What’s Mine is Yours?
Or is what’s mine is mine, and what’s yours is yours? What am I talking about? I’m talking about marrying your money after you’ve anxiously walked down the aisle, pledged your vows, had your honeymoon somewhere with an infinity pool overlooking the Amalfi Coast, and you’re ready to start talking finances with your husband or wife.
You essentially have 3 options:
You keep your money 100% separate and combine nothing
You keep your money separate except for a joint account
You combine all accounts
Merging your money is a delicate transition. None of these options are right nor wrong, it’s simply a matter of being intentional and clearly communicating what works for you and your life teammate. More often than not, I hear that melding your finances together isn’t a sensible idea solely because if things don’t work out, splitting assets will be an actual pain in the ass. That “what-if it doesn’t work out” mindset is a bit dismal, but I digress.
Where do you start?
Think of it like a first date, but a money date. Sit down with your favorite human and ask questions about their current financial situation. By asking critical questions, it may help you decide which of the three options will work best for both of you.
A soft reminder: be ever so gentle with your partner and maybe sprinkle in some compassion. Talking about money isn’t easy for everyone. Judgements, sarcasm, and criticism likely won’t go over well.
Here are 10 questions you could ask one another to get candid.
What is your annual income? Oof, what a starter.
Do you have any outstanding debt?
What are your recurring monthly and annual expenses?
Do you have any short or long term financial goals?
What did your parent(s) teach your about money when you were younger?
Are you saving and/or investing?
Do you prefer splitting 50/50 or would you rather contribute an equal percentage based on our incomes? '
Do you have any financial habits you struggle with?
What are things you would want to save up for together?
When it comes to our finances, is there any way for me to support you? (emotionally or financially)
Not a bad start, right? Now, before I get into the 3 options a bit more, I want to share a personal story with you.
I dated someone for a few years who talked about marriage with me. To be honest, my biggest hang up was finances. It wasn’t a difference in income. It wasn’t that neither of us were generous with one another. It was that he was dishonest about having an addiction to spending and perfidious about purchases and his debt.
There are times where I wondered if I didn’t open enough space for him to feel comfortable talking to me about his financial situation. Being a senior professional in the financial sector I’m sure didn’t help him feel like he could come to me either.
I’m not blaming myself, but I can’t set aside the fact that being a person who worked with million dollar corporations and their money would give comfort to someone who struggles with their own money habits.
At the end of the day, it wasn’t our financial differences that ended the relationship, but the dishonesty, not just around finances but into other areas it overspilled into. My two cents: Give your partner more space than I gave mine. Personal finances are not just personal, they’re emotional.
Let’s waltz into these 3 options, shall we?
Option 1: You keep your money completely separate and combine nothing
Essentially, what’s mine is mine, and what’s yours is yours. Typing that myself feels a bit jarring (personally), however, this method works great for some people. This is the method my parents chose. My Mom tells me she’s glad her and my dad chose this method, but I’m not sure “glad” is the right word. It just so happened that they divorced and not having to worry about splitting personal finances made the paperwork a bit easier. This is the only reason I think my Mom is “glad” she kept money completely separate, but who am I to have an opinion on that?
Before marriage, you’ve likely been using the method for your finances. Maybe you shared your Netflix account with your partner and your partner shared their Hulu account with you. Meanwhile, you’re both chipping into the relationship in whatever way has worked for you. Many people use this method for so long, that when it comes to marrying your finances, it’s even more daunting since you’ve been accustomed to what’s mine is mine.
The pros of this method is you can make financial decisions independent of one another since your money is yours, and your spouses money is theirs. You want to go buy a $99 napping pillow? Go for it. A majority of couples who choose this method end up splitting combined expenses like rent, groceries, utilities, etc., but then do whatever they want with their own money.
The not so positive side of this method, you’re not really working as a team. Having common goals gives something to work towards together. Helping one another to self-actualize when it comes to money can make for a stronger alliance.
Option 2: You keep your money separate except for a joint account
I think this is rather obvious, but essentially there’s an account for you, an account for your spouse, and a joint account. You and your spouse would have a pre-determined amount to transfer into a joint account at a particular cadence (monthly, weekly).
There’s two ways to determine how much to contribute to a joint account.
Option 1: You split everything 50/50
Option 2: You contribute an amount proportional to your income.
Let me give you an example. Let’s say this is your combined list of expenses that you plan to contribute to together per month:
Rent/Mortgage: $2,200
Utilities: $200
Groceries: $500
Eating out: $350
Subscription services: $30
Total: $3,280 per month
With Option 1, I think it’s fairly simple. You would split the total 50/50 and each contribute $1,640 per month into a joint account.
With Option 2, let’s say you earn $4,000 per month and your spouse earns $2,000 per month. You would be earning roughly 66% of the monthly income while your spouse is earning roughly 33% of the total monthly income. Given this option, you would contribute 67% of $3,280 which is $2,197 per month into a joint account, and your spouse would contribute $1,083 per month.
With option 2, the pro is that neither partner feels the need to “keep up with” or “budget down” their money. The only disadvantage I find with this option is the potential for the higher earner to feel potentially penalized for earning more. At the end of the day, you’re a team. Find what works for you.
Option 3: You combine all accounts
You just said “I do” and vowed to combine your life until death, and now you decide to combine all of your accounts. What’s yours is mine, and what’s mine is yours. You’re an absolute UNIT.
By combining accounts, you would be speaking in terms of “we” and “ours” when it comes to money. If one person’s income increases, or if one person’s income falls, you would balance one another. This makes things easy for couples who plan to budget together as well as file their taxes as MFJ (married, filing jointly). And although this method sounds ideal, it’s still not for every couple.
If one partner is a spender, and one is more frugal, this could cause for a lot of friction. In fact, it’s the reason one of my best friends recently divorced his wife. I won’t get into the details, but if there’s any way for a partner to bleed an account (mindfully or habitually), then it’s likely not the option for you. This is where someone’s behavior towards money would be important to analyze prior to joining accounts.
My own thoughts
I find that many people fear option 3, and that this option is not as common in my generation. And I understand why. Likely because of statistics like this:
20% of couples would rather hide money than argue about it
33% of couples say that their money related arguments were because of spending
35% of couples say money causes stress in their relationship
35% of couples say they do not consult with their partners about large purchases
The likelihood of divorce increases 45% if one spouse feels the other spends foolishly
Couples who argue about finances on a weekly basis are 30% more likely to get divorced
48% of Americans get divorced over financial differences, whether it be opposing attitudes, mismatched financial priorities, existing debt, financial infidelity, overextending budgets, inability to compromise on spending, impulsive purchasing, and loss of financial control.
Behind infidelity, arguments surrounding money is the second leading cause of divorce. When I read those stats, my heart breaks a little, because it doesn’t have to be that way even though stats are stats, right? You don’t have to be part of those statistics.
In general, most people are uncomfortable being transparent about their own financial situation. That feeling becomes compounded when you then have to share that information with your spouse.
The first challenge of financial intimacy is the underlying social taboo about discussing money. We’re taught when we’re young that talking about money is not polite. Even worse, modern America far too often equates success with money. This makes one or both people in the relationship feel judged.
Our natural resistance to talk about money can disrupt your marriage. So, I challenge you to start with the assumption that virtually every couple finds money conversations awkward. From there, consider that combining finances isn’t a death sentence. What if making your money and your partner’s money coalesce actually strengthens your relationship? (perspective, baby).
When you’re on a team, you’re playing to each other’s strengths and weaknesses as one. So put on the same color jersey, have a somewhat awkward date night (it’s fine), and customize the process to do what works for both of you.
Cheers.
LP
