Marriage and Finances

[Yellow]

How do you guys think finances should be handled in a marriage?

I have friends who believe that there is no such thing as my-money/your-money and friends who believe that you have to keep it separate. Some of the people try to have both joint and separate bank accounts, but still can't figure out what constitutes "joint" money.

I am not talking about one being a spendthrift and the other bring frugal. How do you think money should be put together and dealt with?

[SomeRandomGuy]

I do not believe in keeping separate finances. I believe that in a marriage everything is shared, including the income and the bills. This could be partly because we are a single income household, but we operated the same when we we were both brining in income.

That is not to say that my wife and I do not have our own spending money. In our monthly budget we each have a set amount that is set aside for free spending. If either of us wants to purchase something outside of that free money we will discuss it and make a decision together. For example, I recently ran across a great deal on a netbook that I wanted, and even though I didn't have the money set aside in my free spending bucket we discussed it and decide to go ahead and make the purchase.

With a little communication it is very easy to make financial decisions together.

[ssandra]

My opinion is that we share a house, a life, a love, so also money.

There have been times when he made all the money (and I got to spend it all ) and where I have made all the money, or when we both made money (or both didn´t make money).

As long as the 2 people involved are clear on what the agreements are I see no problem with that.

Some things I believe you should make clear agreements on:

How much goes to savings
How much can you spend on "silly" things
What are "silly" things (for us they are thingies in the house that we don´t need, xbox games, gifts for people without anything special going on etc)
From which amount do we talk to the other person to see if we both are ok buying it

[marinik]

Been married 20 years, raised 4 kids. Never had mine, yours and ours - I mean money. Sometimes we would both have some money saved aside but more for getting the other some special present or a great holiday to surprise the other. As the years went by and depending on who was doing what career wise one of us was the treasury. We both have made a lot of money, but there were times in the '90s when we had almost no money during the dictatorship, it was hard and we did have some disputes over our finances. At first I was teased that we women were much more expensive to clothe so I started a "his/her clothing diary" and proved that it was not true. Since then there is no joking about even my creams as he is using Lancome himself

My parents on the other hand always had the male-female thing where my father held the "bank" and gave my mom an allowance although she had her own pay check. She rally had no control over her shopping habits.

My in-laws had separate accounts, and it was sad to hear the discussion who was going to pay for the presents of their grandchildren.

There as many models as there are people in various relationships. Setting down rules or agreements is the right model, and changing them when they are outdated.

This is my 2 cent on the topic.

Love m

[aelle]

If I wasn't ready or trusting enough of my partner to merge my finances with them, I definitely wouldn't get married! There are plenty of relationship forms that don't include merged finances, but marriage, by default, does. I personally wouldn't opt out of it.

My partner and I aren't even living together right now (long distance) and yet our finances are very intertwined. As others pointed out, there are times when one of you might not make enough or any money, and being in this together, you just share. I can't really imagine sharing my life with someone but not my daily finances.

[James81]

This is definately one of those things where I think there should be distinctions. I never bought into the whole "two become one" thing with marriage (even though that's how my marriage became). I say like two become two, because two > one.

If you only have one income, then obviously you would be sharing the incomes and the money would be equally for each of you.

But in either case, I think that each partner should have their own account and their own money, and then a joint account for bills. I think contributions should be such that all the bills get paid, and then each partner is left with the exact same amount of spending money.

And since I'm not a big credit card kinda guy, you should keep one tucked away somewhere for emergencies only.

[spirit4711]

Originally Posted by Yellow

How do you guys think finances should be handled in a marriage?

However the partners in that marriage decide. How else?

[Aybee]

My husband and I have joint checking and savings, and separate money as well. I really don't want to have to discuss with him every purchase I make, nor does he want to talk with me everytime he wants to buy a new video game. The way I see it, we discuss our finances, and are doing fine on that front -- what's wrong with having a little personal play money. (Now maybe if we were living paycheck to paycheck we would need to pool everything together to squeeze every last cent out?)

[ssandra]

Originally Posted by James81

This is definately one of those things where I think there should be distinctions. I never bought into the whole "two become one" thing with marriage (even though that's how my marriage became). I say like two become two, because two > one.

Just out of curiosity, why do you feel this way? Why do you think this is better than doing everything (money wise) together?

[ssandra]

Originally Posted by Aybee

I really don't want to have to discuss with him every purchase I make, nor does he want to talk with me everytime he wants to buy a new video game.

