Financial independence is the best. Financial DEpendence is the worst. If you truly love your spouse, you would make them financially independent. Don't let them always feel like they have to ask for money or ask for permission to spend money.
If you plan to get married, then you better not get divorced. Otherwise, what's the point? You'll end up wasting money on lawyers. You'll absolutely disrupt your finances. And if you have kids, they might have to go to therapy in order to make better sense of the cruel realities of the world.
Money Is A Constant Source Of Contention For Couples
According to a Kansas State University study of more than 4,500 couples, it found that arguments about money was by far the top predictor of divorce.
Approximately 7.2 million Americans (4.4 million men and 2.8 million women) have hidden a bank or credit card account from their live-in spouse or partner, the report found.
What's going on? For one, if you are constantly feeling financial constraint, there's no surprise that your relationship will suffer. Therefore, making enough money to live a comfortable lifestyle is important. Then getting 100% on the same page when it comes to spending and reaching financial targets is the obvious next step.
But even rich people go through breakups all the time. So clearly there's something else going on after a couple starts earning a comfortable income as the hidden bank and credit card accounts survey indicates.
Welcome to the terrible world of financial dependence, where no matter how much your household earns, you'll never feel free if you aren't earning your own income.
Why Every Spouse Should Have Their Own Bank Account
One of the best gifts you can give your spouse is the gift of financial independence. I'm not talking about showering your spouse with riches once you get married. I'm talking about supporting your spouse in making his or her own fortune in addition to contributing to the family fortune.
After all, financial independence by definition includes being financially independent from each other. Many of us remember the sheepish feeling of having to ask our parents for money growing up. The same feeling still exists as an adult without your own bank account.
Over the years, I've had over a hundred spouses tell me how they wish they had their own money to spend freely without fear of judgement from their spouses. Many have told me the financial dependence they had on their spouses ruined their marriages.
Let me share three specific examples why financial dependence is no good. More specifically, why each couple should have their own individual accounts plus a share joint account.
Husband of a heiress who lives in a mega mansion.
“Sam, the reason why I spend so much time trying to become a published author is because I want to make my own mark. Right now, I'm seen by strangers as just some chump who married into money. No matter how much I tell people I married for love, nobody will fully believe me.
I want my own identity. I want to eat what I kill. The freedom to buy what I want without drawing from a pool of money my father-in law left would be wonderful. I don't deserve it.
Never in my wildest dreams would I have imagined a poor kid raised by a single mother would one day be asked to host political fundraisers at his home. I need to right the scale. “
Business school classmate who married a Google engineer back in 2007.
“We live a comfortable life down in Menlo Park. Google's stock is up more than 6X since we graduated back in 2006 and we feel financially secure. It's wonderful being a full-time mother of two, but it's exhausting as you're now finding out.
I had a great 10-year career working as a chemical engineer until we decided it was best for me to stay home. He made more and the family benefits at Google are amazing. But ever since I decided to be a SAHM in 2012, I miss the feeling of being able to make my own money and spend money on silly things without having to explain myself to my hubby.
Although we are a team, I'm always second guessing whether I should spend on even the simplest of indulgences. For example, when my back and hands were starting to kill me from having to rock my youngest to sleep for an hour each evening, all I wanted was to get an hour long massage.
But instead of charging $120 on our joint credit card where he checks each line item, I decided to just spend $20 in cash on a chair massage at the mall because I was afraid he'd complain that he could easily give me a massage for free! I love my husband's frugal ways, but his massages don't come close to what professional hands can do.”
A reader shared one of the reasons why she got a divorce.
“We never made a lot of money, around $85,000 combined, or so I thought. He liked to handle the finances so I just let him do his thing. Then one day I found a pile of ATM withdrawal receipts stuffed in his coat pocket that totaled about $8,000 over the past three months.
When I confronted him about the receipts, he admitted he had a separate account used for playing poker. He didn't want me to worry, explaining to me poker was just a fun outlet.
It turns out he was actually a great poker player and had over $50,000 in the account! I was pretty proud of his success in the beginning. But, then I realized he wasn't always going to play poker during the nights he said he was. I won't get into the details, but I strongly believe that if your partner isn't completely honest about you about money, he's probably hiding something else as well.”
As you can see, financial dependence creates unnecessary strain on a relationship. Today's modern couple is evolving to the point where each person is building their own wealth long before getting married.
