everything is shared, from accounts, trusts, mortgages, etc. “We” have both had good careers, and have always considered the aggregate income stream as “ours”. “We” spend a few hours a year deciding on what charities to donate to, and how much.
“We” are fortunate to have saved up multiple years worth of cash reserves, plenty in retirement accounts, and primary and secondary paid-for real estate. “We” did this together, with plenty of financial wins, mistakes, and lessons learned – together. Only one of us is working now, but that hasn’t changed anything for “us”.
For day-to-day purchases, in the hundreds of dollars range, no discussion is necessary. For medium sized decisions, in the thousands of dollars, “we” are in sync on when and why. And, for the large purchase decisions, over 100k, “we” will likely have several discussions of pros/cons to be sure it’s right for “us”. “We” consider our net worth as “ours”, and have not spent one minute thinking otherwise.
United, “we” stand.
Wonderful! May I ask how long your wife has worked out of those 23 years? I’m doing a follow up article. Thx
She worked up until about 2 years ago, so roughly 21 years. Mostly full-time, with some part time contracting in the most recent years.
I’ve been married for over 10 years. We have separate banking accounts, but have it set up so that we each have access to each other’s accounts. We do this because we find it’s simpler, and have yet to find a reason to combine our accounts other than you’re “supposed to”. It seems like some people have no issue with having separate credit cards, but I don’t see how it’s really any different than separate bank accounts.
I wonder if having separate accounts makes more sense in the States where the judge can award one spouse more money during divorce proceedings if the other cheats.
In Canada, it just gets split 50/50. The law doesn’t care about cheating. So even if you have separate accounts, it gets split 50/50.
Also, having separate accounts makes it more difficult to work towards financial goals. If one spouse isn’t aware of what the other one is doing with their account, and then end up inheriting a lot of debt when they THINK the account is healthy. But then again, if your spouse is dishonest about money, there’s no way to work towards financial goals, regardless of whether the accounts are separate or not.
I get that some people prefer their independence so it works for them. It depends on their personality.
I am in favor of splitting bank accounts. I give my wife more than the mean earnings of those who are employed in the city of our residence each month. I am also paying for all normal living expenses and schooling fees for our daughter and am the only breadwinner in family.
My wife is able to pay for discretionary items from this allocated money and can also save and invest in it. Meanwhile I’m also doing investing and saving in parallel. It’s been working well for quite some time as we just celebrated our 10 year anniversary last month and all seems well.
-Mike
I completely agree with you on marital financial independence. My Father passed away three years ago and left me seven-figures in cash inheritance. As you’re probably aware, that’s separate property and remains separate to this day. I created a Revocable Trust and Im the Trustee and Grantor. My wife has no access to the trust now but she’ll receive it all as a beneficiary if and when I die. I don’t intend to ever divorce her but in the unlikely event it ever happens, my money is safe, hence the Revocability of my Living Trust.
My fiancee and I choose the pile everything up in one big shared account after we bought our home. And that was the best choice for us. I also know many that have separate accounts and are perfectly happy with it. Therefore I don’t really believe there is only 1 way (having separate accounts) that works in a relationship.
What’s even more important before discussing how to deal with accounts, is to check if you’re both on the same level with saving and spending. If you do, joined accounts are the way to go (at least for us). If not, then separate accounts are more likely your thing. In the examples you wrote there is one common factor, and that is the fact that both partners have different views on saving and spending money.
Financial independence is very important in relationships as it helps maintain self-esteem, financial and emotional harmony. My friend just left her partner due to financial infidelity.
He hid thousands of pounds which she later discovered from a friend’s brother who happened to be his husband’s friend too. As dishonest as it may sound, he just wanted spend some of his hard-earned cash without having to answer to anyone.
Married 4 years, 1 beautiful 1 little baby girl and both work full time. We have had joint everything since day 1. We discussed having separate accounts but didn’t for a variety of reasons.
1. Introduces a level of secrecy that neither of us felt comfortable with.
2. Creates some kind of insurance policy for your marriage ending in divorce. I prefer the “burn the ships” method to marriage.
3. More efficient to have one bill to pay and account to manage instead of 2. Time is extremely valuable once you have a little one.
4. If my wife ever decides to stay home she would have no income and she hates the idea of me “paying her”. Said it would feel like getting an allowance like a kid.
