Image: Paul Sapiano
Confession time: I am horribly selfish with money. Well, maybe not selfish – just particularly cautious. In my adolescent years I watched my parents’ marriage implode, and with it the sense of financial security I’d maintained for most of my childhood. I also learned a few legal lessons regarding what happens to combined finances in a marriage, and what happens to women (although I’m sure this happens to men, too) who aren’t the main earner, or financier (this is the fancy term I’ll use for “people who pay the bills and keep an eye on the savings accounts”) of their household.
Needless to say, when my then-fiance, now-husband and I were moving in together, and later getting married, how we were going to deal with finances was a top point of discussion. I’ve read a number of items on how couples combine money now, and I know there are a variety of ways to go about it, but there seem to be three most-popular choices – total combination (one joint-checking, all joint-savings, etc.); total separation; and a little bit of both.
Obviously, how people combine their money is a wildly differentiating and personal decision, which should be jointly-agreed upon depending on your circumstances. My personal disclaimer is: what works for us may not work for you, and the MOST IMPORTANT THING is that you have this conversation before you start pushing money around anywhere. That said, there were a few things I knew going into money-combination-time:
- I really like having my own money, in my own name
- We have savings goals that we’re working towards together (travel, houses, etc.) and it makes sense for us to have singular accounts for these things
- Husband is a graduate student and I have a full-time job, which means we have separate retirement funds, and that is fine.
Since we’re relatively young and unestablished, and neither of us come from money (sorry Mom – I tried to marry up), our finances were relatively uncomplicated. We decided to stick to the “bit of both” plan, and combine what made sense to us. This meant that we opened a joint checking account (which we’d actually opened when we moved in together) to which we each add enough each month to cover ongoing expenses like car insurance, gas, and cat food, and fun things, like drinks and dinners. The joint checking account has also been useful, budget-wise, because there’s a clear rule: when the money is gone, it’s gone, and there will be no more drinks or dinners or things that cost money.
We also have joint savings accounts that make sense for our situation – one “Emergency Fund,” one “Future House Fund,” and one “Travel and Car Fund” (for fun things, like travel, and not-so-fun things, like that time I took our car to get inspected and it took the mechanic five seconds of hearing it run to know that he wouldn’t be able to pass it without an exhaust replacement).
As for what isn’t combined? We each maintain our own checking accounts. Sure, we could have closed these when we got married, but I like having my paycheck deposited into my own account, and then pulling money out for savings/joint checking. It allows me to see what kind of money I have leftover, and to maintain a degree of autonomy. The same situation applies to my husband – his stipends and occasional paychecks go into his account, and he puts money in the joint checking account accordingly. This also means that I don’t have to care how much he spends on video games, and he doesn’t have to care that I just bought a J.Crew sweater I’ve been eyeing for a while.
We also have separate retirement funds – this might change one day, but for now it’s the simplest way for us to save (read: I am too lazy to figure out if we should combine money into another IRA or not). Is it a perfect system? Probably not, and the nagging concern about “What Will Happen” if something goes wrong (divorce, death, etc.) is always there, but I think it would be there regardless of our situation. For now, we both keep our eyes on the money (because that’s just good sense, not because we don’t trust each other), try to save smartly, and will plan on adjusting as circumstances change.
How have you navigated combined finances?