If you love your spouse, you’d make them financially independent. If you don’t truly love your spouse, then you’d make them depend on you for all their financial needs.
Depending on someone for money is a terrible feeling. Imagine being a grown adult and returning home to live with your parents after four years of college.
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. However, it’s another thing to be dependent on someone as an adult with so much education and experience.
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. There should be a concurrent quest to build your couple’s finances together and separate.
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. She clearly loves her spouse, but she has issues too.
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 is liberating.
Despite the rise in our wealth and our income, I felt trapped. 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. 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.” That would would be a 25% increase. That’s right, spending more than 5% of our monthly income is way too much for him to handle. That cheap bastard.
My Husband Is Too Frugal!
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 crazy. 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
Love Your Spouse: File For Divorce
If you haven’t figured it out by now, money is one of the top 10 reasons why couples divorce. Financial dependence is the worst!
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.
No wonder why divorce is so common among wealthy people.
Ways To Make Your Spouse Financially Independent
- Marry. 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.
- Sign a prenuptial agreement. Although not romantic, a prenuptial agreement helps protect the less wealthy spouse in case of a divorce through not fault of their own. The longer the marriage, the more at risk financially a non-working spouse becomes. The greater the net worth difference before marriage, the greater the importance of a prenuptial agreement.
- 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.” They 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 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.
- Make sure your kids are financially taken care of. Even if your marriage doesn’t make it, it’s important for your children to always be taken care of. This means funding a 529 college savings plan, opening up a custodial Roth IRA, writing a will, creating a death file, and potentially setting up a revocable living trust. Your spouse becomes becomes more financial independent when they no longer have to worry about their children.
- Create A SLAT (Spousal Lifetime Access Trust). A SLAT is an irrevocable trust where one spouse makes a gift into a trust to benefit the other spouse (and potentially other family members) while removing the assets from their combined estates. All appreciation of transferred assets are not subject to estate taxes.
Love Your Spouse: 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. Besides, marrying your equal is better than marrying rich. It’s better to come from nothing and build your wealth together.
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 was thrilled for her. Before 2015, she was so focused on climbing the corporate ladder. But she was passed over for a promotion one year and it crushed her spirit. When she finally left, it was the most incredible feeling for both of us.
If you seek financial independence, then you must also give financial independence. Strive for equality every day.
Keep Track Of Your Finances
The best way to build financial harmony is by tracking your finances together. To do so, sign up with Personal Capital, the best free financial tool online. I’ve used Personal Capital with my wife to track our finances since 2012 and it has been a huge help.
Before Personal Capital, we had to log into eight different systems to track 35 different accounts. Now we can just log into Personal Capital to see how my stock accounts are doing. I can easily track my net worth and spending as well.
Personal Capital’s 401(k) Fee Analyzer tool is saving me over $1,700 a year in fees. Finally, there is a fantastic Retirement Planning Calculator to help you manage your financial future.
Love your spouse and track your finances together!
Buy The Best Personal Finance And Money Relationship Book
If you want to read the best book on achieving financial freedom sooner, check out Buy This, Not That: How to Spend Your Way To Wealth And Freedom. BTNT is jam-packed with all my insights after spending 30 years working in, studying, and writing about personal finance.
Building wealth is only a part of the equation. Consistently making optimal decisions on some of life’s biggest dilemmas is the other. My book helps you minimize regret and live a more purposeful life.
It’ll be the best personal finance book you will ever read. And there’s a great chapter on money and relationships as well. You can buy a copy on Amazon today. The richest people in the world are always reading and always learning new things.
Related Posts:
The Average Net Worth For The Above Average Couple (net worth targets to shoot for)
How To Get Your Spouse To Work Longer So You Can Retire Earlier (fun post)
Solving The Happiness Conundrum In Five Moves Or Less
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“Sign a prenuptial agreement. Although not romantic, a prenuptial agreement helps protect the less wealthy spouse in case of a divorce through not fault of their own. The longer the marriage, the more at risk financially a non-working spouse becomes. The greater the net worth difference before marriage, the greater the importance of a prenuptial agreement.”
This seems counter intuitive to me. Can you explain? I married a wealthier man and soon had to give up my own lucrative professional career when his required a move across country. I retired to follow him. No income in 15 years. Pre-nup is horrible and provides a total of less than I would have earned in 2 years. How is that protecting the “less wealthy spouse”?
This is such an important topic! At the end of the day, both partners are “trapped” together in a marriage unless they have enough net worth as a couple for them to get divorced and still each be financially independent.
For this reason, my husband and I have decided to shoot for roughly double what we truly need to retire before quitting our lucrative careers. I hope we don’t ever divorce, but I’m 38 and he’s 44 – if we live another 56 decades who knows what will happen, what I may want, what he may want. I refuse to end up one of the many 50-something women having to go back to work after divorce after years if not decades outside the workforce, hoping to make half what I used to earn.
