When Does "My" Money Become "Our" Money?

The Street takes a shot at answering the question of when couples should establish joint ownership of their money, investments, property, etc. They approach it from the perspective of people living together (not married) and come to the conclusion that it depends on the couple and what they want in their relationship (duh!). But basically they're saying that each couple should do what works for them.

I thought I'd add my two cents to this issue just to get things stirred up a bit. ;-)

My thoughts:

• If I was living with someone, I'd opt for separate accounts. Disaster can happen if you put accounts together earlier than that -- and there's no reason to take the risk. That said, I might open up a joint account to pay joint expenses (food, utilities, etc.), but I'd keep most of my funds separate.

• If I then got married, I would make everything into joint accounts (this is what my wife and I do now.) For me, marriage is two people coming together in all ways, and that means financially too.

• The above said, the one thing I'm not sure of is how I would handle a remarriage later in life. The two points above work for a couple married young, but what happens if it's a second marriage for one or both of them and there are kids and/or a significant amount of money involved? Then it gets pretty dicey. I think that if it was just the money issue (no kids) that I'd still have joint accounts (after all, I'd trust this person enough to marry her, so why not trust her with "my" money?) But if I had kids to care for (which I would), I'm not so sure how I'd handle the finances. I'd certainly want the kids to be provided for (education plus some to get started), but after that, I'd probably open up my finances for joint ownership/access.

How about you? What are your thoughts on the issue?

Comments

[cmadler]

When I got married, we agreed that although all of our accounts would be joint accounts in fact, we would each have our own accounts in practice. This means that I have my own account that I put my paycheck into, that I pay my bills and my share of our bills out of, and that I'm responsible for balancing, but if something happens to me, she can access all the money, bank records, etc. Over time, we've combined most of our savings (though we still have about $1000 each in our separate savings accounts), and with our first child on the way this fall, we'll probably gradually combine accounts even more. We've discussed putting everything into one account, paying bills (including savings) from that, and then transferring an "allowance" to each of our separate accounts, but we haven't gotten there yet.

Regardless of how its accomplished, I think it's important to keep some things separate. For one thing, if I buy a gift for my wife, I don't want her noticing it on a bank or credit card statement!

[cmadler]

Just as a quick followup on my previous comment, we're a month away from our sixth anniversary, so while we're not an old married couple, we're also not newlyweds still figuring everything out. This has worked well for us for six years, and although we've had some disagreements about other things, we've never argued about money.

[savvy]

We tried joint accounts and individual accounts but now we've settled on a combination of the two which works well for us. A portion of both of paychecks go into a joint account that is used for household expenses. The remainder goes into our individual accounts which are our own discretionary spending (i.e. work lunches, clothing, etc.)

I can see pros and cons to each method but what it boils down to is whatever works best for each couple.

[Richard]

I'd had too heavy a class load to have a job my junior year of college. During my senior year I got a part time job on campus and opened a bank account without telling my wife. For Christmas I gave her a bank statement with the money I'd saved up.

After that we went and added her to the account. :-)

We keep all our accounts together. We're equal partners and I married for her virtues and flaws (even if she does like to shop from time to time).

[Nick]

My girlfriend and I took a hard look at combining finances and concluded we would be more focused by maintaining our individual finances. It maintains a realm of independence in the relationship that we both value.

However, we both save towards common goals with the easy-to-use ING Direct joint savings accounts (one account for each goal).

We used to have a joint checking account for our shared expenses, but that didn't work as well as what we do now: joint credit card. We signed up for a Chase freedom credit account and use that for all of our joint expenses. Then at the end of the month, we split the bill evenly. This has worked great for us and allows us more flexibility.

Right now we're both working, so this might change if one of us becomes a stay-home (in the event of spawning).

[Kevin]

We decided to combine when we bought our home together about 2 months before we got married. But I agree wholeheartedly it depends on the couple. We currently use a joint checking account to pay all our bills and each have a credit card to use for daily expenses. We are pretty frugal and don't really have an issue with either person overspending, so it works well for us.

[guinness416]

We have separate chequing, joint savings, and have had for about a decade. We each pay the bills we've assigned as our respective responsibilities, with me taking the big ones (mortgage etc) as I earn more than my husband. Neither of us wants or needs to micromanage each other's day to day spending, although it helps that we have no debt but the house.

But of course it really depends on the couple. After all, unless you've been married five times, how can you know what's best for "most people"?