5. It acts as a band aid for not addressing underlying communication problems.
We are a team and we either succeed together or we fail together. We are seeking financial independence together not separately. I believe working like this introduces a synergistic effect where you can achieve more than the combination of the separate parts.
We certainly don’t agree 100% on how our money should be spent and that is okay. My wife is a far more generous giver than myself. Instead of not addressing that disagreement, we discuss our goals, compromise on an amount and then budget for it. Isn’t that what marriage is all about?
Grant, thanks for sharing. It’s not secret if you simply say you have these separate accounts.
One of the key points of this article is to be FLEXIBLE. If your wife stays at home, her attitudes and feelings about money and independence might change, as it has for 100+ people who’ve provided me feedback for this article once they become a SAH parent.
But what you are spending your money on is secret.
I am open to any system that works for us both. I am just not sure me paying her and establishing an employee/employer relationship would make her feel equal.
I will actually talk to her tonight about it as I would never want her to feel like the woman who couldn’t get a massage.
THIS. Exactly.
+1
My wife and I have been married for 7 years and have 2 kids. We each make enough money that we could make it on our own.
We have a budget that covers all our expenses (house, savings, retirement, kids, utilities). We create the budget at the beginning of each year, and determine how much each of us needs to contribute (split 50% each) to cover those expenses. We contribute every paycheck to this ‘corporation’ to cover the budget. This is a joint account.
Any amount we make beyond this is ours to keep and spend as we desire. This includes our own clothes, toys, frivolous things. No questions asked on any of these expenses. Also, this extra goes into our own separate accounts.
I like the hybrid plan. This has been our plan too. Does one of you plan to stop working given you guys can survive on one income? What’s the longer term plan?
Both of us enjoy what we do, and the joint incomes have enabled us to pay off our house early, get an RV to see the US with our kids, and ‘hopefully’ retire a bit earlier than the standard ‘work until social security kicks in’. Neither of us plan to stop working until then.
What if you married a spouse from another country, whose government required you to send, yearly, via an insecure website, all the details of every single one of your joint accounts, including bank, bank address, account number, and amount of money in the account, and the penalties for not doing so were greater than amounts in the accounts? This is what the US gov’t requires of spouses of Americans living abroad via FBAR (foreign bank account report). I don’t blame my spouse for refusing to put my name on any of his accounts – money he has earned, in his currency, in his country. I am a SAHM and this disadvantages me in so many ways– I don’t feel particularly ‘free’ as an American because of this requirement.
In this case, not putting your name on some of your spouse’s accounts is bad.
But what about the income you generate?
The income earned by the US spouse overseas is subject to two tax jurisdictions, because the US is the only country in the world with citizenship-based taxation (Eritrea has something less onerous). Yeah, I am free to keep that income in my own account and file my two tax returns and FBAR reports on it!
…..’bade?’
Very good and relevant post for me! My wife and I have 2 small children and she is contemplating becoming a SAHM. We have been together for 8 years and have never had issues or a single argument about money. We run a hybrid system of sorts. We each maintain our own separate accounts, and we hold a joint account for bills plus agreed joint savings ventures (529s, kid expenses (clothes, diapers, etc.), house repair fund, emergency fund, etc.).
When it comes to contributing to the joint account for anything, I contribute X and she contributes Y as percentages of total household income. X+Y = 100%. That way, we’re both left with similar amounts in our separate accounts after our joint contributions. Has worked like a charm since we’ve been together. If my wife does become a SAHM though, we’ll clearly need to re-work our system somehow.
I’m not opposed to having separate accounts, but we merged our finance a long time ago. It worked for us so it isn’t a big deal. Mrs. RB40 is usually pretty frugal and I trust her implicitly.
Last month she purchased a dress for $400. That’s more than my annual clothing budget, but I kept my mouth shut. She has got a special occasion coming up.
Dang, $400 ain’t frugal Joe! Time to have a talk! :)
Congrats on your wedding anniversary. Or is it she finally engineering her layoff?!
Great article, Sam! My personal view: The real question is: get legally married or not. Once you are married, it’s a fallacy to think anything is really “separate” or any decision is really autonomous without effecting the other (marginally or significantly depending on the couples resources). It is all in the same pot like it or not. In fact the legal system in most community property states agree. However, coming up with a system that both can live (thrive) with is certainly essential.