And for the record we both make about the same amount ($300-$400K) and share finances including just one joint checking account. But we both spend whatever we want on our individual credit cards (which get paid from the joint account, which is where all income, including gifts to me from my parents each year, are deposited). I had 5x the net worth he did when we married, but we opted against a prenup as we had no idea who would make more, if we’d have kids, who might raise them, etc. Part of the point of marrying for us was to build wealth together, and we have done that. But I still want to protect my future self to the extent possible.
Interesting topic .
In my case it’s exactly the opposite .
My wife wants me to spend more from our savings as she thinks life is short and wants to enjoy .
I am retired and depend on my 401k for monthly expenses . I try to explain to my wife that we need to be conservative in spending as I don’t want to outlive our savings .
I’m a little surprised that you connected this persons letter of divorcing their spouse to not having separate bank accounts and financial independence.
Let’s be real… they would have still divorced.
It seems to me the answer might be a little more obvious:
They didn’t share the same core values.
Separate accounts for this couple would have only led to dishonesty and deceit (which there probably already was).
Different accounts and paying yourself or spouse a “salary” (aka an allowance) feels tactical at best, at worse it’s financial control.
Marrying someone whom shares your same core values, having open and honest dialogue, and being willing to compromise in times of disagreement seem like a much better recipe for a healthy marriage and joint financial plan.
I liked the last two comments a lot.
I was bothered by the tone of some of the previous comments, some people seemed to have much resentment towards their spouses, and the other gender.
Sam has always respected Sydney and appreciates how much effort she puts into raising their children. He also enjoys caring for them. His children are so lucky.
I am 80 years old and have enjoyed all my life. I was extremely fortunate to have loving parents who encouraged me, a girl, to break the barriers. And a husband who has always been so supportive.
We got married at 22, first baby at 23 and now married for 58 years. We emigrated from the UK in 1982 and both started again.
On reflection, my mother especially was my driving force. As little debt as you can manage. The mortgage is the first one, house buy immediately. Graduate from university before you marry and go back to extend your qualifications.
But her main advice, which I have carried with me for all these years was that a woman, you have to be self sufficient. Always. So I worked till I was 75 to maximize MY SS. I loved teaching so that was no hardship. And I also maxed out my 403b account. And then maxed out MY Roth IRA. And I have worked for the past 5 years as a substitute teacher in my local school district. I got Covid money when I couldn’t work because of Covid. I still substitute now because it pays the grocery bills (as my husband says). And it benefits my city.
But it means that it benefits my husband because we have always pulled together.
Good advice from a woman whose husband was called up in 1938 and served till 1946 AND brought up 3 children AND paid the mortgage.
Me again.
I have always been horrified at the number of my female friends who don’t open retirement accounts but put all their incomes at their families’ disposal. Leaving employer money on the table and letting their husbands do the retirement contributions.
Ladies, you will be in poverty when you reach old age.
Please look out for yourself.
Hi Jo, I hope women pay attention to your message. I am easy to ignore since I am a man and people don’t want to be “mansplained.”
But as a husband and a father to a daughter, I really care about the financial independence of both partners in a relationship.
Maybe my goal should be to have this message given by a woman in the form of a future guest post. If you’re up for it, let me know!
Yes I will do it for you.
I am passionate about empowering women. People don’t realize that there are at least 2 parts to a partnership.
Thank you! My e-mail can be found in the About page towards the bottom.
This is another point to mention for your post:
“Women tend to live longer than men. Actually, that’s a financial downside as well, Whitney Pesek, director of childcare policy at the National Women’s Law Center, previously told Insider.
“While women end up with less retirement income than men, they also tend to usually need more retirement savings because women tend to live longer than men,” she said. “Women are more likely to be single later in life and have higher health costs than men as they age.”
I think this is one time I might have to disagree with you a bit! My wife and I have no separate financial accounts at this point. I think if both spouses have a truly equal say in the financial management, and open lines of communication, the relationship can still be perfectly healthy. If my wife or I have to go over budget, we simply re-evaluate our current budget and if that was a one-time expense or if we genuinely have a need to increase the budget. With that being said, she is not a stay-at-home spouse yet. She has voiced the desire to do so in the future (once we have kids), which is perfectly fine with me. When that time comes, perhaps we’ll adapt to something more similar to what’s laid out here, but I think what will end up happening is that she’ll take a more active role in the finances and I can step back a bit (which is a load off of me, to be frank). However, I doubt we’ll have separate financial accounts.
As a secondary note, prenups are fantastic. Many think they kill the romance, but they open up communication a lot as you look towards marriage. Also, a prenuptial agreement can help BOTH people. A lot of people seem to view it as a way for one spouse to exert control over the other, but that’s simply not the case (unless you have exceptionally bad counsel, I suppose).
Also, I want to point out that separate accounts definitely has merit, and may work for some, but I’m not sold on it being a one-size-fits-all solution.
All good to disagree! Everyone should do what they think is best in their household.
But I would like you to send this post to your wife and ask her thoughts and let me know! Thanks
Got her to read it!
She wouldn’t actively recommend separate accounts, but she gets the thought process. I’m paraphrasing, but she basically said that the system which works for the couple – where both people feel like they’re having a say – is right for them. In her opinion the actual practice can vary wildly. In our case it isn’t separate accounts, but she said she can see why a lot of women want that depending on their partner or background.
