Keeping separate bank accounts with your spouse or similarly intertwined partner has a whole spate of logistical issues attached. How do you split the bills? How do you make sure none slip through the cracks? How closely do you track your partner’s finances – and how do you ensure you’ll have access in an emergency?
There’s also the philosophical issues. Why are the accounts separate, and do you both have the same reasons, or at least understand and respect your partner’s rationale if it’s different?
My husband David and I have always had completely separate accounts, and in our case, the reason is simple: We both like the independence of managing our own money and trust each other to do so sanely. Plus we’d risk violence if I saw the details of his spending on collectible CDs or he saw the price tags on my handbags.
But for split-account couples, there’s another wrinkle that can sneak up on you. What happens when one partner starts vastly out-earning the other?
That can be an issue for couples with joint accounts as well, of course. It’s easy to tie a lot of self-esteem up in careers and paychecks, and every couple – even if only one works outside the house – has to make decisions together about the pragmatic and emotional ramifications of their joint earning power.
But it’s always seemed to me that couples who pool all their funds have already made one major choice: All our money is our money. If one side suddenly starts generating significantly more of it, yay, but it doesn’t fundamentally alter the household financial dynamics. The shared pool simply gets larger.
With split-account couples, the math is trickier. The seesaw tips.
Some couples have to deal with this right off the bat. I know a teacher married to an investment banker, and a computer guru paired with a historian. No matter where you come down on the relative merit-to-society of each position, they’re clearly not carrying equal salary potential. Those couples had to sort out early on how they wanted to handle the mismatch.
But for an awful lot of couples, it sneaks up.
It did for us. When David and I moved in together, we were both young and entry-level at our various jobs – journalism for me, statistics for him. We made almost identical salaries. That first year, he made $2,000 more than me. Then I got a promotion and made $5,000 more than him. Then he got one and outpaced me by $2,000 again — and onward the leapfrogging went for half a dozen years. We roughly split all our household bills and maintained a fairly laissez faire attributed toward each others’ finances.
Then came The Big Promotion: A new job with a giant leap up in title and salary. Quite abruptly, one paycheck was 30% larger than the other, a discrepancy big enough to pay our annual rent.
Which made us realize: We’d never talked about this. We never planned for it. It hadn’t even occurred to us to discuss or plan for it. Suddenly splitting things straight down the middle, 50/50, didn’t seem quite so obvious and fair.
Fortunately, we turned out to be philosophically in synch on the matter: We both have a commie streak. From each according to his ability, etc. We shifted bills around so that each of us was still paying about the same proportional share of income into the household expenses, even though one person ended up shoulder more in absolute dollars. It was a fast, easy decision. Figuring out how to spend a sizeable five-figure windfall involved far less wrangling than my reaction to finding out what David spent on eBay last week for a rare Marillion CD. (I wasn’t aware it was possible for small plastic disks to cost so much.)
But we got lucky. I’ve seen the economic mismatch cause all sorts of angst and arguing, especially when it pops up for long-established couples (a sudden job change – or loss – is the usual catalyst). If you’re each used to paying the same into the household in total dollars, it gets fraught when that becomes a much bigger burden for one half of the couple than the other.
To the long list of questions it’s essential hash out before you pair up with someone for good – how they feel about career goals, having kids, moving to new places, retirement savings, debt, the Yankees, etc. – it’s helpful to add one more: How will we handle our money if one of us is making two or three times as much as the other?