Yours, Mine, Ours?

My husband and I were in our early 30s when we got married.  We had each been on our own for quite a few years, managing our financial lives as we each saw fit, and feeling like we were both pretty good at it. So, when it came time to discuss how, or if, we would merge our financial lives, we had a lot to talk about.

Like a lot of young couples, we didn’t come to the partnership table with equal balance sheets.  I owned a house (asset), but it came with a nice mortgage attached (liability).  He had always lived in an apartment (no equity), but had zero debt and a good cash stash built up. I was making more than he was at that time, but his bills were significantly less than mine.

How exactly were we going to mesh these two very different financial lives together with the least amount of friction possible? 

Here are the questions we worked through that helped us figure out a path forward.  Hopefully these questions can help you and your partner figure out how to best move forward and enjoy a lifetime of financial bliss (which we all know comes with hiccups along the way).

 – Should we combine our bank accounts? The options we discussed, with some pros and cons, were:

• Put everything into one pot and pay everything from that pot
  1. Pros: simplification, ease of tracking, ease of access, everyone is aware of what’s going on (reduce the risk of “financial infidelity”)
  2. Cons: no more “financial privacy”, risk of one person paying off the other person’s debts they had no hand in creating

• Keep “Yours, Mine, Ours” bank accounts
  1. Pros: we each still had “my” money, we could spend without the fear of being judged, no one had to pay for the other’s bad purchase decisions
  2. Cons: reduced financial accountability to each other, harder to track bill payments and wealth accumulation

In a recent online article by Julia Carpenter of the Wall Street Journal (December 5, 2022 “Couples who combine finances are happier. So why don’t more do it?”), Ms. Carpenter cites research from various sources showing that combining finances helps couples (especially married couples), attain more financial wealth. Although each couple is different, and the cons to joining finances for you might be more significant than the pros, this is something to keep in mind as you’re making these decisions together.

– Should we combine our credit cards? The options we discussed, with some pros and cons, were:

• Start fresh with a new, joint credit card, close all other cards
  1. Pros: neither of us had to take on the other person’s debt, this would keep us accountable to each other
  2. Cons: might lose points or perks from previous cards, might hurt credit score to close out long-standing accounts

• Each person keeps a credit card in their own name, and then we get a joint one
  1. Pros: we get to keep our credit history on our personal cards, we can use our personal cards for Christmas and Anniversary gifts without giving away the surprise
  2. Cons: reduces financial accountability to each other, creates room for “financial infidelity”
     1. Side note: the idea of financial infidelity is that one partner keeps financial information – like debt and bad financial habits – from the other partner. Almost always, this tends to blow up in everyone’s face and creates a break in trust that is often difficult to overcome. I have seen this happen many times over the years with friends who found out their spouse was $10,000 in the hole on a credit card they never knew about, or that their house was being foreclosed on because the mortgage payments were spent on something besides the mortgage. Protecting yourself, especially as a newly married couple, for the possibility of something like this happening, seems like a good way to go about doing things.

– Who should be responsible for paying the bills?

• We each keep track of our own bills
  1. Pros: if you’re late on paying a bill you have no one to blame but yourself
  2. Cons: the more things you have joint the harder it becomes to keep track of this

• We put one person in charge of all the bills
  1. Pros: ease of tracking, only one cook in the kitchen
  2. Cons: easy to ignore if you’re not the one in charge, responsibility fatigue for the person who is in charge

• We work together to pay the bills
  1. Pros: sets the stage for everyone being in the loop and involved, less likely to have any bills slip through the cracks if two people are on top of due dates
  2. Cons: running into “I thought you paid that last week” issues

– Should we, or should we not, keep track of our spending and create a spending plan?

• Yes, let’s keep track
  1. Pros: builds a great financial discipline and allows us to see where our money is going, can help us plan for the future and unexpected expenses
  2. Cons: time consuming and can be tedious depending on the level of detail, can feel constraining and “no fun”

• No, let’s not keep track
  1. Pros: less restrictive, frees up your time for other things you enjoy more
  2. Cons: danger of over drafting on account and creating fees, might leave you unprepared for emergency expenses

Ultimately, we decided to have one joint checking and one joint savings account, we each kept a credit card in our own names, and we opened a joint one.  Over the years the responsibility of who pays the bills has changed hands a few times and we are extremely detailed with our spending tracking.  But I think that what has helped us have more success than the actual choices we made was the fact that we talked through the choices before we were forced to make them. 

Having a plan was more than half the battle.

By Daniela Jones, CFA^®, CFP^®

© Intrinsic Wealth Counsel, Inc. 2022