I hope everyone had a wonderful Valentine’s Day! I spent about $360 dollars on a dozen long stem red roses and took my wife on a scenic helicopter ride over Napa Valley to a secret mountain villa. Just kidding. Instead, I got her some white roses for $20 because they smelled better, did some last minute grocery shopping and cleaned the kitchen at 6:45am, whoo hoo!
Depending on someone for money is a terrible feeling. Imagine being a grown adult still living at home with your parents. Every time you go out, you’ve got to ask them for a couple bucks to buy a loaf of bread or more likely, beer money to hang out with your buddies.
Now imagine marrying someone, giving up your job to raise a family, and being entirely dependent on your working spouse for all your spending needs. A common situation, but is it ideal?
It’s one thing to depend on someone for money as a kid. It’s another thing to be dependent on someone as an adult after getting a college education and marketable work skills.
For all this talk about the desire for financial independence, it’s odd that some couples aren’t willing to establish separate financial accounts to allow each other more freedom.
My Husband Is A Rich Controlling Miser
I recently received an e-mail from a reader who highlights the point about the importance of financial independence in a marriage. I asked her to elaborate her thoughts on the subject after her initial e-mail, and this is what she wanted me to share.
Sam,
It’s been a while since we last corresponded, but I wanted to drop in and say how much I agree with you regarding the importance of having separate financial accounts.
My husband and I are worth about $4 million, up from $900,000 in 2012. Last year, he made over $1 million from his business, but you would never know it.
We live in a house worth less than 40% of our annual gross income, while some people spend 3-5X their annual income on a house. We have a 10+ year old car and he prefers to bike everywhere.
I’ve been a stay at home mother for the past 10 years. I help out with our business where I can. However, between picking up our daughter from school and shuttling her between activities, I admittedly don’t do a large amount of business work as I used to. It’s his baby.
I’ve been with my husband since the business first started. For years, we hardly made any money and I was his support system. I did a lot of the grunt work in the beginning to help lift the business off the ground.
I was also a happy, independent woman who had a day job before our daughter was born. Having my own paycheck to spend as I wished was liberating.
Despite the rise in our wealth and our income, I felt trapped because we only have joint accounts with different spending habits. My husband is a miser who wants me to run all expenditures by him first. We’re talking about even a $25 toy for our daughter.
If I spent $1,000 more a month, it wouldn’t make a dent to our budget because we only spend about $4,000 a month and pull in over $100,000 a month. However, to him, spending $1,000 more a month would be a big “no no” given it would be a 25% increase. That’s right, spending more than 5% of our monthly income is way too much for him to handle.
He simply cannot let go of his excessively frugal ways, even if it was hurting our relationship. As you know, being a stay at home parent is hard work. I resent having to “ask for permission” before buying anything, even it’s for our family.
My husband spends more time on his business and on his hobbies than he does with me and his daughter. He’s always jockeying to promote his business by doing interviews and TV spots. It’s nauseating how full of himself he is.
He tells people publicly how little he cares about money to justify his parsimonious ways. But in secret, he is money obsessed. All he wants is more of it!
Given our differences, I decided to get a divorce after 15 years of marriage. It was a tough call but I’m much happier to have my freedom back.
He bought another house close by while my daughter and I stay in our original home to reduce disruption. I think you called it “bird nesting.” I call it stupidity because it was an unnecessary $300,000 expense if we would have worked things out.
He can hoard his money as he pleases. I’m now free to do as I please with half our assets.
Regards,
Financially Free
Money Is A Big Reason For Divorce
If you haven’t figured it out by now, money is one of the top 10 reasons why couples divorce.
The other reasons include: infidelity, lack of communication, constant bickering, weight gain, unrealistic expectations, lack of intimacy, lack of equality, not being prepared for marriage, and abuse.
If you have one spouse making all the money, there will naturally be a lack of equality, no matter how much you believe there isn’t.
It’s like a couple owning a car. If one spouse only has the keys, that spouse determines their destination most of the time.
Think about the power dynamics in the workplace and how it is frowned upon for managers to date their subordinates. Think about the #MeToo Movement.
If you want to control your spouse, then feel free to make more money and throw up checkpoints before every dollar can be spent. The lack of equality between spouses is a bigger problem than society recognizes.
Ways To Make Your Spouse Financially Independent
- Get Married. Marriage brings about stability for the less wealthy spouse. Assets accumulated after the marriage will be divided equally in a divorce. Alternatively, assets will be distributed based on the conditions of the prenup. A spouse will also receive their deceased spouse’s Social Security benefits.