[Keith Lauren]

Separate accounts for day to day stuff and a joint account for large purchases and the usual bills. That's how we did it.

[Todd]

I'll echo what others have said, to wit: that it really comes down to the preference of the couple. But I'll add that, for myself at least, I wouldn't want to be in a marriage where we didn't share everything. It's a matter of trust and intimacy to me.

Consequently, my wife and I have joint accounts and joint responsibilities for everything. I manage the money, but she knows where everything is and we discuss each major purchase and we both have complete veto power over any such purchase.

[Rod Ferguson]

Joint everything for us. While my wife can pay the bills and balance a checkbook (a major improvement from when we were first married 18 years ago), I am far "better" with money than she is. Here's a related question that I've been seeing a bit more of lately; is your spouse on your mortgage (if any)? I work with a couple of people whose wives are stay-at-home-moms, and most of them do not have their wife on the mortgage. Even though my wife's income didn't factor into our mortgage (she was about to enter grad school, so I thought it safe to factor only my salary for house buying purposes) I certainly put her on the mortgage. Anyone married couples out there that only have one spouse on the mortgage? If so, why?

[Gregory]

Rod - when you say "on the mortgage", I assume you mean the title/deed to house as well. It would be a no-brainer not to have both spouses on the mortgage if at all possible, to reduce exposure and debt for one of the two. But the huge advantage (in most states) is having both spouses hold title to the property (and thus both will be required on the mortgage - some lenders require both spouses, regardless, in fact) as tenants by the entirety. With title held that way, the house (and any other property held this way) is generally not subject to judgment liens/attachment to satisfy a debt of only one of the spouses. This alone makes marriage a great financial tool!

[Stephanie]

I don't know if maybe my feelings about this will change when I get married, but right now I can only handle the idea of having a joint account for shared expenses, and then keep the rest separate. I guess I just don't want to have to share my student loan debt or the money I earn. Maybe that means I'm selfish and I shouldn't get married yet (don't worry, it's not happening anytime soon anyway).

But I really just want to control what happens with my money...is that weird?

[J Dawg]

"It depends on the couple" when is someone going to Cowboy up and call Shananagins. If you as a couple are ok with distrust in a relationship then go ahead and keep things separate. But do not kid yourself what you are saying is that you are waiting around for the divorce. If you are not comfortable with one account (obviously you can have seperate accounts for different catagories, ie. one for bills, one for emergency fund) with each person having equal access then what you are saying is that you do not trust the other person. Now if you are using the excuse about not wanting to have to ask for permission to spend money then what you are really saying is that you are a child and that you do not have a adult relationship. Because the idea is you put all the money in to one lump sum. You sit down and talk about goals together and decide how you are going to spread out the earnings. You do not keep score by assigning equal amounts of bills to each other. One couple, one set of goals, one bank account. Grow up and stop getting married to someone you don't trust.

J Dawg

[J Dawg]

The separate account for spending money BS is also out because you should not need an account for that much cash. If you have sooooo much money for your pocket money that you need an account then you need to go over your budget again, you should be able to carry cash around fine.
Also BS is the I don't want her to know how much I paid for a gift. Name one gift that you got that you did not know how much that person spent. If it is something you want then you have gone out and priced it and know how much it costs. IF by chance you don't know how much they spent like you could not find out by a quick search of the internet. Come on people stop clouding your eyes over with excuses and get down to the real issue. You are not ready to give up your independence. Translation you married not because you were in love but because "he is a really nice guy", " I want kids and I am not getting any younger", "Well I have to marry someone", "She's pregnant and it was the right thing to do", "She has stuck by me and deserves it". How about I love her and she completes my life, I would gladly give anything to be with her including my independence.

J Dawg

[Livingalmostlarge]

Depends on the couple. There is no right way. DH and I were joint during our 5+ years living together, not the best move right? Well it worked. So every couple is different.

[heidi]

I'm of the 'yours, mine, and ours' camp. I've see far too many things go horribly wrong for clients with nothing but joint accounts to ever recommend it as a banking strategy. There's a fine line between trust and stupidity. If you have joint accounts and aren't acting as the CFO of your relationship/family, you better be looking at statements every month and understand where all the money goes. Far too many spouses have no idea.

That being said, I know a lot of couples who make the joint thing work.

[guinness416]

J Dawg, you can stamp your little feet and call us shotgun spouses all you want, we still aren't going to click over to your site!