Reasons For Spousal Financial Independence
Here are the reasons why each spouse should have their own individual financial accounts along with a joint account. Ideally, both partners in a relationship should be financially independent.
Reason #1: The Release Valve
The common reason for each spouse wanting their own bank account is the desire for independence as all three examples demonstrate. There's no greater feeling than being free to do whatever you want with your own money.
Because it is impossible to 100% agree on every single aspect in life, having your own bank account provides a release valve when partners don't completely see eye-to-eye on a particular expense so that pressure doesn't build up to the point of explosion.
In the massage example, the husband couldn't fully empathize why his wife would want to spend $120 + tip on a massage he thought he could provide for free. And because his wife doesn't have a salary, she felt guilty spending $100 more than what she could get for a 25 minute chair massage at the mall.
Over time, resentment builds up by the wife, especially since taking care of two young children is way harder than going to work at Google for 10 hours a day. The husband, on the other hand, might disagree with her views. He may begin to resent her for thinking this way. He purposefully shielded her from all the corporate BS he's had to deal with.
Without a release valve, the chance for arguments and ultimately divorce increases.
Reason #2: The Insurance Policy
Having independence is just one reason why each spouse should have their own separate bank account. After all, before each partner met, each enjoyed independence for years. The other reason for having your own financial account is insurance.
Let's say something bad were to happen to you and the legal system somehow ties up your assets in probate despite a clearly written will. Or perhaps your life insurance company decides not to pay out the claim you spent 15 years paying. Who knows what snafus await after an unfortunate event. They happen all the time.
If you have your own finances, you can more comfortably wait out the storm while the legal system makes you whole. In other words, your bank account is your worst case scenario. Knowing that my wife has her own healthy bank account let's me die more peacefully knowing that at the very least, she'll do just fine without me and our accumulated wealth and vice versa.
Notice how I didn't write about insurance from divorce. Marriage is about security, and having a separate bank account provides that extra security.
Related: How Much Life Insurance Do I Really Need?
Reason #3: The Financial Trainer
Just like how a workout buddy helps motivate you to do one more set or eat one less slice of pizza, your spouse can help motivate you to earn and save more as well.
By having separate financial accounts, you can clearly see where each of your finances stand. You can challenge each other to see who gets to a certain savings amount first. Or if your starting amounts are vastly different, you can challenge each other based on a percentage increase amount.
The number of different challenges and the ways to get there are endless e.g. the many different types of side hustles and investments one can undertake to boost their income.
The ultimate goal is to push each other to achieve optimal finance performance while concurrently building a stronger financial life together. If you completely co-mingle your funds, it's hard to tell exactly how much you've contributed to the household. The more murky your contribution, the easier it is to feel demotivated or be misinformed by how much you've contributed.
Keeping separate bank accounts also minimizes the temptation of “cheating” by overly relying on your spouse. Don't take away your spouse's sense of pride and accomplishment like the man in example #1. Financial dependence causes friction.
The Horrors Of Having Separate Bank Accounts
I know by now a lot of you are completely befuddled with the idea of giving each spouse the gift of financial independence. I don't blame you since for so long, the tradition has been for the husband to earn and the wife to stay at home.
Making a spouse financially dependent on you is a great way to control your spouse. However, we're in the new decade now. It's time to modern up and abolish the old ways!
Believe in equality between men and women. Every little girl and boy growing up today should believe they can have a fantastic career and be financially independent on their own. If you had or have a little one, what would you encourage him or her to do?
If you are financially independent, you can weather a breakup much easier. Don't think divorce won't ever happen to you since the statistics prove otherwise. If you are financially dependent on a person you no longer love, life won't be easy.
But to recognize the other side, here are some aghast comments from my post, How To Overcome Money Addiction. In the post I wrote, “I borrowed $10,000 from my wife to invest in an Austin, Texas real estate crowdfunding deal.“
Aghast comment #1
“I will state flat out that I think everything should be shared and that I am a bit alarmed that you ‘borrowed $ from your wife’ although I don’t know your situation, I just want you to succeed, marriage and all, especially with all the baby talk on this blog as of late.”
Aghast comment #2
I hope you don’t take offense, as I have never looked into any surveys or studies on the subject, but I know several people whose marriages have ended and many of them kept separate accounts. It just seems like (to me) the two becoming one should mean everything!”