Once you are married, you got a business partner like it or not. You can have the best “system” in the world–but it is only as good as your business partner (wife or husband). The reality from my experience and the woman I have had long term relationships with is getting married would be making a conscious decision to cut my net worth in half. These were well educated, professional women (but so many have little to none in terms of savings and assets). For some, cutting net worth in half in the present is still a bargain for the right woman that may more than make up for it in non monetary contributions (e.g., child rearing, emotional support, etc.) for others the trade off is a non-starter.
That is a good point. The government loves marriage b/c they can tax couples more :)
Not all marriage financial assumptions are the same. For example, CA is split 50/50 on any assets accumulated AFTER marriage.
I hear you about the CA split Sam BUT if things are contested be prepared to shell out some cash for attorneys (and perhaps a forensic accountant) in proving what was the AFTER. Prenuptials (or postnuptials) are not the panacea either as they are contested all the time.
I agree with the split accounts, it’s always a good idea in my opinion, to have a discretionary account where the other person doesn’t need to worry about what’s spent. As long as both people have the long term goals that are similar, they will meet it in the end. The downside comes if one person is a saver and the other is a spender and learning how to manage the two meaningfully. I think most of the challenges come when you have this type of difference and why money problems start at that point.
I’ve only been married for 4 years but my husband and I have never argued about money. We merged accounts right after getting married and have never looked back. In our marriage, we really emphasis partnership in every circumstance and don’t keep score (except for the garbage which I refuse to take out). For example, we recently had our second baby. Besides both of us not sleeping well my husband works 50 hour weeks as well as some weekends. When I run out of energy and slack on my chores he’ll take it on. If he’s feeling exhausted and takes a nap or watches TV instead of working around the house I don’t nag him about what has to get done. We’re both tired, it’s not a competition to see who’s more tired that day. Same principle applies to money.
I don’t understand these people who as for “permission” to spend money. My husband is my best friend and I can’t imagine not asking his opinion on everything. Even if something is 20$ I’ll ask his opinion about it because sometimes he comes up with a better option or knows of a discount someplace or just to tell him about my day. We respect and value each other, so we don’t deny what might bring joy to the other or repeatedly splurge on ourselves and put our shared long term goals at risk.
Sam – Interesting article that sparks a lot of interest and questions from me as I have been thinking about a lot of this lately. Some questions for you or other split account couples who would like to chime in with their experience:
How do you handle vacations (each spouse pays their own way?), going out to eat (split tabs?), etc…?
How do you split mortgage payments, monthly bills, etc…?
How do you handle large differences in income? If one makes 2-4x as the other and consistently wants to take nicer vacations, eat at nicer restaurants, etc… seems like it could lead to more conflict as the lower income spouse would feel the need to overspend to keep up or the higher income spouse would not be able to enjoy everything he/she wants to.
How do you handle one spouse sacrificing income now to build a business that you’re on board with? Example: We’ve made the decision for my wife to work part time so that she can focus on building a business which can be run from home and has potential to make as much or more money than I do.
I think this is a very interesting idea and one I have mulled over before, but I’m definitely not sold on it yet. Also, if everything is in joint accounts, I’m having trouble understanding how there could be problems where a surviving spouse would have trouble accessing funds.
Pretty easy actually. It doesn’t matter. Because the small stuff doesn’t matter. Whoever wants to pay the bill pays the bill. Whoever didn’t forgetto bring their wallet, pays the bill. Whoever has more cash in the wallet or purse at the time, pays the bill.
Too many people are thinking about the small stuff, which doesn’t matter. But it is the small stuff that doesn’t matter if you have a joint account and you’re starting to feel like you can’t spend on the small stuff.
It is the big stuff, like buying a car or a house or making a huge investment in a fund that matters. The key is open communication no matter which way you go.
How long have you been married and how have you set up your finances? Let’s get your point of view. Thx
Oh, and forgot to answer your other question: we’ve been married for almost 4 years
I had similar questions.
I generally think joint is the right way to go. On the other hand, it is inevitable that two people will have different spending priorities, and making and spending one’s own money and being able to hit certain savings goals is also important. Also, I think it is really important for each person to know that they are financially secure as a separate person, not just as a couple. I see that as important to one’s psychological well being. Some couples can accomplish this with only joint accounts, and others cannot. My mom was dependent on my dad and even though they are still married after almost 40 years, I still view that aspect of their relationship as a negative that I would not want to repeat in my own life. I think your suggestions on how to accomplish joint and individual financial security, such as a hybrid method of accounting, is a good one.