[Colin]

I'd say that this has been a gradual process for my fiance & I. We opened the joint bank account early on in the engagement, but have been using it for more and more. More and more of our spending is on expenses that benefit us both, so maintaining separate "his" & "hers" accounts is less and less important as we go on. We're still figuring it out, but I think we'll get there eventually.

[Jennifer]

My boyfriend and I have been living together for about 10 months. We opened a joint checking account when we moved in together for the purpose of paying joint expenses (rent and utilities, groceries, eating out and entertainment that we do together, etc). We are both paid weekly and each contribute approximately the same percentage of our income each week(the amounts are different because our incomes are different, it ends up about 60%/40%). Eventually we also opened a joint savings account to save for shared vacations, etc. The idea, however, is all the money that goes into our joint accounts is intended to go back out and until we are married we maintain separate long term savings and pay our personal bills from personal accounts.

This plan has worked really well for us. One of my favorite perks of this plan is when we go out with friends or are shopping at the store there's none of that awkward "whose turn is it to pay this week" ... it's already been divided fairly. And if it makes Fabulous Boyfriend happy to be the one to pay at the restaurant he can do it every time. :) (Men, right?)

[Jennifer]

My boyfriend and I have been living together for about 10 months. We opened a joint checking account when we moved in together for the purpose of paying joint expenses (rent and utilities, groceries, eating out and entertainment that we do together, etc). We are both paid weekly and each contribute approximately the same percentage of our income each week(the amounts are different because our incomes are different, it ends up about 60%/40%). Eventually we also opened a joint savings account to save for shared vacations, etc. The idea, however, is all the money that goes into our joint accounts is intended to go back out and until we are married we maintain separate long term savings and pay our personal bills from personal accounts.

This plan has worked really well for us. One of my favorite perks of this plan is when we go out with friends or are shopping at the store there's none of that awkward "whose turn is it to pay this week" ... it's already been divided fairly. And if it makes Fabulous Boyfriend happy to be the one to pay at the restaurant he can do it every time. :) (Men, right?)

[dlewis]

Listen up men! If you take this guys advice...you are going to loose your shirt (and everything else). First, if you are not married...find out if your state is a "common law" state where the state will recognize you as married even when just living with your honey for a while. If you live in a common law state...guard your finances because you will be automatically married by the state if living together for too long (meaning your private finances may already be opened up to your girl). Second, marriage is like a contract between you, your girl and the state. If the state is a marital property state, when you mix money in accounts (even 1 cent), it becomes marital property. If you are trying to keep funds separate…do not mix them and do not put earned income in the same account during your marriage. Third, consider the full ramifications of divorce. In a divorce, you (the man), will generally loose ½ of all your joint assets, be paying child support (the real cash cow for women these days) and alimony (limited in duration generally). The only way to protect you from gold diggers is to: 1. Do not get married 2. Don’t commingle any money (keep everything completely separate) 3. Don’t have any kids (child support is the real cash cow for women these days-big money lasting up to 19 years) 4. Learn if your state is a common law state and what all the ramifications are.

[guinness416]

Thanks for dropping by from 1963, dlewis. Want to step forward into 2008 and offer advice for us high-earning women?

[Gregory]

Not to legally geek out on you, dlewis, but there is an important distinction here if people do want to research their state's laws on this. All states except Louisiana (civil law) are "common law" states, but that is an entirely different concept. Common law simply means rule of law by precedent set by prior court decisions (versus civil law codification).

You are referring to common law marriage and may be getting some of that mixed up with the concept of community property (the 50% division)...? Anyway, you are correct in concept that common law marriage is a real risk in some states. We don't have this concept in Florida, fortunately. Nor am I a family law attorney, so I can't say much more about it. But I believe that most states enforcing common law marriage require the couple to have been together for many many years and to have evidenced other signs of being "married" for all intents and purposes. State by state, YMMV.

[Gregory]

guiness - that was hilarious. But note that aside from his misogynistic speak, this is quite equally an issue for women. My mother has been with her boyfriend for 27 years or so without being married, and is definitely of the higher net worth. Not an issue at all with them (especially since it doesn't apply in Florida), but clearly an example where the woman would have the risk.

[Gregory]

guinness - that was hilarious. But note that aside from delewis' misogynistic speak, there is something to be taken from his rant/advice. This is quite equally an issue for women. My mother has been with her boyfriend for 27 years or so without being married, and is definitely of the higher net worth. Not an issue at all with them (especially since common law marriage doesn't apply in Florida), but clearly an example where the woman would have the risk.