Aghast comment #3
“My wife and my finances are completely merged. So the concept of borrowing money from her is ridiculous! Financial dependence is fine!”
I have no problem with couples 100% mixing their finances together. I'm not sure why it always seems like couples who only have joint acccounts have problems with those who don't. But let me explain anyway why I used the term “borrowed.”
We Have Joint And Separate Bank Accounts
Since we first met, I've always wanted to give my wife everything I could conceivably offer. From paying off her remaining college loan after my third year of work, to buying a house in San Francisco for both of us to live a more comfortable life while young, I've always had a desire to provide.
I owe her a lot because she has been with me since the beginning when we were broke college students. During my senior year while I was interviewing for jobs in NYC, she'd wake up at 5:30am just so she could call and make sure I wouldn't oversleep for a 7am interview.
We have a special relationship because money was never a deciding factor for why we came together. We had no money when we met in college! Further, I never want money to ever aversely affect our relationship.
We Are A Team
I'm proud to say that she has never needed direct financial help from me as a financially independent woman. She enjoyed a fantastic 13-year career in finance as well. Although, I have “borrowed” money from her during a cash crunch. I wanted to invest in a particular stock when it was selling off, and I didn't have enough money.
In 2014, with some coaching help by yours truly, she was able to negotiate a severance and finally break free for good in 2015. Since then, we've continued to build our wealth together and separately.
I want her to be a multi-millionaire with accounts all in her own name. Because if I die prematurely or we break up, it's easier for her to get on with things. At the same time, we've set up revocable living trusts to ensure an orderly transfer of assets if one of us were to become incapacitated.
Finally, we both have affordable term life insurance policies to make sure the survivors in our family can continue to live life without financial worry.
If you're looking to get life insurance, check out Policygenius. My wife was able to double her coverage for less with Policygenius. And I recently got a new 20-year term policy with them. Having matching term life insurance policies while we have two young kids feels wonderful.
The Stay At Home Spouse
So far I've addressed separate financial accounts between two working spouses. But how does a stay at home spouse expect to earn his or her own money if he or she doesn't have a job? Well that's easy.
Being a stay at home parent is easily worth AT LEAST the median income of your city. In reality, being a stay at home spouse is often much harder than having a day job since it can be 24/7 for the first several years of a child's life.
If you don't believe so, then take the number of hours your stay at home spouse works and multiply it by the average hourly cost for daycare or a nanny. That is the amount of money he or she deserves to make and spend.
Have A Conversation On Spending
Of course, it's a good idea not to spend it all. The money should be allocated similarly to the way the day job working spouse's money is allocated in terms of savings, investing, spending, and so forth.
And of course, you don't have to give a salary / allowance. You can just agree to earmark this money in a joint account as his/her right to spend at will.
If you believe in happiness, then you believe in financial independence for both spouses. And if you believe in financial independence, then you should not be opposed to each spouse having a separate bank account plus a joint account.
The ultimate goal is to create household wealth together, while also ensuring each spouse never loses his or her freedom. Giving financial independence is a gift of love.
Loading ...Related post on financial dependence:
The Average Net Worth For The Above Average Married Couple
A Discussion About The Growth Of #TradWives
Given that this site is about achieving financial freedom sooner, being financially dependent on someone as an adult is the exact opposite of what I want for readers.
As a result, I decided to talk to Jo Piazza, a bestselling author, about the emergence of the #tradwife trend on social media and its implications.
A tradwife typically denotes a woman who believes in and practices traditional gender roles and marriages. Some may choose to take on a homemaking role within their marriage or leave their careers to focus on meeting their family's needs at home.
According to Google Trends, online searches for the term “tradwife” began to rise in popularity around mid-2018 and reached high levels during the early 2020s.
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I've been using Empower since 2012 and have seen my net worth skyrocket during this time thanks to better money management. Couples need to proactively review their finances together in order to build greater wealth. Money consistently ranks as the #1 or #2 reason for fights and divorces.
Financial Dependence Is The Worst is a FS original post. Join 60,000+ others and sign up for Sam's free newsletter to get smarter and wealthier each week.
Wow – sounds to me like massages create the most financial arguments in relationships…LOL. We are still sooo tied to our puritan past! NO TREATING YOURSELF ALLOWED, ITS A WASTE OF MONEY!!!! I gotta ask the person who golfs (or any fun activity that costs money), how is that any different than getting a massage?