Marriage offers security. There’s no doubt that Security is a main reason why people get married, especially those who have lower incomes, or less income generating potential. By having your own separate account, you add an extra layer of security in your security.
I hope people can see that by encouraging one spouse, and especially the lower income generating spouse to have financial independence, that is an act of love.
Sam,
As usual a good article from you. Unfortunately, I do not think I completely followed your train of thought with this. So, without agreeing or disagreeing with you directly, I will share our situation and see what you think.
I make $83,000 and my wife is working on her PhD working part-time as a TA bringing in around 15,000. We have a joint account that both of our paychecks comes into and we also have individual accounts. However, we track all of those accounts using a single Personal capital account so each can see any expenses the other is making. So, does that practically make it a joint account situation? We have budgets for everything including our play money. My play money budget is 50% higher than hers(100 vs 200). A long time ago we talked about what we would need for that and each of those came up with a number that’s subject to change based on changing needs. We both are happy with the numbers and almost all the time be under that limit.
A significant thin and imo the only thing that really matters is how well you (not you but everyone) trust your spouse to make good financial decisions. I trust my wife completely to not make bad financial decisions and she does the same. When investing in anything, we both talk about the pros and cons before making a decision. I believe the people who said money matters was a significant factors in a divorce meant one spouse not being honest in that regard and/or making bad decisions in that area. I have a hard time believing that not having financial independence is what causing the issue. If so, I would look at why one spouse is not letting the other be financially independent.
I agree. As the income earner, it’s important to ask your wife how she feels. This is one of the main points I’m trying to encourage in this article. Let’s not just focus on ourselves, but let’s focus on the spouse who might not be making as much or as a stay at home spouse or is a student in your case.
Let me know what she says!
We had this talk a long time ago. She did not like being dependent on me for money. She gave up a career & moved countries to be with me. There will always be a part of her that thinks what if it was the other way around. It’s upon me to make sure that she doesn’t regret it. 7 years in so far and we are going strong. She is working towards a future where she wouldn’t need to be dependent on me for money. Even then, we would have joint accounts and spending is controlled through mutually agreed upon and accounted for ways.
Yeah the big stuff is what I was really interested in getting everyone’s opinion on: down payment on a house, large vacations (which is really any vacation for us given our fairly high savings rate which cuts significantly into our discretionary money), and the large discrepancies in income and potential conflicts that could raise.
We are set up with all joint accounts. We use some budgeting software and go through it briefly each week as well as more in depth each month. Occasionally we have a series of months where one spends more than the other, but are good at recognizing it, talking through it and then adjusting so we are both really good at avoiding and addressing (when necessary) any money conflicts in a health way.
My one concern with our set up is a worry about my wife feeling like she isn’t contributing enough to our finances – this is mostly by design as she is only working part time while using extra time to start a business with some solid potential. But even if she was working full time (the nature of her project requires her to be available during more standard business hours), she would make less than half of my income due to her industry and the place we live. Her current side hustle could match or surpass my income if it goes well over the next few years. However, if we went fully separate accounts, she wouldn’t have as much flexibility or time provided by my higher income to pursue the opportunity in front of her.
The more she cares, the more she will feel like she isn’t contributing. So your goal is to make her know that she is a great contributor b/c it’s not just contributing based on money. In fact, I would say money isn’t even the most important contribution to a marriage.
Yes! You need your own bank account no matter if you’re married,
single, cuddling, whatever you want to call it.
I’ve been married for 5 years and we only have 1 shared account for
household and joint expenses. If I want to save up for a few months so
I can have 3 hours at a spa, that is something I don’t want to
“explain” to my husband. We have a 9 month old baby and we both
destress in different ways. I want a spa day and he wants to go with
his buddies and play golf or go to happy hour.
A fairy tale marriage doesn’t mean mushing finances, it means
supporting one another. Plus if anything were to happen you are
covering your bases with accounts in your name. :)
I know we already tweeted a bit about this, but I really appreciate this post. I actually don’t believe there is one best option for all couples. One pot works really well for us, but I know plenty of people who have separate accounts or even have one account but adjust who spends what based on the percentages of income contributed! That last one kind of makes my head spin, but they have five kids and have been married almost a decade. I am curious to see if I’ll sing a different tune (or if my husband will!) when I start my unpaid leave in August. What’s especially different for our situation is the fact that I outearn my husband, and we’ll be drawing down savings so I can take this leave. Hmmm. Thanks for making me think, like always!