The way we do it, we don´t have to discuss every purchase as well. I can go to the sauna, or out to diner with friends or buy something nice, he can buy as many video games as he wants.. as long as we stay under the limit.

I am going to discuss with him if I want to spend over 200 euros on a shopping spree. Not to ask permission, but just to see if he thinks this is a good idea.

[gigij]

We do it on percentage.
He makes 65% of the income I make 35% of the income. He pays 65% of the bills, I pay 35% of the bills. We have designated who pays what. At the end of the month we both have the same amount of disposible income left over to spend on whatever we want - no questions asked.
We switched to this method because we were constantly fighting over money. Who was spending too much ... etc etc.
Now -no problem.

[gigij]

Originally Posted by James81

I think contributions should be such that all the bills get paid, and then each partner is left with the exact same amount of spending money.

haha - just read this after i posted mine. we agree ... scary no

[James81]

Originally Posted by ssandra

Just out of curiosity, why do you feel this way? Why do you think this is better than doing everything (money wise) together?

The biggest thing, I think, is individuality. A think one of the hardest hurdles to get over in a marriage is losing your sense of individuality to the marriage. People no longer look at you as one person, but, rather, a couple. If you can find ways to retain your individuality (and thus your individual choices), I think you can save yourself some tension.

Plus, it automatically alleviates any "fights" you might have over who spent what. When you have your *own* money, that no longer becomes an issue.

[SomeRandomGuy]

Originally Posted by James81

The biggest thing, I think, is individuality. A think one of the hardest hurdles to get over in a marriage is losing your sense of individuality to the marriage. People no longer look at you as one person, but, rather, a couple. If you can find ways to retain your individuality (and thus your individual choices), I think you can save yourself some tension.

Plus, it automatically alleviates any "fights" you might have over who spent what. When you have your *own* money, that no longer becomes an issue.

James, do you think that couples with separate finances are as efficient at saving for retirement or some other large goal as couples who make all financial decisions together? It seems that separate finances introduce the risk of working towards two different goals, and therefore being less likely to reach either than if working together towards a single goal.

Although, as I type that, I realize that you may not see that as a bad thing. I guess if the goal is to maintain individuality within a relationship that may extend to retirement plans and large purchases as well.

[James81]

Originally Posted by SomeRandomGuy

James, do you think that couples with separate finances are as efficient at saving for retirement or some other large goal as couples who make all financial decisions together? It seems that separate finances introduce the risk of working towards two different goals, and therefore being less likely to reach either than if working together towards a single goal.

Although, as I type that, I realize that you may not see that as a bad thing. I guess if the goal is to maintain individuality within a relationship that may extend to retirement plans and large purchases as well.

I view retirement as a bill, not as an option. Thus, paying for retirement would be part of the "pool" of income that is used to pay bills with. Of course, it also depends on the job you have, because a lot of jobs pull retirement out without you ever seeing it anyway.

But I see nothing wrong with working towards separate goals. The only time that becomes an issue is when those goals conflict with each other. But this is something that you should probably discuss BEFORE you get married to make sure you are compatible in this regard.

[The Big D]

I find the whole separate finances thing to be somewhat delusional. The fact is that whatever financial choices you make explicitly affect your spouse no matter how much you pretend they don't. When you buy that video game, it costs your spouse just as much as it costs you, regardless of which nominal account it came out of. The 'separate' accounts are just a fiction that breaks down as soon as a big expenditure is being contemplated or money gets tight.

If you're not adult enough to handle joint finances, you probably shouldn't have gotten married in the first place.

[James81]

Originally Posted by The Big D

I find the whole separate finances thing to be somewhat delusional. The fact is that whatever financial choices you make explicitly affect your spouse no matter how much you pretend they don't. When you buy that video game, it costs your spouse just as much as it costs you, regardless of which nominal account it came out of.

When you're talking about spending money, I don't agree with you. Me buying a DVD with money that we agreed is my own money has no more affect on her than me buying a DVD has an affect on you right now. The effects of that spending only come into play when you use money that's not specifically designated as spending money.

Originally Posted by The Big D

If you're not adult enough to handle joint finances, you probably shouldn't have gotten married in the first place.

I think you've got that backwards. Any Tom, Dick, or Harry can dump money into one account and manage finances that way. I think it takes MORE maturity to handle separate accounts because it does get a bit more tedious to manage.