In any case…great article. Incredible comments. We have been married 30 years – joint all the way. Both have and still working. I have made 5-10X a year what she made/makes. But we had shared values and goals – saving for college, paying off house, saving 30% of income, so it was really seamless. With the rest we like to enjoy ourselves. I don’t get to enjoy myself “more” because I make more money.
I want to just offer that some words are getting thrown around that are interesting to me in the comments. I often see “transparency” equated with “trust”. They aren’t the same. If I announce I an going to Vegas with the boys and spending 10k to have fun…”and she has access to all the ATM receipts, I’m not hiding anything” you are being transparent, but that has nothing to do with trust. One can be transparent with their spending but also a bully from a money perspective in a relationship.
Trust is about honoring and being aware of the relationship between money and power and how it impacts those in your sphere of relationships.
Finally, Sam, I would love to here more about your situation. When you write your articles about purchases and investments, are those your accounts or from joint accounts, and what were your wife’s feeling/wishes about:
1. Plowing 810k into real estate funds. Did you discuss with her first?
2. Buying “my dream home”. Was it also hers? Did you feel she needed to be at least “on board”?
3. Buying 50k worth of NKE stock.
Is all this happening from your individual accounts or joint? At what “level” do you feel you need to run it by her?
Big investments over $25,000, I’ll discuss it with her, especially ones I’m not certain about. But we have separate investment accounts as well.
We definitely had many hours of LONG discussion about buying the dream home. We even recorded podcast episodes about it here:
” rel=”noopener” target=”_blank”>Dealing With The Emotional Stress And Fear OF Buying A New Home (Apple)
” rel=”noopener” target=”_blank”>Thoughts After Buying A Nicer Home (Apple)
I’d appreciate a rate and review. Every one counts. Thanks
Re: During my senior year while I was interviewing for jobs in NYC, she’d wake up at 5:30am just so she could call and make sure I wouldn’t oversleep for a 7am interview.
THAT is TRUE love right there! Samurai Sydney definitely is a “keeper”! :)
Reminds me of the time my eventual husband-to-be and I started dating. I would stop by his place after my evening work shift ended to spend some time with him watching Johnny Carson before he needed to leave to start his night shift. I’d get back to my place (still living at home with my parents while working and earning my AA degree) at around 1 am in the morning. Then I’d wake up at 6 am to get ready for my “first thing in the morning” community college class (of course I was attending the college almost 10 miles away rather the one less than 2 miles away). An exhausting schedule, but that’s the kind of thing you do when you are young and in love!
Awesome! Yes, indeed. I’ve slept through too many morning classes back then to not have a backup backup alarm clock.
Outside of this discussion, I would add this: before any legal or financial commitments, both parties should have successfully lived completely independent financial lives for at least two years without boomeranging back to the childhood nest. No going straight from a parents’ or other persons financial cover straight to a spouses.
Great suggestion. If you never learn how to live independently, then you might be screwed if you end up by yourself.
My husband and I have a successful strategy that works for us. After we fill our 401k, the rest of our paycheck went into debt payoff, shared account (strictly for bills, groceries, gas and mortgage ONLY) and $2000 PER YEAR for each of us to do with how we pleased (no judgment allowed on partners spending). In January this year we payed off the last of our debts, and we have yet to discuss what our new yearly “personal account” amount will be. But this three bucket system has worked amazingly for us. With my ex bf we had a similar system of X amount contributed to “household account” for strictly necessary bills, but everything else earned was our own. The system was changed with my husband because we had to work together on getting financially ahead as a team, but the idea of having separate accounts as well has definitely saved us loads of stress and resentment.
I definitely agree with the goal of having a sense of financial confidence and personal independence… and the solution is likely different for people in different relationship and career situations. A couple of good examples that really challenge to think differently about a household’s finances.
