Money and Marriage: Should you Separate or Combine Finances?

Whenever marriage or a similar significant-other long-term partnership is formed, the question of combining finances (and to what extent) is bound to arise.

And, oh what an interesting (and challenging) conversation it is.

If you’re having trouble bringing up or revisiting this conversation, it’s best to know the framework of possibilities and hear from personal experiences (I’ll share mine and hopefully others share their’s in the comments). That’s what this post is all about. So let’s get started.

Opposite Ends of the Combine Finances Spectrum

The extent to which a couple agrees to combine their finances usually has two opposite ends of the spectrum:

1. Financial Firewallers: these couples intentionally keeps all but common living expenses (food, rent, utilities) separate, and even those common living expenses are equally covered. They have separate bank accounts, separate savings, and even an agreement that should there be a break, finances will be kept separate.

2. Shared Poolers: these couples have one joint bank account from which all income and expenses are funneled – a “shared pool”, if you will. Retirement and other savings are combined.

My guess is that most fall much closer to the “shared pooler” model than the “financial firewaller”.

Somewhere in between, to varying levels, are those who have planned to split the expense of most items, yet still keep the remaining income and savings separate, for any number of reasons.

combine finances in marriage

External and Internal Influences

How a couple operates is usually dynamic, not static. And it’s influenced by a number of factors:

  • each individual’s view on money
  • children (from past or present relationships)
  • each individual’s consumption habits
  • health
  • special needs
  • age
  • retirement
  • employment status
  • length of relationship

In other words, life can get in the way of any good plan. It’s inevitable that the longer the relationship lasts, the more combined the finances will become.

Does that mean everyone should just pool everything right from the beginning so as to not delay the inevitable?

Not exactly.

The Benefits of Separate Finances

Why should one even bother with separate finances when it’s clearly easier just to pool everything?

For one, it forces you to know what your monthly expenses are and keep tabs on what a good and bad month are. It also forces you to equally work towards shared financial goals (a large shared purchase, vacation, etc). And it’s hard for one half to feel entitled to do nothing when this structure is set.

It also does give a bit of permission to use the separate savings towards personal hobbies, education, and purchases with less of a chance of strong feelings of resentment.

For any couple entering into a live-in relationship, I highly recommend keeping some degree of financial separation for these reasons.

With all that being said, there are definitely benefits to a pooled or semi-pooled approach. My personal story should best describe what I think the biggest is and opportune times to use it.

My Personal Money and Marriage Ideological Evolution

When my wife and I first married (7 years ago), we were mostly financial firewallers. We started out immediately with separate bank accounts, to which our income was direct deposited. From there, we determined what out average monthly living expenses were, added a small cushion, and then each set up a second direct deposit of an equal 50% to cover those joint living expenses.

If we had a big joint expense coming up, we’d add equal amounts to our joint account, without exception.

A few years ago, we started discussing a career change for my wife. At the time, she had a decent paying full-time job, but felt ready for a change. Together, we agreed that a change would be a good move. There was just one problem. She did not have the retirement savings to pay for school or to cover her half of our shared expenses over the year and a half she would be going back to school.

At this point, I had a choice. Do I ask her to work long enough until she could cover these expenses? This would have taken years. Years that she wouldn’t be moving forward with career and personal growth.

Or maybe just cover her living expenses and ask her to take out high-interest student loan debt to pay for the tuition? This would have saddled her with high-interest debt for years.

How about working part-time while going to school? It was an accelerated program, so this would have been extremely difficult from a time availability standpoint.

So, I agreed to fully cover our joint living expenses and her tuition, without any expectation of her paying me back (there are indeed couples who loan each other money in these types of scenarios with the full expectation of paying it back).

Then school started, and our car died. Did I loan her money for her half of the car (I say half, but she was the only one using it)? No. I paid for the new one in full.

I say this not as back-patting, “look how good of a guy I am”, but rather to highlight the gradual shift from being financial firewallers to shared poolers.

I saw it as an opportunity to invest in my wife to enable her to personally grow and ultimately improve our relationship. And given my financial situation, I didn’t think it would be fair to put unnecessary financial or other stress on her for the purpose of sticking to a previously determined financial ideology.

Throughout our lives, I anticipate we will encounter many situations where one of our personal savings or employment situations can be advantageously used to enhance each other’s lives and our relationship. It’s hard to find any negative in that.

Do what Works for you

I have my opinion on what works, but it’s what has worked for us. Like most things, there is no one-size fits all approach. Every relationship is unique and the life variables are going to differ. When in doubt? Test.

The one common denominator that I think is necessary for everyone is to be fully open and discuss it. Ideally, this happens at the start of the relationship and periodically throughout. As financial problems are the #1 reason for divorce, the importance of doing so should not be overlooked.

Money & Marriage Discussion:

  • How have you handled finances in your relationship?
  • Has this changed over time? How?

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