Yeah, I can’t get behind the exact prorated earnings and savings percentages. At some point, a couple has to let go and not sweat the small stuff, as that small nitty gritty stuff will start to grind on a relationship.
Good luck w/ the baby!
Wonderful article!! I’m a late-20s female. I grew up with 2 working parents, who have always had joint accounts. I remember when I was younger, my mom instilled in me that a man who wants to keep a separate account is hiding something. (She wasn’t saying this in the hopes of raising a gold-digging daughter; quite the contrary, “happy, self-sufficient woman” was ingrained in me at an even younger age. Also potentially important to note that my mom has been a salaried employee for decades, while my father has been self-employed or an independent contractor since the early 2000s, so there have been years where my mom is the primary breadwinner.)
However, as a gainfully employed (and currently single) woman, I’m the one who wants to keep separate accounts! Looking at the balance in my various accounts is a reflection of my hard work, my long nights, my sacrifices. I can’t imagine giving someone free range of my entire life’s savings even if he is coming into the relationship with more assets to his name, for all the examples you gave above and countless others. Some call it selfish. I call it pragmatic.
Hi Gigi,
Thanks for sharing your story. It is EXACTLY what I’m talking about! There is an obvious trend towards women having longer careers. Couples are getting married later, partly because of this trend. After say 10 years of independence, earning, and saving, having the joint + separate financial arrangement works wonders in a modern day marriage.
The feeling of financial independence is priceless. And each side has a tremendous amount of pride in what they’ve brought to the table. You don’t want to suddenly take that away through an artificial government construct!
But, everybody needs to do what’s best for them.
Best,
Sam
I really like the idea of the stay-at-home parent getting the income that’s left when you subtract the cost of childcare from the working parent’s salary.
I recently quit my job to stay at home with our three daughters – ages 5, 3 and 8 months. The cost of full-time daycare for all three of them would (sadly) be more than I made.
I’m one of the lucky ones, though. I started a blog three years ago that now makes $3,000+ per month (on average). Because of that, I feel absolutely zero guilt when spending money. Blog money is always saved and my husband pays all the bills and expenses. So, I’m spending his money hahaha (but yes I realize his money is my money, too).
Before blogging, I was a freelancer. I definitely believe that if a stay-at-home parent wants to make money, there are ways. It’s not necessarily easy — I’m oftentimes blogging early in the morning and at night after the kids are in bed; but to not have any financial stress or arguments with my spouse make it more than worth it! Plus, I LOVE making my own money and contributing to our finances :)
Great post!! Thanks!!
-Sarah
Great job! Feeling zero guilt spending money is definitely EMPOWERING. That is what financial independence brings. And giving FI to a spouse, or encouraging a spouse to be FI through things like starting their own endeavor like your blog is amazing.
Who doesn’t love feeling like a great contributor? Always depending on someone for money, no matter how much you love them, is not an optimal solution.
This is so affirming, Sarah! I have wanted to start a frugal blog for some time, but haven’t had the “Get up and go!” Maybe reading this will give me the get up and go that I need. I have been able to do so much on a budget and want to share my ideas on the blogosphere.
I like this thought of adding more security to your security of marriage. Also totally agree that if you are going to get married, then stay married and try your damndest to make it work. I have always said it is something I would always do once…
We keep separate accounts and manage them together. We use one excel sheet to blend them together as far as big savings goals, vacations, etc. We can track our spending but really don’t talk about what we spend things on as long as we aren’t going over budget.
Having the ability to manage your own money in case a spouse leaves is also crucial. You need to be able to survive financially in case something was to go wrong with your spouse. I had so many cases of spouses not knowing how to manage their money in the event of a spouse dying when I was a financial adviser. Give the gift of financial independence and you also give this ability as well.
Great post Sam, I love the discussion it has created!
Me and my husband have always had separate accounts and I want to keep it that way. I don’t give a rat’s ass about ‘secrecy’. You either trust your partner or you don’t. He is a spender and I’m a saver. He freelances and I have a FTJ. I pay for his health insurance and save for us both in an HSA, but that is about it.
Since we live in California, he’ll get half of what I’ve earned since the marriage if we divorce. I got married in my 30’s, so I was living as a single woman for a long time managing my finances on my own and having to make and learn from my own financial mistakes, so I can’t imagine having to talk over my decisions with someone else.