Maybe like some of your other posts, the ideal income really is somewhere in the +/- $250k range for a household… in this range no one is likely to be on the wealthier or less wealthy end. Even if that’s one income and the other spouse stays at home… $250k is a great income for an individual, but that’s a mid-career doctor, lawyer, or reasonably successful junior executive in a corporate role, small business owner, etc. People at that income range really need to stay humble as they don’t really have a ton of power, and there are a lot of people with much higher incomes, assets, and power! :)
I bought my wife a new home paid cash I remolded the house her father left her paid cash again bought her the car she wanted and she still doesn’t agree with me spending on myself and other family as I wish whats your answer to that
Hi Ed. I think this requires compassion and conversation. She is having some concerns, and if you can schedule a chat. And keep in mind how to be open minded, and to be a safe space for her to share her thoughts. Key phrases are: “I understand how you can feel that way.” Biggest is to NOT try to re-explain the situation from your point of view. You already know your point of view from your side. But to see if you can get her to share about why she feels a certain way. What needs is she not expressing? How can you help her meet those needs? I think it could take a while, but there should be a compromise in the future that she should feel comfortable with, if you can understand how she needs to feel cared about. It’s an idea. Anyone reading this should check out the free resources on marriagehelper.com (I am not a paid affiliate, but just an actual community member who actually is getting a divorce but learned a LOT of skills that helped me become a better person, friend, co-worker through the concepts on this site!!)
I think I remember seeing this post when you originally published it, but I love it nonetheless. I think we have a fairly unusual arrangement. We still maintain our separate bank accounts, have a joint savings account, but all investments accounts are managed by me even though they are titled in either my name or his name. In other words, I have a Roth, a taxable account, a 401k, a TSP, a regular IRA, and he has a TSP and a Roth- but I manage all of the them as one giant investment account and just allocate funds to whichever bucket make the most sense. I also have had a more variable income as a military spouse with young kids, so he basically gets an allowance in his bank account, we both spend on credit cards, and I pay all the bills using money from both of our accounts.
We have been married since 1979. I have always earned about 3 times more than her. Almost from the beginning she made the house payment and I paid all the other expenses. The rest of her income went into her account to spend as she wished. This gave her great freedom to buy items for others, the children, and herself. Money was never an issue for us since she had her own account and income stream. Now we are both retired and she still gives me what our house payment use to be each month and she keeps the rest of her retirement check. If you look under your chart for the net worth of the above average couple you’ll see our net worth is in the highest bracket you have for 65 year olds. We saved for 35 years just like you suggest that couples do and as a result ended up with a net worth in line with your projections.
I THINK THE FACT MY WIFE MANAGED HER BUDGET RELIEVED ME FROM HAVING TO DEAL WITH HER SPENDING NEEDS. I COULD FOCUS ON SAVINGS AND INVESTMENTS MORE. THIS ALLOWED US TO MAX OUT MY INCOME IN IRA’S, ROTH’S, 401 K’S AND THE STOCK MARKET.
Loved this article. It is truly difficult to come to an understanding of how best to manage your money as a married couple. However, before me and the husband got married we went for a church marriage course over the weekend. It was surprisingly useful.
When the husband was still on a corporate job, we used to divide the fixed monthly outflow in the percentage of individual salaries to the total inflow. So, if he earned 60% of the total income in the household, he paid for 60% of the joint expenses. A joint credit card has always helped in the clarity on joint expenses. I wrote about it a few months back.
Now, the husband has started a small business where all profits are being reinvested whereas my salary is used to run the household. Somehow, it makes me proud of the fact that my salary is being able to help my husband go for the dream that he totally deserves.
I do not agree with the theory that joining all income and expenses leads to more transparency. Me and the husband are absolutely transparent about our finances and for any holiday or big expenses, wherever inequitable contribution are required, make it so. I strongly believe if the spouse has to cheat financially, he or she will do it even with the joint finances firmly in place. However, seperate finances just make an individual more confident and even more comfortable with managing money.
100% separate finances and taxes, thank God, as my spouse proved to be a fool with money and taxes, and caused me financial hardship even with totally separate finances and taxes. I cannot say strongly enough that if you are naive enough to marry, do not hold any money or assets jointly. I recommend you simply live together with your sex partner/baby mama/baby daddy, in a state with no common-law marriage or palimony laws.
We are not yet married, but I believe we’ll do one joint account for joint bills and maintain our separate accounts. We both love our banks and worked so hard building independence. That said, we currently operate as if our money is joint. If I am tight one month, I know she would help. If I have extra miles and she is too tight that month to be able to afford to fly to me, the miles are hers. We approach life together.
I don’t believe in alimony, common law, dependence for able adults. I told my significant other from the beginning , whatever wealth I brought into the relationship is mine and I will remove it whenever I please. Love and trust are great , try to make them last a lifetime but plan for something to go wrong. If someone is to be dependent there should be a verbal or written in advance as to how it will be handled when/if circumstances change. Unfortunately there are injustices in many relationships but as Voltaire said , this eventually produces independence .