- Establish independent financial accounts. Independent financial accounts should be additions to a couple’s main joint accounts. The independent accounts should be seen as “pressure release valves” to give each spouse the freedom to spend as they choose.
- Create a business and give ownership. A business is a separate legal entity that can have whatever ownership structure you want. One way to create more equality is to give a greater percentage of ownership to the spouse who earns less or doesn’t earn at all. Not only does this show good faith, but a higher ownership structure might also motivate the spouse to work hard at building the business.
- Contribute extra to their retirement accounts. If one spouse has less in his or her retirement accounts, the other spouse can contribute more to create more balance. Given you can’t contribute to someone else’s IRA or 401(k), it’s best to help build your spouse’s after-tax investment accounts. You can, however, elect to contribute more to your child’s 529 plan.
- Pay down their debt. Paying down one spouse’s credit card and/or student loan debt upon first entering a marriage is a very strong gesture. Even if there continues to be an income imbalance, the spouse whose debt was paid off will feel incredibly liberated and appreciative.
- Assign an income to the SAH parent. If one spouse works and another spouse is a stay at home parent, then assign an income amount for the stay at home parent. No job is more important than taking care of a child. Therefore, the stay at home parent should be paid top dollar. Do an honest assessment of the number of hours the SAH parent works in a 24-hour period. A six-figure income for a SAH parent is completely reasonable, especially if the household lives in a high cost of living area.
Set Your Partner Free
I’ve seen too many divorces where the wife ended up in financial turmoil because she had sacrificed her career for her husband and family. Then they broke up. Being out of the workforce for years makes finding work difficult.
By helping make your spouse independently wealthy, no matter what happens to your relationship, your spouse will always be fine. This is true love.
The key is to be selfless and think about the bigger picture. Don’t be that rich, miserly, ex-husband as one reader described above. Having millions of dollars but nobody to spend it with is sad.
Financial freedom is a wonderful gift to give. When I helped my wife negotiate a severance in 2015, I couldn’t have been prouder. I felt like I had been waiting for her for three years at Heaven’s gate.
Now, whenever I do something wrong, all I have to do is remind her how awesome it that she doesn’t have to commute downtown in rush hour traffic anymore. Then all is good again!
If you seek financial independence, then you must also give financial independence. Strive for equality every day.
Related Posts:
The Marriage Penalty Tax Has Been Abolished, Hooray!
The Average Net Worth For The Above Average Couple
How To Get Your Spouse To Work Longer So You Can Retire Earlier
A Divorce Ruined My Life, But I Clawed My Way Back
Readers, why do we seek financial freedom, yet are unwilling to give financial freedom to our partner or spouse with a separate financial account? How much does money have to do with power in a relationship? What type of money fights do you have and how are they resolved?
Great advice on how to make sure both spouses are cared for in a relationship. Keeping each other financially independent together and separately is the best way to ensure financial frictions are minimized.
My wife and I each maintain side accounts for small portions of our paychecks. This gives us the freedom to make financial decisions we deem best suited to our needs and free from an audit by the other. The overwhelming majority of our net worth is kept in shared accounts with a shared purpose: (1) funding a secure retirement (maxing out our retirement accounts), (2) contributing toward a house down payment fund, and (3) building our net worth through after-tax investment accounts. Our primary focus has been building (1) and (2) at the moment but we we will be sure to include (3) soon after buying the home.
Thanks for the tip. This sounds like a really simple way to split things up. This will give each partner freedom to do what they want with their spending money while also having shared goals.
I think the key is to have a shared plan but to have separate accounts for spending money. This would be a relatively small portion of the budget anyways. It is effectively working together towards your goals while not sweating the small stuff.
Feel like I already commented on this, but this just doesn’t hold water for everyone. Relationships and marriages are far too complex and emotion has a big say. What works for one couple may not work for another. Far too dynamic of a topic to put such boundaries on. Obviously the scenario above is not at all appropriate, but I can’t help believe that there are other underlying issues within the Marriage, and Finances my be both a partial cause and sympton. My .02. Keep up the good writing. Looking forward to an update on crowdsource real estate!
What is the downside to having your own account?
My spouse came from a much wealthier background than me. She spends more freely on things I would never spend money on. We used to fight about spending, but now we don’t as much because of separate plus joint accounts.
I agree with Cody; one size does not fit all in this case. I think it is fine if you want to have separate accounts but if the need isn’t there, why bother? It is just another account to manage and keep up with that may also involve extra costs. Again, perfectly fine for those who think they need it for whatever reason but not something I or my wife of 25 years have ever felt necessary.
