First, let me give mad props to my fellow personal finance blogger, Holly of Club Thrifty, for rocking a Wall Street Journal essay and a Fox Business TV interview. She was dealing with the topic of money and marriage. This is a very controversial topic in the world of personal finance and I understand why. I wrote about it briefly some time ago when I was talking about paying off a spouses debt when they incurred it before marriage. That one got me some angry comments and emails, but I powered through. I don’t mind causing a little controversy. I read both the arguments on the WSJ piece and I am going to provide my argument for separate finances for married couples.
My Argument Disclaimer!
I figured I would throw this disclaimer in the beginning as it will make a cleaner article and maybe calm down some of you that get your blood boiling from my comments. It DOESN’T matter how you deal with finances when you are married if you don’t talk about it before you get married. Let me say this again. If you don’t talk about money before you get married, then it doesn’t matter how you deal with your finances. Communication is the key to a successful marriage. This goes with everything in a marriage and not just money. The key to succeeding in marriage is to understand each other and compromise on how you want to deal with everything.
Why Separate Finances Works for Us
OK, get your pitchforks ready my friends. I am sure you will want to try and stab me through the computer screen. Unfortunately, if you do, then you will just destroy your computer screen and I will be unaffected!
My wife and I have been married for close to 10 years. Yes, it is not a long time, but we have been together for 14 years altogether. We know each other pretty well. We have great communication and we agree on a majority of things. I mean, what couple actually agrees on everything? This communication is why our separate finances works well. Here is how we handle our money.
My wife and I have our own checking accounts. I also have a business account, but I won’t count that as she is not part of my business. We also have a joint checking and savings account in both of our names that we each have insight and access to. We use our joint checking account to pay our joint bills. This includes our mortgage, food, utilities, taxes, insurance, blah, blah, etc. We put a specified amount in each paycheck that we have agreed upon. This is based on our current running budget. If one of us is short for some reason, like taking time off work or what not, then the other person picks up the shortfall. We talk about it before hand and understand why there is a shortfall. See how easy that is?
Since we have kids, we use that joint account to pay for all of their expenses. Daycare, doctor visits, clothing, and all of the other fun things that goes with a child comes out of our joint account. We made them together, so we pay for them together. It is not even an issue.
Here is where our separate accounts come in. I have seen too many arguments about separate accounts fostering secrets between spouses. Are we all conspiracy theorists? Why do separate accounts have to foster secrets? I don’t have any secrets with my spouse. My wife knows how much I have in my accounts and I don’t mind showing her or telling her. I hold back no secrets from her. If you are withholding secrets, then you have a bigger issue than just money. This all goes back to communication.
Play Money Funds
We use our separate accounts as our play money funds. I have some expensive hobbies, like working on Jeeps and brewing beer. I have no intention of having my wife pay for these hobbies. I use my separate checking account to save and fund my car part purchases. My wife does the same thing with hers. She keeps funds in there to pay for her hobbies. Since we don’t share all of our hobbies, why do we need to pay for one another? Does this mean we are doomed? Nope! Having play money funds separate is a great way to keep your independent identity. It has nothing to do with secrets. The times are changing and people want to have some form of independent identity. I think everyone should have some form of play money.
Debt Incurred Before Marriage
One big thing for me with keeping separate accounts, especially when we were married was the debt that I carried. I had over $50,000 worth of credit card debt. You all know that already. My wife had no part in creating that debt. It was all on me. I incurred it before we got married. I am a big advocate for owning up to your responsibilities. It was my responsibility to pay for my debt. She should have no part in it.
Yes, I know that I am going to get more hate mail for this stance, but think about it for a minute. Most arguments come from the fact that marriage is about unity. I get that and I am united with my wife. Should we punish our spouses for issues they had no control over? What a way to create animosity toward one another. The argument that spouses should help with debt incurred before marriage just rubs me the wrong way.
What about people who are single? Are we saying that they should just get married, so they can get assistance with the debt that their spouse had nothing to do with? This is like using our spouse as an flotation device during an emergency that they just got brought into. As I said, everyone needs to own up to their mistakes. If you made some major money mistakes before you got married, then why not deal with them on your own? My wife gave me a ton of emotional support throughout my debt repayment process. That was more than enough for me. She helped me through it by just being there for the ups and the downs. I don’t believe that I should have her pay off my stupid money mistakes, especially since I made them before we were even married. There are other ways for spouses to help than to provide monetary support.
I have said it before and I will say it again, I am a planner. I plan the crap out of things. It is just in my nature and I don’t mind it. It does drive my wife crazy a bit, but that is OK. She respects it when I have backup plans for when our original plans go to hell. The sad truth about marriage these days is that more than 50% of marriages end in divorce. That is an alarming statistic. Is that because everyone is having separate accounts? No! The main reason for divorce is due to communication issues. Those communications issues lead to one of the bigger marriage problems. Money problems!
I don’t believe that having a separate bank account is going to cause problems for your marriage if you already have great communication and have talked about how money is going to be handled. Marriages fall apart because of communication problems. While I don’t like to think of my marriage ending, I can’t help to look at statistics. Since I am a planner, I like the security that separate finances brings. The main reason I like this is due to having both parties understand how to budget.
I have met couple after couple where only one person handles all of the finances. This leaves the other one unknowing of how the bills are paid, where the money is coming from, and so forth. This leads to disaster. What if your spouse dies or wants to end the marriage? Will you know how to handle the money? Having separate accounts just gives you that continuing education. It keeps you sharp when it comes to managing money. Yes, you can argue that both people in the marriage should deal with the money at some point, but that just doesn’t happen in many cases. There is nothing wrong with planning and I don’t believe separate finances is a tell-tale sign that the marriage won’t work.
I know that this is a controversial topic. I don’t mind if you have differing opinions about this. The only thing I will say is that each couple is different along with each person within said couple. We all handle our money in different ways. You can only do what is most comfortable with you. If you are married, then you need to discuss how you want to deal with your finances beforehand. There are always going to be pros and cons to each side of everything. Do what works for you! My argument is to show that separate finances does work. We are not totally separate and have more of a hybrid approach, but we still get to keep a hold of our own fun money. We have no money arguments and we have a great understanding of our overall financial picture. We are very much a team and work toward one big goal. Having separate accounts for our own play money does nothing to change that goal.
One thing we do is we both have access to our Personal Capital account. This gives us a massive picture of everything going on. It shows all of our retirements accounts, all of our debts, and our assets. We can both log in at any time and see where we are. This keeps everything transparent.
Make sure to go checkout Holly’s write up on her site. While I don’t agree with her points on this subject, I respect her opinion on it and think she did a great job!
OK, get your pitchforks ready and use the comments to sound off on why I am an idiot. You won’t hurt my feelings!
Image via Leland Francisco