She loved your comments on retirement accounts. Most people forget to make up some of the difference when a spouse stops working and loses access to things like a company match. We had even recently been discussing how we wanted to handle that too.
I’d guess that in a lot of marriages only one spouse takes care of the bulk of the finances. While that can work for some couples, I think it’s highly beneficial for both spouses to be involved. Perhaps not to the same degree, but the more aware each spouse is the better. And yes totally agree on finding ways for both spouses to be financially independent. Both spouses need to be on the same page with investment and financial goals for both short and long term success.
This is a great topic. My wife and I have been navigating this for over 25 years and once we realized certain things about each of our attitudes about money things made alot more sense and were easier to navigate. My wife has been employed most of the 25 years, but makes much less money annually than I do. We both took active roles in raising the kids, but for about 5-7 years she sacrificed career ambition to take a larger role in raising the kids. No an unusual story for a couple in their 50s.
I think it is important to identify the role of money for each person in a relationship as the starting point. For me, I learned in my 40s that money = security = freedom. I am a saver cause money in the bank is an “emotional buffer” that allows me to experience a certain amount of freedom. My job for many years was rather tenuous and a great fear was being laid off and my family suffering and not being provided for. Also, I needed to save a certain amount of money cause I always wanted to retire early – so if I wanted to retire early and feel secure, I/we really needed to save fairly aggressively. I won’t go too deep into it but some of this came from my parents attitude toward money growing up.
Of course, my wife didn’t share this view (LOL). A much freer spender. For many years it “felt” like she was disrespecting my goals but I eventually learned a simple fact that for her money didn’t equal security. She did not need to analyze every purchase cause for her money was not a value-laden thing, not connected to her goals (She loves her job and is fine working well into her 60s) and she didn’t fear being “without” – money held no value in an of itself at all, but just a mean to an end. No money = freedom connection. She was happy as long as she was doing what she enjoyed. I then realized how lucky I was to be married to such a wonderful person and how I could learn from her in many ways.
But anyway, in our earlier days when were not so self-aware, these attitudes would lead to our standard argument. Say she would buy plane tickets to florida. My approach would be to check prices on multiple airlines for multiple days and look for the best deal. If I could save 20% on tix, I would take a 7am flight instead of a more convenient mid-day flight. My wife would get online and find the first flight that leaves at a convenient time and purchase it – whether $350 or $600. For her, to spend the extra time and effort was not “worth it”. Better ways to spend her time. You could plug in anything other than airline tickets and same idea. Furniture? dog care? I am the deal hunter, she is not. I feel great when I can get six strip steaks on sale for the price of three. Nothing about that rings my wife’s bell.
So what happened? Well, once we discovered how money effects each of us she became more sensitive to my feelings. I will buy (or at least review with her) the big ticket items. She understood why I stressed out over something she had no stress over. For me, I needed to give up feeling of loss when she would spend $200 on a grocery bill where I would have spent $170. IT is just a matter of respecting eachother. Partnerships must compromise to survive. No two people are alike.
Many of the stories I am reading on here are about people who are using money = power. This is not good at all. They are using money to exert power over another, probably to make themselves feel better. This also likely reflects their views on the relationship. Many older men don’t view marriage as a partnership. They see their spouse as an appendage to themselves, unable to fathom different views or goals. It is unfortunate. For others, it appears that they are feeling so horrible about themselves, and so powerless in their relationship, that it is their last vestige of power to hang onto. Often that doesn’t end well either.
My only advice is that if you are in a relationship that is stressed over money, then reflect with you partner over how it functions emotionally for each of you. You may be able to use that knowledge to find a middle ground. If you are in a relationship where money = power, then that is a tougher one and a fresh start may be better. If it is you, get some therapy. Definitely, if you aren’t married yet and sense your partner uses money as a power play, probably run fast now. It likely won’t end well.
Thanks for sharing. And all good thoughts and recommendations.
“using money = power” – Unfortunately, money and power are often tied together. Hence, if we can give one spouse financial independence, we can give them more power too.
Happy Valentine’s Day, everyone! I’m an avid reader of FS but must have missed when this article originally posted. Whoa! I rarely see this much negativity in the comments! Hopefully, we can see some happier comments on this lovely day.
To help my husband be financially independent, I purchased a 3-year old Toyota Tundra for him since he was a handyman and was constantly spending time fixing one thing or another on an old SUV. It wasn’t good for his business to have to reschedule appointments with clients due to car trouble. Then when we started purchasing investment properties, he was set as the sole proprietor for that business. He had already been fixing up other people’s investment properties so it just made sense for him to work for himself and reap the rewards.
My husband never asked for any money for the car or to start a business. Honestly, he was fine with life. He didn’t have any debt and lived a simple life. His house and car were paid off. I suppose when he met me, I wanted so much more out of life and because he loves me, he goes along with my crazy dreams.
Nothing better than having a partner who wants to go on your crazy journey together!
Life is so much easier as a team.