[Gregory]

Sorry about the double post - browser locked up. See second post for much better wording ;-)

[Ggrrl]

I believe that in a good relationship, you would want your spouse to have access to your accounts - in case you cannot do so yourself. However, I don't see anything wrong with having separate accounts dedicated to each individual into which each person can put a portion of their income. Right now, I'm single, but I have a separate savings accounts for property taxes and insurance.

In my case, my fiance enjoys a very expensive hobby. We have already decided to have a joint account and his and hers accounts. We think that this will be a good way to avoid disagreements over his purchases.

[Todd]

Are the comments true for people that get married after already having accumulated some net worth? For example, if they are bringing 50k, 100k, 500k, 1mil, 2mil., do you still want to join everything? What about if the other person has negative net worth, do you take that on jointly?

My vote is keep everything you had before marrying seperate and join everything earned after that. That also isn't straight forward, since money earned after marrying may come from net worth you had before you got married.

I ofcourse am not married yet. :)

[Todd]

To continue that thought, my girlfriend has a different idea of how much to spend/save. She likes to drive a nice car and carries a big loan on it. AM I SUPPOSED TO TAKE THAT ONE!? man I hope she isn't reading this blog! :-)

[Todd's Girlfriend]

Oh, you're gonna get it now! (or not)

[don_oc]

How about keeping everything separate, but higher earner gives (say $1000) to lower earner each month?

This way things are separate (you eliminate the state from your relationship), but you still maintain fairness and help each other?

[Rhenae]

Is is wrong of me after three years of marriage (2nd) that I be named on his accounts? He makes 6 times what I do, and we only have a joint savings, which I don't contribute to, because most of my money is spent of clothes, lunches, gas, etc.

[kimberly]

My husband and I are constantly fighting because he makes 4 times what I do, but still expects me to "half" all of the bills. We each have separate accounts. I am using every penny I have to try to be fair, but I don't even have money to buy anything extra, while he is out spending money like crazy. Am I just being silly to think that he should contribute more than half since he makes so much more?

[Jason]

I think that if you're roommates then separate accounts are still a good idea. However, once you're married, it's all shared. You should both have equal access to the entire family's money. Unless someone thinks he's too important to share his riches with his lowly wife. Nice.

I think the bottom line is this: do you have a full all-encompassing joint budget or not?

The talk of joint or separate accounts is mixing apples and oranges. For example, if I were married, I'd suspect that my wife and I might each have separate accounts (with the other as a beneficiary) and a joint account at a banking institution in order to maximize our FDIC coverage. But I'd expect that we would each have full insight into all of those accounts.

I think the attitudinal difference is shown in how you handle the budgeting. In other words, who cares where the money is placed or where it is pulled from, if you are budgeting as a cohesive whole. And sure the budget could include discretionary spending amounts for both of you.

The rest of this is to get lost in the weeds and slightly tangential matters of what would happen in divorce or not. If you really want to protect yourself financially for a divorce, do a pre-nup. But I think the far better protection for divorce is to stay married. And we all know that money issues are part of what leads to divorce.

To me, if you are budgeting in a fashion that assigns contribution percentages to each partner (whether the arbitrary 50/50 or based on the percentage of income) than what you are fundamentally admitting is that you are not budgeting wholistically. You are a developing a joint budget for a limited set of things (versus your entire financial picture) and negotiating the contribution percentage of each member of the joint venture. I won't pass judgment on that. If you can do that in a way that's fair, equitable, and promotes the deepening of your bond rather than interfering with your bond, more power to you. But be honest enough to admit that what you are doing is negotiating about a limited joint budget versus agreeing to jointly budget your whole financial lives.

And obviously, the advice I'd give to a non-married couple and a married couple would differ. But call me old fashioned, but a non-married couple that is dealing with this issue is just dealing with the inherent conflict in their rejection of the traditional view that they shouldn't be living together if they aren't married. And if they aren't -- they truly have promised to one another life long fidelity -- then I'd say my advice would be the same for them as a married couple.

At best it is quite unfair at worst it is bordering on abuse. "Money is the weapon of choice" of abusers according to CNN today. Maybe you should start charging for dinner, laundry, and other services.

Personally, I think that separate accounts are ridiculous. It makes it seem like a temporary relationship of convenience -- like a roommate -- not a long-term partnership with shared goals. However, having some separate spending money that the other person does not watch over is a good idea. It should not be based on each person's income. I make nearly double my wife's salary and feel this would be extremely unfair.

What about a spouse that stays home to take care of the kids?