When Lauren and I got engaged last year, we had an important decision to make: did we want to combine finances or keep them separate?
We are on the same page financially, we have similar goals, and are equally frugal. We buy what we want but also have things we want to save for in the future.
There are couples who keep their finances separate and there are others that combine their finances. It can work either way, so every couple needs to find out what works for them.
Advantages of Keeping Our Finances Separate
Since we have the same goals, why combine finances? Lauren doesn’t need me looking at each of her purchases and questioning the little things. We’re focused on the big picture, so why worry about individual transactions? She should be able to spend money guilt-free without me looking over her shoulder.
As we began to talk through it, we realized one thing: we didn’t want to have an allowance.
Since I am working full time and Lauren is in school full time, keeping our finances separate meant that I would be transferring money from my account to hers. We thought that would have the potential to create a rift where I would want to reduce the amount she gets each month. This was definitely something that wouldn’t work for us.
So, we thought about joining our finances and what that would mean for us.
Advantages of Combining Our Finances
We’re about to get married, and we love thinking about how everything will be shared. “Ours” is our new favorite word. We’ll be able to consolidate accounts, which I like. Lauren won’t feel like I control how much she spends.
Lauren has some student loan debt and by combining finances, we can pay down the debt together. With separate finances, Lauren would be responsible for her student loan debt. It would cost us a lot of money if we had to wait until she finished school to stay paying off her loans.
However, when we combine our money, she’ll have my help paying down “our” loans. This is especially true since she has some loans at a high interest rate that I would love to pay off in the near future. Now, we’ll be able to tackle them together.
Both emotionally and financially, it makes sense for us to combine our finances.
Readers, do you have separate or joint finances with your spouse? What do you think of our decision?
I love that you said that “ours” is your new favorite word! How sweet!
We’re joint all the way (starting after we were married). I think if both spouses are willing to do it, do it. If you wanted to keep separate finances from the beginning, I would have a lot of follow-up questions that would ask if you were really marriage-compatible. IMO there has to be a pretty compelling reason to justify separate accounts that won’t result in inequality, loss of trust, or decreased ability to work together.
I’m writing a series on joint and separate money now (based on what I’ve read in the literature) and there are actually two questions here – the functional and the theoretical. Functional is how you live day-to-day – your account structure, who pays for what, who has the authority to spend without consultation. Theoretical is how you regard your money in the big picture – do you think of it as “his and hers,” “his, hers, and ours,” or “ours”? It sounds like you’ll be joint on both.
@Emily @ evolvingPF, I’m not sure that just because people want to be separate that they aren’t compatible. Maybe they both bring in money and like managing their own finances? Otherwise, the financial duties tend to go to one person.
Ours is joint as well and has been this way for 5 years. It’s worked great for us.
It sounds like this setup will work quite well for you. My only concern with joint finances is how you would be buying each other presents with each other’s money and you’d have less freedom to buy things you personally want. If you’re on the same page with your goals though, there would be lots of benefits.
@Jeremy @ Modest Money,
1) “…how you would be buying each other presents with each other’s money…”
It isn’t tough. My wife and I have separate credit cards that both draw from the same joint bank account.
2) “…you’d have less freedom to buy things you personally want.”
It’s a marriage. You discuss the things you personally want and come to an agreement. That’s kind of the point of getting married. You choose to share your life (and finances) with someone else.
I think this is such a fun topic simply because there are as many different variations of this answer as there are different couples! My goal is to get my student loan paid off before I get engaged so that he doesn’t feel like he has to help.
We have joint finances in our household. We felt it was important in our marriage to be united in all things, including our finances. Having our finances separate just felt like we were still trying too hard to be individuals, not a united partnership in marriage. Combining helped create that sense of one-ness, and forces us to stay accountable to one another for our spending and saving. We have regular budget meetings to review our shared goals, and all money goes into one checking account for everyday spending. Our savings accounts are goal based, and shared accounts as well. As far as gift spending, if we ever want to surprise the other spouse, it’s just a matter of getting out some cash and buying it that way, or finding another way to surprise them. Not an insurmountable problem though.
@Peter, The gift idea is one that a few people have brought up. Maybe getting one of those AmEx gift cards could work for that so that you know the other person is getting something, but you don’t know what? Not sure the best solution for this, but if it’s not huge (or online), cash could work.
Sweet so is Lauren my new partner? I have been itching to upgrade lol.
The Wife and I do a modified approach where we each have our own accounts and then shared accounts. I am not sure how long it will last but it has worked REALLY well for us for the past 3 years.
https://www.myjourneytomillions.com/articles/my-familys-cash-flow-chart/
I’m not married, but if/when that does happen I’d prefer to join finances. We have a great article on Adaptu about combining finances too: Yours, Mine and Ours: Money Management Strategies for Couples: https://www.adaptu.com/articles/DOC-1529/yours-mine-and-ours-money-management-strategies-for-couples
Yes, Evan :-) … I start the job in 27 days.
We’ve had a joint account for almost 34 years. But, at one point we also each had an additional separate account (relatively modest). The purpose of that was to use it for special purchases, including presents for each other. It’s a little weird to buy an expensive present and then have your spouse see it on the credit card or bank statement.
I think you are definitely headed in the right direction. Separate finances could cause problems in my opinion although many say it works out well for them. Once my girlfriend and I eventually get married I look forward to helping her pay down her student loans as well :)
I think it is wise that you chose to combine your finances. It shows a high level of trust and that you both want to work together with complete transparency. My wife and I combine our finances and it works great. Note: I think one should only combine finances once they are married. I have heard story after story of people breaking their engagement. If you wait until your married, you will be better off.
@Deacon, We are waiting until we are married. I’m also waiting until then to pay off some of her high-interest student loans. Nothing will change between now and then, maybe I just like the idea of having the money in my bank account for a long period of time?
@Daniel, I think leaving the cash in the bank is wise until you get married. That way you have it for unforeseeable expenses and when you get married, then begin to tackle that debt. Congrats on the Engagement BTW!
We combined our finances before we got married (7 years ago) too. We also give ourselves “fun money” allowances each month (same for both of us), but yes, we joined our finances since it is “our” money and “our” goals, so it made sense to us.
Ours our joint as well and have been that way since before we married. It just makes it easier to balance the books and keep track of everything, especially since I’m a bit of a control freak and like knowing where every dime went!
My husband (just married a month ago) decided to join our finances and wow am I glad we did. We saw the mountain of debt we were in and made HUGE changes to address it because it’s what WE needed.
Ultimately we decided to tackle our $157k in debt fast…and of course blog about it ;)
wwww.trimwaistfatwallet.com
Subscribed to yours for inspiration! Keep it coming!