[The Big D]

Originally Posted by James81

When you're talking about spending money, I don't agree with you. Me buying a DVD with money that we agreed is my own money has no more affect on her than me buying a DVD has an affect on you right now. The effects of that spending only come into play when you use money that's not specifically designated as spending money.

What you're describing is a head-in-sand approach, as an example will simply illustrate. Say my wife and I have $1000. Now, along your line of thinking we divvy it up into two $200 accounts for each of us two spend freely from and a $600 joint account for common expenses. I go out and spend my $200 account on designer sunglasses, which per the agreement you describe should be OK. Now an unexpected $900 bill comes in (car repair, medical, whatever). Did my $200 expenditure have an impact on the family finances even though it nominally came out of "my" account? Damn right it did - had I not bought the sunglasses, we could fix the car. Because I did, we can't. The fact that it was supposedly a transaction within my private account did ABSOLUTELY NOTHING to isolate the family as a whole from the impact of my purchasing decision. The car still won't run because I bought the sunglasses. All the separate accounts did was allow me to pretend that my decision wouldn't affect them - hence why separate accounts are a head in the sand approach.

[IFeelGood]

This is an interesting discussion... what happens when a single person with no kids marries a divorced dad of three kids who has joint custody plus additional support payments? In addition, I imagine that dad wants to leave his assets to the kids when he dies?

This is an issue a close relative is currently experiencing... she just got engaged and hasn't sorted this out with her fiance yet... I think she needs to be very clear before they marry.

[James81]

Originally Posted by The Big D

Now an unexpected $900 bill comes in (car repair, medical, whatever).

And voila...you dip into your savings which should be 3-6 months worth of income that are specifically set up for situations like this and that you both work to replinish in the future.

Savings = A bill

[The Big D]

Originally Posted by James81

And voila...you dip into your savings which should be 3-6 months worth of income that are specifically set up for situations like this and that you both work to replinish in the future.

Savings = A bill

Ahh yes, you can defend your position if you imagine another pile of money outside the example that just happens to be big enough to handle the unexpected joint expenses without impacting your precious sunglasses. I love having to deal with absurd and poorly though out arguments. Perhaps you need to re-read my first post, where I clearly state that this scheme breaks down when a LARGE family expense looms. If the expense is small enough that it can just be absorbed without affecting everyone's fun money, that's great but it's not the situation I'm talking about.

It's a fact of life that family expenses have to be prioritized against individual expenses, and the size, timing and criticality of those family expenses can't be predicted in advance. As such, there is ALWAYS a tradeoff between those expenses and individual ones, even if you try to pretend that there isn't by arbitrarily splitting the money up into separate accounts. The philosophy you're expounding is in large part why so many marriages fail when one of the big unexpected expenses (or a loss of income) occurs.

[ssandra]

Originally Posted by The Big D

If the expense is small enough that it can just be absorbed without affecting everyone's fun money, that's great but it's not the situation I'm talking about.

I don´t really think this situation would be any different if they would have joint accounts...

They would simply say, we have 1000US, all our bills together are 600US, so we have 400US free spending this month. I see this great sunglasses that I want so I check in with my partner if this is ok (if it is above the limit that we stated, it might not be, that is different per person). My partner hates sunglasses but knows that I love them, also knows that we have plenty of money in the account so I buy them... big bill comes in... same story.

I truly think it is a matter of preference. I like everything together, with seperate accounts for savings. Others might like different things.

It is nice to hear different point of view though..

I can imagen when it comes to kids from a previous marriage that I would set up seperate accounts, but 1 for the kids (and ex) and one for the partnership.
It is up to the partners to decide if the new partner also pays a bit into that or not.

[The Big D]

Originally Posted by ssandra

I don´t really think this situation would be any different if they would have joint accounts...

The difference comes about via thinking about the problem correctly in the joint account scenario vs. incorrectly in the separate scenario. When the guy goes to buy the sunglasses out of the joint account, the question is: "Is this the right thing to spend the *family's* money on?" When it's nominally his account, the question is "Should I spend *my* money on this?". It's fairly easy for the answer to the first question to be "no" but the second question to be "yes". The reason for the discrepancy in answers is that the second question contains the assumption that the decision won't affect the family. That's of course a false assumption since whether or not the sunglasses get bought (regardless of accounting scheme) determines whether the car can be repaired. So it clearly does affect more than just you.

[SmartAlx]

Originally Posted by SomeRandomGuy

I do not believe in keeping separate finances. I believe that in a marriage everything is shared, including the income and the bills. This could be partly because we are a single income household, but we operated the same when we we were both brining in income.

