Married couples have been doing it for centuries. Combining their finances is just something they’ve always done. Call it tradition if you want. Call it necessity. Recently, it’s a tradition that has come under fire as being old and outdated. After all, the reason that the tradition exists is because it was rather usual for the woman in the marriage to stay home and be a homemaker while the husband went off to work and earned the money. Since the woman wasn’t contributing to the financial inflow, there was no reason for her to have her own account. What would she put in it?
But, with a new age, comes new standards. Now, it’s expected that a woman will enter the workforce (or, at least, the contingent workforce). And she’ll remain there even after marriage. Not only will she remain in the workforce, but there is a chance that she’ll bring more to the table financially than her husband. Suddenly, the decision to combine finances isn’t such an easy one. In fact, combining finances can lead to more arguments than keeping them separated, unless both parties are on the same page financially. The way I see it, there are three ways you can handle finances as a couple.
Combined accounts. (What we do.)
We came to the conclusion early on in our marriage that combining finances made the most sense for us. Neither of us made much more than the other, and we both brought about an equal amount of debt to the marriage. We combined and pay all of our bills and other expenses from one account. It makes it easier to balance, easier to pay, and avoids having to figure out how much each owes to what bill, or when/how to transfer money from one account to the bill pay account.
Combined account hybrid.
If you want the convenience of combined accounts, but still have a bit of an issue with purchasing things for each other. Or, just want a “me” account where you can purchase whatever you want, whenever, no questions asked, a combined hybrid set up might make the most sense. Combine all of your accounts, but open a new account in each of your names. Those accounts get a set (budgeted) amount deposited into them each month. Each account is completely hands off to the other partner. Spend it however you like, as long as the cash is in the account to cover what you spend.
Completely separate.
You don’t like the idea of combined accounts at all. They should be separate. Each of you keeps your own account and you either agree on who is paying which bill, or you create a third account that each of you deposits your share of the bills into and pay all bills from that account.
Which is right for you? I can’t say which is right, or which is wrong for you. It’s something that you need to sit down and discuss with your spouse/partner and decide on. I think that combined finances are easier, but with automated deposits and bill pay, the separate accounts could be made pretty easy as well. And, just because you settle on one way, doesn’t mean you can’t change it down the road. What I will say is that people are sometimes quick to judge based on the decision that you make. Are you too trusting by combining? Not trusting enough by leaving things separate? Perhaps your relationship is doomed if you don’t combine?
The truth of it is this: a majority of divorces have some root in money issues. Forcing yourselves into a money model that you don’t like won’t help with that statistic. Be open with each other about money. Be willing to discuss your finances, both separately and combined, and get yourselves on a path to a solid financial future. If you do that, it won’t matter which option you choose, it’ll be the right one.
photo credit: Will Folsom
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My personal choice is combining and having a joint account. My reasoning is if you cannot agree about money what else can you not agree on? Being a little more pragmatic, whatever works for the couple is fine with me.
We have combined our finances from day one. I do all the budgeting and bill paying. I can’t imagine having separate accounts and a joint one together; it just seems like too much work, though I know some people do it successfully. The only way I would want separate accounts would be if my significant other had terrible credit or had filed bankruptcy.
I’ve been with my girlfriend for 8 years but we don’t combine any finances. I think that’s good from a visibility perspective. It sounds quite bad, but if my gf screws up her own finances, that will be much more visible when we’re not sharing accounts and assets. Also, my earning potential is much higher so I like to be in control of the mortgage because I can much more comfortably make overpayments.
We use a joint account for paying bills but we don’t store any savings in there. Are we modern or just very unromantic? 🙂
Exactly how I see it to, Melissa. Just would seem like too much work, especially after having them combined and seeing the ease there.
Maybe this isn’t why you’ve kept them separate, Ash, but I think I would keep them separate if we weren’t married. I can also see why someone who, like you, has lived with someone for many years would chose to keep them separate when they do get married. Why change what works, right?
Both good points…OK, I think I feel a little less ‘business’ now. Thanks!
The Wife and I rock out the hybrid approach its just how it worked out and we haven’t changed since
I think that couples should combine finances because it will help you balance your income and get a much higher tax return.
As much as the tax incentives and such are appealing, sometimes it can just be easier to have someone else to take a look at things, as long as your partner is a responsible one…