We’ve been blessed that having money and how we spend it has not been an issue or an irritant in our marriage. Like I said, for others it may make perfect sense but this is not the “end all, be all” solution for everyone.
I agree with Cody. To each their own, but I personally believe a couple must be united in their money and goals. The letter posted does not indicate the wife needs her own money. It indicates her husband is controlling, and they are not on the same page financially.
Great post Sam! Lots of wisdom here. I happen to know who wrote that letter to you and I’m not surprised it worked out that way. So sad. Honestly, his failure to figure his shit out reduces her husband substantially in my eyes…NOT good for his brand. Marriage has to be a genuine partnership, not one person imposing rigid rules on the other. Seems obvious when said aloud doesn’t it?! Shame he couldn’t see that. His emotional/financial immaturity was his downfall here; I hope he grows past it for a happier life.
In a way my situation is similar. My wife did a lot to support my very successful career (we married right out of college – 4 days after my last exam!) and so I firmly believe every bit of my success and high earnings is as much her’s as mine. We don’t keep separate accounts but only discuss purchases if they are over several hundred bucks. THen it’s as much to reality check ourselves as to “get permission” and it works both ways.
The biggest thing people that are “money obsessed” and married is that the most important relationship to nurture is the home one. The quickest way to lose 1/2 your precious assets is to get divorced.
In this letter, the former husband was picking up pennies and stepping over dollars as the divorce likely caused him a far greater hit to his finances than if he just loosened the money control he had over his wife. Making that much a month and worried about $25 toy is taking to the extreme and in the end that caused him to loose 6-7 figures.
I do like the gesture of helping out the financially disadvantaged spouse. I actually paid off the balance of my girlfriend’s medical student loans and because of it she has a much better financial start in the world. She was incredibly appreciative as it was a decent balance at a fairly high rate of interest that would have set her back quite some time.
In today’s age it can be strange to go from being completely independent as a career person to being a stay at home parent without a regular income. It certainly is a full time job so one way that might help the stay at home spouse is to calculate the value of the hours put in as a caretaker and add a premium for being a parent vs a nanny.
That was a story about a controlling partner, not necessarily an issue over shared accounts. She was right to divorce him, he was not hearing her or being a good partner. Shared accounts doesn’t mean that anyone has more power. My husband and I have had shared accounts for 17 years. He is the breadwinner, I am (mostly) a Stay at home mom. My husband earns the income and I manage our bills and investments. If he wants to buy new running gear, we talk about it and then he buys it. If I want to go away with friends, we talk about it and then I go do it. In 17 years the only fights we’ve had over money were when times were lean and stress got the best of us. We are a unified front, have shared goals, and it just makes sense for us to manage everything together. Having individual accounts would feel weird and uneccesary to both of us. Why would you want joint accounts if you’re working toward the same goals?
Great Post Sam! I don’t agree that having separate bank accounts gives financial independence, I think it actually gives an excuse to not be accountable to the person you have partnered with for life. Isn’t this why we get married?
To be with a smart wise person so that we can make decision together as opposed to separately? You find a lot of spouses hiding expenditure from their spouse or being dishonest with finances because they haven’t taken the time to create their “money culture”. What I mean is this, it’s not about how much money you’re spending but the principle of accountability when it comes to expenditure.
It doesn’t matter if my husband is spending $50 or $5,000, what matters is are we in agreement in principle of what he is buying or spending on. For example my husband loves tech gadgets, just the other day he came and sat next to me and said I need $130 to buy a new hard drive. Now the money was insignificant to our budget, the only reason why he came to me was he knows he sometimes over spends on his gadgets and so he asks my advice on if he thinks he really needs it.
Same with me, I spent 2 months looking at about 5 pairs of shoes because I my shoes are no longer working. Again the amount was insignificant but I trust him to give me good advice on if he thinks I need five pairs or shoes or not. The question is do you trust your spouse to ask what they think.
And by the way sometimes I don’t ask I just buy and my husband TRUSTS that I make wise decisions when it comes to our money. The trust takes work, and consistent consultation but after almost 8 years of being married it works like clock work and we have no insecurities concerning our money because we have agreement for our expenditure and the principles behind our spending.
Wow, well said!
Sounds good to me. Do both of you work? And if so, how do the incomes compare? Do you have children? Thx
PS I added paragraphs to your comment. Hope you don’t mind.
