In my financial coaching practice, I’ve noticed a trend lately. I’m encountering more and more married couples who are financial roommates. This means they’re keeping their finances completely separate.
It’s not my imagination either. According to a recent study of the money habits of millennials by Bank of America, 28% of millennial couples say they keep their finances completely separate. Only 11% of Gen Xers and 13% of Baby Boomers keep their money separate from their spouse.
When I ask these financial roommate couples why they don’t merge their money, I get a variety of responses:
- My husband is irresponsible with money and I don’t want him wasting mine.
- My wife brought a lot of student loan into the marriage and it’s her responsibility to pay it back, not mine.
- We got married in our 30’s and are used to managing our own money, so it’s just easier this way.
- My ex-wife burned through most of our money before the divorce, and I don’t ever want to go through that again.
There are three big concerns I have with married couples keeping their finances completely separate.
First, you might be betting on the failure of your marriage. If you’re keeping money separate because you want to protect yourself from your partner’s financial irresponsibility (real or imagined), it breeds an air of suspicion in your relationship. You’re essentially saying, “I don’t trust you.” That’s not a recipe for a long and happy marriage! If you don’t trust your husband or wife there may be deeper issues in the relationship which need to be dealt with via therapy or marriage counselling.
Second, dividing up the bills as financial roommates can be tricky and cause arguments. Do you divide the bills 50/50? Who is responsible for paying what? What happens if one of you makes a good deal more or less income? If you make 40% of the household income, do you only pay 40% of the bills? What if the other person is late on a bill that’s “their” responsibility? What happens if one of you is laid off from work or gets a huge promotion and a raise? (I could go on and on… but I won’t!)
Third, if you and your spouse are living as financial roommates, you are missing out on opportunities to communicate about the bigger issues of life. When your money is merged with your husband or wife, you’ll be regularly discussing your values. We spend money on what’s important to us. When you and your spouse decide on those things together, it’s an opportunity to discuss what’s really significant for you as a family. It’s not always an easy process, but couples who discuss financial topics like spending and investing on a regular basis usually have solid relationships.
What does financial unity look like in a marriage?
Does it mean we have to keep all of our money in one account and ask each other permission to spend every dollar? Absolutely not! I’m not opposed to spouses having their own accounts for “fun money,” and in fact, I encourage it. However, it’s my opinion that both spouses’ names should be on all accounts so both will know exactly what’s going with the financial big picture.
For my husband and I, it looks like this. We have three checking accounts we spend out of: a joint account for the majority of our bills and spending, and two additional checking accounts for each of our spending money. Both of names are on all of our accounts and we have equal access to them, even if we don’t exercise that access. This ensures we are being transparent with each other about our spending and saving habits. We usually discuss money matters several times during the month as things come up.
So, how do financial roommates merge their money?
The first thing I encourage all couples to do is to conduct a Financial Dream Session. Talk about your goals, values, and dreams for the future as it pertains to your finances. Second, go to the bank and open up a joint checking account which you’ll use to pay the majority of your bills and household expenses. If you don’t have a joint savings account, open one to start saving towards the goals you discussed in your Financial Dream Session. If you choose to keep your individual checking accounts for your spending money that’s totally fine. Just be sure to add each other’s names to all accounts.