To Merge or not to Merge…
The newly formed Women’s Personal Finance Network asks this week, do you merge your money when you’re in a relationship and combining households, or do you keep it separate?
When my spouse and I first moved in together (yes, before we were married) we kept everything generally separate. We opened a joint checking account, and we each deposited a set amount into it per month to cover all of our joint bills, like rent and utilities, and groceries (I cook, he doesn’t, so our groceries became joint). That sort of worked. Except my spouse and I split all the bills 50/50 and my income was a third of what his was (I was in graduate school). I had left my graduate student housing to move in with him, and it was significantly more expensive than where I was living before.
Eventually, my spouse’s mother set him straight on what a financial burden he was creating for me (without any input from me - she just assumed he was paying more than I was and her assumption made him think about the actual reality) and we had a big talk and we decided to completely merge our finances. By this point we were engaged and the wedding was only a few months away so it wasn’t as big a step as it could have been. I took on his credit card debt, he took on mine, and we sailed off into the sunset… or at least, to where we are now.
For us, it has been much easier to have merged finances. First off, we made the choice for me to leave my job and move when my spouse got a job offer in another state. The economy here is pretty sluggish and I wasn’t able to find comparable full time employment to what I had where we last lived. We also made the decision for me to stay home with our children for the first few years, so my income is not enough to pay any share of the bills we have. For us these were joint financial decisions, so our joint finances reflect that.
I know that many people keep finances separate very successfully but for us, I can’t imagine the logistical nightmare of figuring that out regarding the kid-related expenses and things like that even if we both had comparable incomes. And generally, all of our expenses are joint now. I can see it working easier for people who don’t have children.
What’s your take? Joint or separate finances? What was your deciding factor?
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October 18th, 2007 at 6:35 am
We merged our finances almost completely after we got married for one (to me) simple reason: it’s easier. We didn’t really want to figure out who pays what, etc. We still have separate IRAs (obviously) and brokerage accounts, but all of our checking/credit cards/etc. are combined. We did both keep a credit card that wasn’t joint just to keep our “individual” credit histories active.
I think it would be easy enough to keep finances separate if, for example, you both earned approximately the same amount and your monthly joint expenses were generally unchanging too much. Otherwise it’s a pain.
And of course since my wife has no wage income at all now, having quit her job, the point has become moot!
October 18th, 2007 at 7:21 am
We’re merging ours too. It’s annoying, for example, to keep checking that we both have enough money in our bank accounts. We know we have enough overall, but we don’t want to overdraw either account.
October 18th, 2007 at 8:15 am
It is kind of odd for us. We have a joint account which is basically the account for all our budgeting and needs. For the most part, we pay all our bills out of this account. My wife’s income instead goes into her personal account which she uses to pay for “her” bills. I probably would not be for this arrangement (as it tends to gyp me), but there are a few advantages in this situation.
My wife is still in school and is working a couple part-time jobs with only a few hours so her monthly income is probably about $150-200. This is just enough for her to pay on some credit card debt she had before our marriage and have a little spending cash for clothes, buying presents for birthdays and such, and other things of that nature. This way, I can budget my salary to meet all our life goals.
The downside is that I don’t know if she is being completely responsible with credit debt that she had before our marriage because of this, but I trust that she won’t get into too much trouble.
Anyway, it works now, and though we have talked a little about how we will handle finances when she has a full-time job, I think that we should consider tossing those plans and instead combining finances. It seems to not really have many disadvantages, and we could budget so that she could still use her check in a way that she wants to and at the same time is responsible.
October 18th, 2007 at 9:33 am
Currently, my husband and I have separate accounts. It is kind of a pain. It was my idea to stay separate because I was scared of losing my whole identity, plus my husband is not the greatest with money. You’re article has made me reconsider the whole issue. It would make it easier to just have one account.
October 18th, 2007 at 2:08 pm
Since I’m not married or engaged, my finances are separate from my bf…however, he has recently moved in with me…since I make a lot more money than he does (a student), I cover most of the bills. However, if I do get married, I would plan on merging accounts…
October 18th, 2007 at 2:20 pm
We have “his, hers and ours” accounts. Our paychecks are split (via direct deposit) between the joint account and our individual accounts. This works well for us because I’m anal when it comes to money (checkbook balanced to the penny, multiple ING sub-accounts, etc.) whereas hubby is more laissez-faire (just spends less than he has and sweeps money into savings when the checking balance gets too high).
October 18th, 2007 at 2:31 pm
For us, in the beginnning keeping them separate was just more of a headache than anything, because we didn’t have much anyway - and needed all of it. As we’ve become more comfortable financially, we can keep things a little more separate because I don’t have to keep track of and nag him about every penny he spends anymore.
October 19th, 2007 at 8:15 am
We’ve kept our finances separate from the beginning. We’ve been married for 24 years, and it has worked for us. He wanted to combine the finances in the beginning, but I just remember my mother always telling me not to do it. She had a pretty rough time of it financially, which I will discuss on a post on my website. But as for my spouse and me, it has worked. He has always made at least twice as much as I have. We have a joint checking, which I only touch if necessay and after discussing it with him. I have an individual checking that my pay goes into and I pay for groceries and anything that is child related: clothes, sports, field trips, etc. We also have a joint savings, which I only touch if necessary after discussion with him. And I have an individual savings. Another reason that we’ve kept our finances separate is that although we have the same goals, we differ in our approach to achieving those goals. I relate it to if we’re going on a trip and there are two ways to get there we always differ on the route.
October 21st, 2007 at 6:35 pm
Funny - I have been working on an article about this very matter for Wise Bread! (stay tuned)….
Personally, I have always managed to maintain separate finances, and quite successfully. One spouse would pay for the beefy monthly expense (ie: rent/mortgage), and the other paid for the rest. I’ve always had a good sense of spending plans, so when one person has spent more than the other, we simply reimbursed each other.
I’ll save the specific reasons around why we did this for my upcoming post, but suffice to say the secret is: excellent financial communication!
October 22nd, 2007 at 3:57 pm
It seems there are those like me who feel like it is too much of a headache to keep separate, and those who very successfully keep everything separate, and those somewhere inbetween.
As long as we’re all communicating, great job for making whichever system you have work!