Yes we both work, our incomes are on par for the most part when you add everything up. Two kids two under two
My wife and I have been married 59 years. Yup, more years than most of you have been living. We supported each other through our education. We both have a Ph.D. degree. We both worked and raised a family. We retired and started an humanitarian service program in Guatemala (Educational scholarships). It continues as a 501c3 not-for-profit corporation. GREAT life! We are partners. Separate accounts was never even a consideration. We are happy in the living room, kitchen, bedroom and in the pocket book. Why? Because we trust each other and we TALK. Communication over the years has defined our mutual values, goals and living standards. If, over the years, you cannot “talk it out” than get help. If that doesn’t work than…..good luck on lasting 59+ years together. Finally, we talk about the posts on Financial Samurai and look forward to more posts on passive income and real estate crowdsourcing. Would be great to hear from people who are in their “later years of retirement”.
I think this is a great post Sam. Too often women sacrifice a part of their careers by either working part time or staying at home; they then have to ‘catch up’. Good guys recognise this – a lot don’t.
I would agree. It depends on the spouse if they respect their decision to stay home and raise the kids. Good guys do respect any decision!
Thanks Sam. I was just noticing this article the other day. More millennials are choosing to become stay at home parents than Gen X. With more people considering staying at home to care for their children, it’s so important to think ahead about the far-reaching consequences of being a SAH parent.
https://www.fatherly.com/news/pew-study-more-millennials-stay-at-home-parents/
From my point of view, a SAH parent should have some side income, no matter how small. Even a few hours of work per week gives you a sense of self-worth and independence and helps you maintain your skills in case you choose to come back to the workplace.
Separating out accounts is a big help. You can’t change each other to one’s liking and it’s not fair to do so anyway. And opposites attract.
Wow, controlling person for sure. If I am guessing right, the husband’s miserly ways are his brand and the basis of his business. But imposing that on his spouse vs just himself would be a very poor choice. Bad for his public brand for sure.
We don’t have or feel a need for separate accounts – mine is her and hers is mine.
But we have adequate money to Max out our 401K spend all we want and save the rest.
My wife made about $30,000 and is 50 and self employed. Haven’t done taxes yet but almost a of the $30,000 will be going into her solo 401K once the amount is calculated.
If money is tight, I think separate accounts can be horrible. Both people should agree on all spending until you have your money right.
I’m in my late 30’s, semi-retired and about to get married: some good lessons to be learned here.
When you have a healthy income, a spouse needing to ask permission for spending tiny portions of your income is not healthy. Really asking permission for anything is not all that healthy. Much better for both to agree to discuss major financial decisions, and let each partner drive their own $100 purchases as they see fit.
If you feel you need to give your wife permission to spend $100, you probably shouldn’t have married her.
I say each person has their own spending money budget. Anything outside of that budget or exceeding the spending money amount needs to be discussed and agreed on by both people. Do I believe that the guy referenced in the above article was 100% at fault? I doubt it. There are 2 sides to every story. Either way communication and agreements trump “equality”. There are many women(and probably many men) out there that don’t want to deal with the money or the bills and just want their spouse to take care of everything and make the budget. The specifics of how things are done is a case by case basis. However, communication and agreement is mandatory and never on a case by case basis.
My wife isn’t interested in finances. For her a big benefit of marrying was getting someone else to deal with all that. I try to get her to understand more about it but she isn’t interested. Mainly I’m concerned that if I died she would be in a big mess and fall victim to some bad financial advisers.
On the other hand, I just let her spend whatever she wants and only occasionally make vague comments like “our spending is rising too fast”. This seems to work for us.
Nice story. In the end, the controlling husband had only an illusion of control, because his wife always owned half anyway, and eventually his controlling ways led her to assert what was always hers by divorcing him. Separate accounts may also feed an illusion of separateness that doesn’t exist once you are married. Unless you have a prenup or the accounts are separate property (maybe a premarital asset, or an inheritance), then the “separate” accounts belong to the marriage, not the individual, regardless of whose name is on the account. I think it’s better to accept what marriage is and work together as much as possible, rather than fool yourself into thinking its “your” money or you can shield yourself from liability that your spouse incurs by banking separately.
Hah! I had interpreted your title in a different light and thought you were going to argue for one’s partner to find their own source of income separate from your own in a show of tough love. So your proposal to ease a spouse’s financial disadvantage as an act of love was a nice surprise.
One of the advantages of having a partner is that you are a team. There are so many aspects to living a full life. Finances are a means to live, but then there are all those other aspects beyond money—in the broadest strokes: companionship, raising a family, maintaining a home, organizing a social life, etc—that make life worth living. It is easier to cover all that ground with two people in a unit vs. doing it solo. Each person brings something to the table.
Great article, Sam. It really is a great show of love to help each other gain financial freedom, which may look very different from couple to couple.
