For the last 8 years, my wife Nicole and I have merged our finances. Our joint checking account has been the holding place for all of my paychecks and all of hers. It’s also been the account where all of our spending has come from.
Overall, that system has worked pretty well over the duration of our short marriage. We’ve rid ourselves of almost $50,000 of debt, we paid off our mortgage and we’ve grown our net worth by $800,000. Our lives are comfortable. We have two kids that are happy and healthy. Life is good.
Every once in a while though, Nicole and I have disagreements about money. What couple doesn’t, right?
There are times when we don’t see eye to eye on spending or saving for the future. I’m always looking for ways to increase our wealth, security and create more time freedom. She likes those things too but is often more interested in enjoying today and not depriving ourselves.
Honestly, I see our “saver vs. spender differences” as a positive. She helps me live a little and I help her plan for the future.
It’s got me thinking lately about what other ways, we could arrange our money situation. I don’t want to stick with the same arrangement if we keep coming back to the same disagreements. Wouldn’t that be some marital lunacy?
I reached out to some friends in the personal finance community to get their thoughts and opinions. This community has helped me win with my money in the past … why not my marriage?!
Here are 3 alternatives to the merged finances situation that I’m going to consider to improve my marriage.
1. Completely Separate
You were living with completely separate bank accounts before you were married. This method has you continue in the same fashion.
The money you earn goes into your bank account and the money your spouse earns goes into their bank account.
Jim from Route to Retire shared the way he and his wife have crafted their separate account situation:
“My wife and I have always kept our checking accounts and credit cards separate (we've been married for 12 years). We do have a joint savings account and divide up who pays which bills. Everyone's different, but this system has always just worked great for us.”
As Jim explained, the trick here is that you'll need to work on an arrangement for who pays the bills and also decide what are the major shared expenses.
Advantages of Completely Separate Accounts
- Overall, it feels like a fair partnership
Challenges with Completely Separate Accounts
- The process feels like a lot of work when you're separating which person is paying for each expense
- This would need to consider times when a spouse might be out of a job or staying at home with kids
To clarify, these are the challenges I would personally see with my situation and not with Jim's or anyone else who chooses to be completely separate. What I'm finding more and more in marriage is that we need to choose what works best for us and not let other opinions interfere. In short, if it's worked for 12 years … keep rocking.
2. Yours, Mine and Ours
This is when you add a new bank account into the mix. The “ours” account is the place where you plop a fixed amount of money for your joint household expenses.
That way you’re parking money in a specific spot and not putting the responsibility of one bill or expense on the other person.
The “Yours” account is for your partner to do with as they please and the “Mine” account is for you to do the same.
Bonnie, from 43 Blue Doors, shared why this approach has worked well for her and her husband in the past:
“When we were both working we kept separate accounts. An equal amount of our paychecks went into one joint account that paid all households bills. We did this simply because it was easier. It worked because we have the same financial values. In my opinion, that is the key, separate or joint doesn’t really matter if you don’t share the same values.”
Bonnie's point on similar financial values resonated with me and got me thinking. My wife Nicole definitely likes to have fun and spend, but she's also incredibly responsible with her money as well. She doesn't spend without purpose or care for limits.
That's why it's tough for me (and probably incorrect) to simply label her as the spender and me as the saver. I like buying stuff too.
I digress …
Advantages of Yours, Mine and Ours
- Similar to “Completely Separate”, you have independence and autonomy
- You're adding a specific account for the shared expenses now. This allows for more automation and ease for transferring money.
- There is the potential for fewer money fights over the small stuff
Challenges with Yours, Mine and Ours
- Again, this feels like a lot of work
- As situations change, like job loss or major life changes, you'd have to make adjustments to the plan to ensure your spouse feels taken care of
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3. Joint with No Questions Asked Allowances
This method has you and your spouse throw all of your money into one joint checking account instead of two or three …. Just one.
Then you budget out your monthly household expenses, debt payments, investments and fun money and assign every dollar coming in.
The trick here though is to ensure you’re budgeting out a healthy allowance for what each partner defines as “fun”. That fun can be anything from hair coloring to skydiving, McDonald's trips, drinks with the boys, lunch with the ladies … anything and everything that your monthly income allows.
As the current household breadwinner, Cat Alford wants to ensure her husband has the freedom to buy the things that make him happy without having to check in:
“Everything is joint but we have separate allowances. We each got $1,000 for the year this year to spend however we wanted no questions asked.”
I felt some definite kinship when Cat shared that some of her husband's favorite buys are “bourbon and hair products”. Smart man!
Advantages of Joint with “No Questions Asked” Allowances
- Less work with just one account
- Autonomy with your healthy allowance
Challenges with Joint with “No Questions Asked” Allowances
- Requires a lot of self-control not to overspend
- If “no questions are asked”, then the relationship needs to be strong
In reviewing all of these other options, I’m not sure if they would help or hinder my relationship with my wife. Right now, I’m making significantly more than her as far as income, but I want her to feel the independence and autonomy to spend on things that make her happy … within reason of course 😉
You know what!? This calls for an epic conversation with my bride. I wonder what she’ll think of these options. Shaking things up after 8 years is probably good for our marriage.
How do you and your spouse manage your finances?
Please let me know in the comments below.