I wrote an article on this same exact thing a month or so ago. I wholly believe in separate accounts. I don’t want Lady Celt to feel like she HAS to stay with me. I want her to want to stay with me. Having her own money and financial freedom allows her to leave if she wanted.
10 years in, she hasn’t wanted that.
OUTSTANDING post. Great points and I completely agree. My dad is an attorney and stated that pre-nups still are not a guarantee things will be divided based on their original wishes and that court could view things differently if they want.
If you live in a community property state (such as CA), and do not have a prenup, your finances and accounts will be shared, irrespective of the manner in which they are maintained. Some people believe marriage involves a complete merging of lives, including finances. Some do not, and those may choose to execute lengthy prenuptial agreements that allow each spouse to keep completely separate assets, income, finances, etc. To each their own.
However, unless you are one of those individuals who has a prenup specifying otherwise, when it comes down to it, any “separation” of accounts is purely psychological, has zero legal effect, and separating accounts will not at all serve as any kind of “insurance.”
If the act of keeping separate accounts is purely psychological, one has to question why. Finances are indeed a major cause for divorce, but so is lack of communication. Separate accounts solely for the sake of keeping certain spending habits hidden (i.e. for the purpose of acting as a “release valve” so one does not have to justify playing poker or getting a pricey massage), then seems like a perfect storm of the two worst risk factors for divorce, in that it allows couples to avoid certain beneficial or necessary discussions about finances.
The fact a husband may be resentful of his SAHM wife getting a pricey massage on rare occasions or that a wife may resent having to defend this decision is probably something that needs to be hashed out with good communication. There may be no clear wrong or right answer – maybe $120 is a bit excessive (or maybe it isn’t), but on the other hand, she should not be made to feel her only option is to get a mediocre massage on the down-low with $20 in cash. Either way, I think it is better for a marriage to discuss these issues instead of sweep the matter under the rug by hiding it with separate accounts.
In the scenarios above, if you live in a community property state, whether you have separate accounts or not, at the end of the day, the decisions to spend money on poker and/or massages will impact both people in the relationship financially. By keeping separate accounts, you are just hiding this fact and/or delaying acknowledgement of the inevitable financial consequence to both in the marriage.
My husband and I have completely merged finances. That means sometimes he might question why my lunch outing was a bit over-the-top, and I might ask “You paid what for that shirt?” It has never resulted in an argument, and I think it’s positive thing to acknowledge even occasional over-spending, because financial success in a marriage depends on keeping each other accountable. In the end, we’ve established enough trust over our spending habits to understand that sometimes I’ll spend more on X and he may spend more on Y, and that’s OK, but the transparency only encourages communication, and I think that’s very important.
I see this as a well thought out article but would have to disagree and say that some of the examples of why the shared bank account had to do with a lack of transparency. One person is usually stronger with finances and having once person take the lead but being completely transparent can lead to greater success in the overall financial picture. You discussed horror stories with divorce, what if one person was accumulating massive credit card debt and doing mischievous things with their money, how would this be known in a separate account scenario? Furthermore, depending on the laws of each state, that accumulated credit card debt would likely be split 50-50 in a divorce punishing the spouse who was making responsible decisions. The course sees everything as shared so why keep it separate? My wife and I have had shared accounts since about 6 months before we were married and its been over 3 years now. We have a shared login with Chase and can each see our checking and credit cards. We each have a credit card we use for small things that the other cannot track which is meant to be used for small surprises like birthdays, Christmas, and what not, but we can each see about how much is spent by checking the paying from our checking account later on if we want. I personally manage everything but we regularly sit down and review our financial goals and successes/difficulties. My wife knows all of our investments, I tell her when we buy more stock, invest in fundrise, etc. She has a login for all of our accounts and can ask questions at anytime. There is no possible way you could achieve the level of trust we have in a scenario where you have separate accounts and can spend significant sums of money without the other knowing. Want to know what I spent on my buddies bachelor party last weekend? Go ahead and check the ATM or credit card withdrawals- all clean. All trust. What is one of the greatest issues that leads to divorce other than financial issues? A lack of trust. What can separate accounts lead to? Both financial issues and trust issues. By being completely transparent and working towards the same financial goals we’re heading towards greater financial success which will lead to greater financial autonomy for both of us as. Combine this with unparalleled levels of trust and a single account system can crush the two or three bank account system in the long run. Great article with great pointers, and it way work better for some, but if you’re looking for ultimate success and not just something that “works” then I think you need to re-think this system. Thanks for the perspective Financial Samurai!