My decisions are fairly sound, I’ve made my own budget and I have no interest in policing my husband for what he spends and what he spends it on. I’ve never been supported by any man except my dad and I intend to keep it that way (my dad was the greatest, btw).
My husband needs some encouragement to earn his own money and I’m trying to help him down that path as much as his manhood allows, lol. I will never be a SAHM. I saw how bad that was for my mom.
Even though my dad was never a dictator with money, there is always an implicit power imbalance in a provider/nurturer setup and many of you provider men who have commented don’t realize what your wives are telling their girlfriends about this setup when we all meet up for our coffee catchups – some of them feel constricted by having to ask for money and they feel like the only legitimate things that they can ask for are child or home related.
The man always sees himself as a magnanimous team member, consulting his wife on everything finance related, but that is not always the reality from the woman’s perspective. I think there is real divergence between the perspectives of husbands and wives on this topic, especially when the husband feels he is totally egalitarian in the way finances are handled in the provider/nurturer setup.
I would love it if the wives could comment here anonymously and we could see if they really agreed with the self reports of the husbands, which might be biased. Sam, I think you have handled your money situation with your wife perfectly and I have to ardently disagree with everyone who doesn’t see it that way :-)
Thank you for sharing! One of my goals of telling the three stories/perspectives in this post is to highlight that sense of constriction, which is basically the opposite of financial freedom.
The more in tune the spouse who makes more is with the spouse who makes less, the more s/he will realize the benefit of giving the other spouse more financial independence.
Dig deeper folks! Have an open conversation about money. I think your situation is a perfect example of why a hybrid system works.
You certainly have to look at marriage as a financial partnership that is for sure! Your spouse will automatically, like it or not, be a business partner in just about any financial decision you make. This can be extremely advantageous, or a huge disadvantage, depending on who you pick to marry!
I was fortunate to choose someone who has a high financial intelligence and thinks big like I do. We feed off of each other’s momentum and drive and it has boosted our finances to unbelievable heights.
I have seen the opposite though. As much as I love my mother, she holds my dad back severely (financially). She has almost ZERO risk tolerance, while my dad is always looking for the next investment. When he wants to move forward on what he thinks is a good deal, it is an all out battle when he tells my mom that they should make the investment. Luckily she has strengths in many other areas (maybe more important than financial) that are very valuable to him and the rest of the family.
My point is, choose wisely. Find someone who is on your same level financially (or at a higher level and can pull you up with them). Find someone who has positive beliefs and feelings about money and wealth. Otherwise, you are in for a very turbulent ride!
This is a great post and I am loving reading the comments. Whether or not you have a joint or separate accounts, the bottom line is that you have a mutual understanding and trust of the other person. My husband and I have shared everything from Day 1. I am much more of a “nerd” therefore I am more likely to look at every expenditure but we earmark “every dollar” and communicate with each other if we deviate from the plan. We do give each other a bit of cash at the beginning of each month that is “blow money” that we can spend as we choose. Since we have had 3 kids and seen how fast the money goes, that amount has been reduced drastically. It has been as high as $80/person/month, but now it’s closer to $20. We have an emergency fund and budget monthly for medical expenses and car repairs, so there’s usually a bit of cushion. It was initially the understanding that he would work and I would be a SAH parent, which felt natural as we were both raised with a dad that worked and a mom that stayed home. However, I felt the weight of it pretty fast and my heart longed to be in the workplace. Neither of our moms had much training beyond high school, and I have a Master’s degree and certification in a very desperate health care/education field (speech pathology). As we figured out the ebbs and flows of both of our schedules, I eventually went back to work and everything with the kids has been a very shared thing. I have the best spouse ever, though, and he has always made it very clear that everything we have is both of ours. I am definitely more of the “selfish” one and I am constantly reminded that this is a joint effort. Since my income is contract 1099 and he is on salary, we aim to budget off of his salary and put my earned income in a savings account and that has saved us a number of times. I would say that, for joint accounts, it should be expected that each partner has access to see the account of the other person’s, just so there is accountability and trust.
Asking for permission for more than $400 or $500 seems odd.
If spouse #1 bought 10x things at $50 each, and spouse #2 bought 1 thing at $500 – to me its all the same.
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 :)
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.
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).
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.
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.
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.
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.
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 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.
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.
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.
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.
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.
“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.
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!
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!
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 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.
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.
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.
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.
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.
“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.
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 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…
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 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 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’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.
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 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!
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.
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.
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.
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 .
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.
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.
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.
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.