That is not to say that my wife and I do not have our own spending money. In our monthly budget we each have a set amount that is set aside for free spending. If either of us wants to purchase something outside of that free money we will discuss it and make a decision together. For example, I recently ran across a great deal on a netbook that I wanted, and even though I didn't have the money set aside in my free spending bucket we discussed it and decide to go ahead and make the purchase.

With a little communication it is very easy to make financial decisions together.

That sounds like a great arrangement. I think I'll steal it when I get married.

[Mogget]

we currently keep out finances separate - my husband gives me 500 per fortnight which goes towards rent/bills/groceries - the rest of his money is to with as he pleases. I pay all the bills rent etc so everything gets paid ontime.

We keep it separate for a number of reasons, one being that he will spend every cent in his account every fortnight, no matter how much he has. Though I do pay for quite a bit more of our joint living expenses than he does I still manage to save a lot more too.

On big purchases I will pay the initial outlay from my own savings (he has none) and he pays me back at $100 per fortnight on top of the normal amount. This works for him as he would never be able to buy big items otherwise.

If we get to a point we we decide to buy a house we have agreed to initiate a joint account and joint budget, but for now this works better for us.

[SmartAlx]

Originally Posted by SomeRandomGuy

James, do you think that couples with separate finances are as efficient at saving for retirement or some other large goal as couples who make all financial decisions together? It seems that separate finances introduce the risk of working towards two different goals, and therefore being less likely to reach either than if working together towards a single goal.

One of my ex-girlfriend's parents have this problem. Her dad makes a very good living but he has not saved much for retirement. He blows the money as it comes in. Don't ask me what he spends it on. Her mother on the other hand (who makes even more than her husband) is much more sensible. She has her retirement plan in order and has said quite clearly that her husband will be on his own when he retires. When they do retire I don't know what they are going to do if he doesn't have any savings. Probably get a divorce.

[SmartAlx]

Originally Posted by The Big D

If you're not adult enough to handle joint finances, you probably shouldn't have gotten married in the first place.

Totally agree with you.

[SomeRandomGuy]

Originally Posted by SmartAlx

One of my ex-girlfriend's parents have this problem. Her dad makes a very good living but he has not saved much for retirement. He blows the money as it comes in. Don't ask me what he spends it on. Her mother on the other hand (who makes even more than her husband) is much more sensible. She has her retirement plan in order and has said quite clearly that her husband will be on his own when he retires. When they do retire I don't know what they are going to do if he doesn't have any savings. Probably get a divorce.

I think this is a great example of how keeping finances separate can create major problems in a relationship. Obviously these two are not on the same page financially. Rather than make the effort to communicate and work together, they are just ignoring the problem by keeping everything separate. It sounds like this could very well climax with the husband running out of money in retirement, and his wife either having to use her retirement savings to support him or them going their separate ways. How sad is it that something as silly as money can cause such issues between people who care for one another.

[Yellow]

Originally Posted by gigij

We do it on percentage.
He makes 65% of the income I make 35% of the income. He pays 65% of the bills, I pay 35% of the bills. We have designated who pays what. At the end of the month we both have the same amount of disposible income left over to spend on whatever we want - no questions asked.
We switched to this method because we were constantly fighting over money. Who was spending too much ... etc etc.
Now -no problem.

That sounds like a good idea. But wouldn't the person making more money feel like they deserve more of their money? I know it is unfair to the one making less to be paying 50% of the expenses, but then its unfair to the one making more to be paying more.

As James81 pointed out, this does seem like a balancing act between maintaining your individuality versus the team you two become. For teams to function well, there has to be a healthy level of individuality that is willing to add to the goals of the team. How does one achieve that in a marriage when it comes to money?

[joelr]

One can create the illusion of separate money and it will hold up pretty well if you keep spending the money. It can get problematic though.

Let's say you split $250 dollars weekly on fun money (aside from food/bill money, vacation savings and emergency savings). Your wife enjoys spending her portion on clothes and all sorts of fun stuff. While you put away most of that money in a secret savings weekly for ~22 years spending as absolutely little as possible. Now try spending the whole hundred grand on a Ferrari, see how that goes.


Point is there is no more "you", it's now the family money. If something happened like the insurance company dropped you when someone needed lung cancer treatment and surgery (this happens) you would have to step up and pull out 10 years of sacrifice money for other people besides yourself. You plus wife and how ever many kids you decided to have.