There are some interesting thoughts here. My wife and I merged chequing acounts, but we keep separate credit cards. Neither of us questions the others cc balance as we discuss the bigger purchases, so each of us knows when the others will be higher than normal. In the end, it’s all about communication and having the same goals.
I’m a fan of decentralization in general. It reduces systemic risk.
I prefer to keep my finances largely independent. Similarly, if I was a country, I wouldn’t link my currency with another country’s currency, like the Euro.
My wife and I have separate bank accounts that the other is co-signed to. This allows her to cover her things and me to cover mine as we both travel and have expenses that have to be paid. The nice part about being co-signed on each other’s accounts is that if, God forbid, anything happened to either one of us, the other would not have to go to probate to be allowed into the account. We also have separate credit cards. This is because of our travel. I have two cards and so does she. One for business and one for personal. If we are out, I normally pick up the check or the costs for groceries. I cover the things on our primary residence, she covers the ones on our two rental properties. This has worked out for the two of us for over 13 years.
I have been married over 20 years and we’ve always had separate bank accounts. My husband owned his own business and didn’t make much money. I’m the more ambitious half of the couple and my income was on the rise in the first few years of our marriage. He’s since working a W-2 job. I think the biggest shock for me was not knowing his annual income until the W-2 came in (it was low). I never really paid much attention because I bought my house before we were married and I paid all the bills. Things have evened out since then (sort of).
We now have one joint account together that gives me signature authority, but my income doesn’t get transferred there.
Because I’ve been the major breadwinner, it’s easier for me to save and control spending from my own bank account. We do this transfer-the-money dance when I feel he’s not pulling his weight, but in the past few years, he pays more and more big bills out of his own account – I don’t even open certain bills anymore. We made a deal that we’d put an extension on our house if he paid the home equity loan. It’s been 13 years and I have not paid a dime towards the additional debt. It’s a matter of working things out.
Financial infidelity is more common than we think it is. That would be hiding accounts and building debt that the other spouse doesn’t know about. Sadly, trust is sometimes an esoteric concept.
My wife and I share our iPhone passwords not only between us, but with our 12 and 15 year olds too. Who cares. My 15 year old does not share hers. But everything is “family” in ours. I do not see any reason wherein it should not be a joint account. But from experience of my mother’s demise, I request all of you to make sure that you have a beneficiary defined for ALL your accounts. Joint accounts are the easiest. it generates trust, maintains it, and makes it stronger.
I think what this post is really about is compensating for fundamental financial vulnerabilities in a relationship. In a marriage with a financially dependent spouse, the dependent one is vulnerable to micromanagement during the relationship, and vulnerable to poverty if the relationship ends. But the financially independent spouse is also vulnerable to the spending patterns of the dependent spouse (and having to pay child support if the relationship ends). For the relationship to work smoothly, there has to be mutual trust that 1) both will do what it takes to make the relationship last and 2) that both will make an effort to spend wisely.
Vulnerability is uncomfortable. It can be scary, especially when you consider the statistics. But it is possible to live in vulnerability.
I am a financially dependent spouse. I respect the hard work my husband does for our family. It took us about 6 years into our marriage to figure out how to use a budget, and when we did, it removed 98% of the conflict in our marriage (which wasn’t terribly conflicted in the first place). We have unified accounts, and a budget in which we both have our own spending category for fun money. We split the money duties in an odd way: he’s the saver, but he doesn’t like to monitor the budget or accounts. I’m the spender, but I am very budget-conscious, so I track everything. (Keeping the budget on YNAB made me into more of a saver because I like to build up the pretty green buffer number.)
I hope to eventually have written a bunch of fun novels that bring in income. Maybe there is a part of me that still wants my own money, or maybe I just want to contribute something, I don’t know. But we’re in a comfortable enough position that I have a hard time thinking of how I would spend a lot of extra money.
I think what matters is not the way the accounts are split or unified, but that it is organized in a way that meets the needs of the two spouses in the relationship. There has to be accountability, but there can’t be micromanagement. There has to be order and priorities, but there also has to be flexibility and room for individual tastes.
