Marriage - Combining Finances

[YLTL_Dan]

I wrote a post on this exact subject recently on my blog and gave 4 reasons why you should combine finances when married. It was interesting to read some of the comments on my post because two people were in their second marriage and neither combine finances now. It definitely differs for people based on experiences, but I still say to combine (only when you get married).

Below are my top 4 reasons you should combine your finances:

1. You get on the same page with short-term and long-term financial goals
2. It forces you to discuss the hard topics
3. Financial infidelity (hiding purchases) is still infidelity
4. How will you split your finances if you have kids? Only pay for the one you like most?

[red92s]

Having separate money for personal spending is like saying "I am going to share every bit of my life with you because I love you, except for this little bit here... this bit is mine and you are not allowed to be a part of it"

Counterpoint coming here . . . although we are only 3 months into this marriage and combined finance thing.

Since we catogorize and track every transaction in our shared accounts against a budget and MVelopes, having a portion of seperated spending money that nobody has to track makes things a lot easier. I don't need to worry about justifying stopping at Dunkin for a quick coffee on the way to work, buying some do-dad for my antique car off Ebay, etc. It's worked well for us so far. It's less of "financial infidelity" and more just a simplification step for us. 98% of everything is transparent, just not the stuff that would become "noise" when looking at the bigger financial picture.

[disneysteve]

98% of everything is transparent, just not the stuff that would become "noise" when looking at the bigger financial picture.

I think this is a great way to put it.

If I give my wife $100 cash for general miscellaneous spending, I never go back and ask her where that money went. I don't ask for receipts. Maybe she and DD had lunch at the mall. Maybe she met a friend for coffee one morning. Maybe she bought snacks for their weekly Mah Jong game. Maybe it was a co-worker's birthday and everyone chipped in for a gift. I have no idea and really don't care. It isn't important as long as the amount I've given her is reasonable and within the bounds of our overall financial picture.

Neither of us has separate accounts though. Everything (but retirement accounts of course) is joint. It is just cash on hand that is individual. I don't tell her where my cash goes. She doesn't tell me where her cash goes. We're not hiding anything or keeping secrets. It just doesn't matter.

[JoeP]

Combining finances makes sense for us. We work together on budgeting recurring items at least a month out, and have earmarked money that falls outside those categories. It helps a lot if a couple shares similar saving and spending habits.

When it comes time for larger personal purchases such as clothing, tools, makeovers, etc., we talk about them in advance. I never buy anything over $20 for personal use without first mentioning it. I'll say, "I need to get this tool in order to do this task," and get buy-in, although sometimes it means waiting until we get paid. This isn't for approval, but rather, communication. She does the same for me, but not quite as much I'll admit. It doesn't bother me though, and we have a healthy balance.

[Slug]

For us, it's all combined. Makes for lots of easy answers. We also each receive $250/mth in "play" money for clothes, massages, haircuts, restaurants, electronics...anything non-essential (which basically means anything not grocery or health-related). Anything unused is carried over. Additionally, once spent, the money from the play account is moved to the emergency savings account but the bill is paid from our standard checking. This creates a flow of money going into emergency savings that is essentially never touched.

I'm a big believer in the 'envelope' method and have lots of sub-accounts.

[28andlearning]

This is my take...

Joint account for Must pay bills...
-Rent/Mortgage, Utilities, food,tithing, etc.

Seperate accounts for play money.
20% of my check goes into this account. This allows me to buy toys, gifts etc.

I hated buying the SO a gift and she already knew where it was from or even worse..what it was because she checked the account online.

Find something that works for both of you. You two need to sit down and talk about it and find what works for YOU.

[qcliffy]

The best advice I've ever read!

Also, if you decide on separate finances, you really need to sit down to discuss things like:
- How will you handle it if one of you loses your job and can't find work for a long time?
- What will happen if one of you becomes disabled and can't work?
- What will happen if/when you decide to have kids? How will that change the financial picture?
- What if you have kids and one of you becomes a stay at home parent?
- How will retirement savings be handled? It will cause problems if one of you saves 20%+ of your income and the other saves nothing for retirement.
- How much debt is OK? What if one partner constantly has a car loan for a new luxury car and the other drives an old beater? Are you OK with that?
- How will you handle large income disparities?

These types of questions should be discussed between all couples, but especially those with separate finances.

I was married 20 yrs. and then had to go on disability. I now make about 1/2 of my former income. I had always made more money than my ex and paid 80% of the bills while he socked 30% of his pay into his 401K. I always assumed I would benefit from this someday too. This turned out not to be true. When I assumed he would take over utilities, food, etc., he left me and got a divorce. My house will be paid off next year and I'll be getting a nice government pension. He now has to pay rent, his own health insurance, etc. He's penny-wise and pound foolish. I sincerely wish I'd read this post 20 years ago!