In our case, my wife has student loans, so I pay the mortgage (also Bay Area) and insurance (home owners / earthquake and auto) so that she can pay off her loans as quickly as possible, while splitting the rest of the bills (electric/gas, internet, water, etc.). We openly talk about our finances to make sure neither of us feel like the other isn’t taking care of their own fair share based on our respective income.
My question, though, is about joint accounts: What are the benefits and why do folks feel the need to establish a joint account?
We never felt the need for a joint account and would only add a layer of complexity. We have our own accounts, distribute the bills as mentioned above, and are free to spend on what we want (though we’re both pretty thrifty). Perhaps it’s because we met in our late 20’s / early 30’s with established careers and lived together while dating before getting married? Nothing changed financially when we got married 4 years ago.
In any case, keep up the great work! I found your site a few weeks ago and have found your posts, as well as the community and their comments, very engaging! I hope to contribute myself going forward!
My wife and I have always worked full time since out of college. We contribute equally to the household expenses and have separate accounts to spend our money anyway we see fit. We also happen to be on the same wavelength when it comes to spending and will never make a big purchase without consulting with each other first (regardless who is paying for it).
I do plan to, at some point in the next five years, walk away from my job. I do worry about the imbalance in income then. You raise a good number of points in this article. Maybe I should start conversations with my wife on how to get me financially compensated when i do work away from my job.
My wife chose to give up her career to raise our kids and never returned to work though they are grown. We are both retired now though I still make 100% of our expenses with a one day a week hobby job. When my dad passed away I inherited a seven figure sum. Because we are equal partners I immediately put it in a joint account. She could walk away tomorrow with half of everything and never have a financial care. My ability to be a high earner came from being able to focus on work and having a happy safe home. Her frugal shopping and delicious meal prep kept our expenses down. Her example of running and tennis competition success showed our son and daughters what discipline and winning looked and felt like and they are all winners in life now as adults. Plus all the kids getting free college degrees was due to her guidance and the accountability she required in their schoolwork. She may not have earned an income but she made us a lot of money. She deserves at least half and I really don’t deserve her.
This article is probably why I would never agree to being a SAH mom without being financially independent. I have seen too examples of husbands being controlling as a result of being the provider. Some of my friends mostly want a provider as a partner, but I’ve mentioned the downside countless times. I sincerely believe that money affects the power dynamic in any relationship (parents/children, romantic, and friendships) and we should always strive to be on equal footing. I also think that sometimes, even the kindest person can become controlling when money is involved.
There are a couple of good reasons to have separate accounts; 1) if one or both people want them for any reason, including feeling independent and 2) if there is one member of marriage who has a serious problem with self-control and spending and both people recognize it as a problem and agree that it needs to be addressed. With a separate account the person with a spending problem can be put on “an allowance.” Note that reason #2 is a self-conscious limiting of independence for the purpose of marital harmony.
What is described in the example above is a psychological and relationship problem of someone who has to feel in control at all times and in all areas of life and is dictatorial about it. The simple procedural fix of separate checking accounts would not have remedied that.
Great fan of your website and your advice. You have been very helpful, and even when I don’t agree I learn something.
Good article although it’s not really about money-it’s about marriage. You can’t “force” your own belief system on another person no matter what you do. We have to be flexible, embrace and respect our differences. My wife and I don’t have a budget, we attempt to make smart financial decisions on a daily basis without depriving ourselves of our “wants”. I think a key is to keep your wants reasonable, responsible and focus on the values that you would like to live by and pass onto your kids. You can’t really put a budget or dollar value on that. I don’t agree with some of her purchases and she doesn’t agree with some of mine. Guess what-sometimes we have different opinions on other things. We discuss then move on to taking care and enjoying of our kids, our house, our lives. I’ve actually loosened up the purse strings a little in the last couple years and it’s much more enjoyable and if I have to work an extra few years because of it that’s fine as I like my job. In my view, it doesn’t matter who brings what money into the household. This view of this is my money goes against the spirit of marriage in the first place. Communication is the single most important skill in life, we then need to find some middle ground and it’s ok if you don’t 100% agree with the other person. With all that said, if you as a couple find a system that works, go for it, just don’t be so uptight about it! Life is messy!
Always had joint accounts – never had a problem. And doing it our way there are no secrets.
I agree with some of the commenters on the idea that separate accounts don’t make up for the need to communicate about how you spend money. Needing to not see your spouse’s spending doesn’t seem like a long term way to share values and goals.
I’m a SAHD, but I’m already financially independent. My wife is still working because she enjoys it. I think if she works for 6 more years, she’ll be set for life. She’ll qualify for a pension and she’ll have that to fall back on in case anything happens.
We joined our finances and it’s working out well.