My parents had separate accounts. I saw how that worked. I was inclined to do it that way when we were first married, but my husband wanted unified accounts, so I was willing to try that to help him be comfortable. He was willing to make his own changes to help me be comfortable.
I’m probably a little weird, but I personally value the practice of running larger out-of-the-ordinary purchase ideas past my husband. (The threshold can be anywhere between >20 to >50, depending.) I like to have his approval.
I’ve made one big purchase in our marriage that my husband was unhappy with. It was a custom couch, and it was expensive. But I knew it would make me happy, and I knew I would love it. (And I do. It’s really colorful.) I DID clear it with my husband, and I gave him time to get used to it, but he was still unhappy with the price. But he could see that I loved it, and he could see that I would enjoy it for a really long time, so he reconciled himself to it. It was hard to see him unhappy though. But I REALLY wanted that couch. :-)
It may be that my story confirms why people don’t want to be financially dependent, but I just wanted to share that stuff so you can see a little bit of the kinds of attitudes and practices that make it a harmonious situation. Your mileage may vary…
Important topic. I know couples with joint accoints and for some it seems to work. I prefer some privacy – I don’t hide my purchases but does the husband really need to know how much was my glass of wine with friends or how much was the new bike saddle?
We have ended up with a system that works for us but has quite a few accounts. I’m not going into details, but there are 10+ accounts + investments in separate provider. Our salaries come to our own private accounts. We put a big chunk of that to joint accounts – there’s one for mortgage and other fixed payments, one for “normal use” (almost all of our non-fixed spending, like food, travel and kid expenses), and one for joint savings. The rest of the accounts are mostly different savings (joint, kids’ and private), which essentially hide our side hustle money and emergency cash etc so we don’t accidentally waste it.
The split is pretty even as our incomes match but when that changes, we choose a fair distribution. Only super uneven times have been with kid care (each of our kids was home until 1 year and we split the time home in half, both were home 6-7 months so some joint time too) and then of course the working one payed.
I’m the bigger saver and invester so this gives also me a peace of mind. I’m also the one keeping long term plans in excel and updating them. Hubby sporadically calculates expenses and I force him to stay up-to-date ;)
Note that while we have our “own” money, we still pitch in if something unexpected happens – extra expenses on a vacation or so. It’s a joint life. (I heard a horror story how someone had to take bus when hubby took plane to a joint vacation. Creepy.)
In extra family expenses we both just put some extra to our joint account, or sometimes we just pick the bill ourselves. We don’t keep tab on the small things and it was fun to notice in our last yearly overview that we ended up having contributed almost equally past year.
“I’m not sure why it always seems like couples who only have joint accounts have problems with those who don’t.”
I wonder the same about so many things.
Anyway, mostly joint accounts, with separate matching his and hers accounts. We each get an equal allowance each month to spend however we damn well please. We both think we waste our money. De gustibus non est disputandum.
I have a 10 month old daughter. I will teach her to insist on financial independence and reject any other option out of hand without respect to whether marriage is involved.
Wonderful! If I had a daughter I would totally insist on her to focus on being her own woman, earning her own money, growing her own net worth, and adopting a financial independence MINDSET. Not only will it be good for her, it will be good for me too so I don’t stress out like crazy :)
Let’s give the gift of freedom and financial independence to our children, by letting THEM stand on their own too fee, forever.
I was surprised to see how high the fully joint option was in the poll, I really thought it would be more split. I’m in the joint and individual option and that works well for us, but we also both work and contribute fairly equal salaries. I agree with you that it is important to share the wealth, especially if one of the spouses is a stay at home parent. Obviously that it a full time job and it’s only fair that they are reimbursed for that. It just seems crazy that a wife would have to ask a husband for money to buy new clothes or go for a massage.
Unlike the misconception in West that Asian woman are submissive – at least I can tell for sure than Indian women “run” the house, though “behind the scenes”. My maternal grandmother did it, my paternal grandmother did it.
With time, married with children folks realize one thing – Ones who take care of children has the most power. working or not.
stay at home moms or dads, are NOT financially dependent folks. They are SAVING a lot more that it costs to raise a child. And they are providing the emotional needs of the children.
Financially dependent BY CHOICE vs. Financially dependent (because I never went to college) are two different humans….ONLY till one has kids.
But one who takes care or home/kids works at least 5x more than the one who works in office, even if it is Wall St.