Sleeping with Money: To Merge or Not To Merge
Once you’re in a relationship for good, do you merge your finances, keep them separate, or somewhere in between? I don’t think there is any one right or wrong answer, but it 
sure is an ongoing conundrum in my quest for blissful money matters with my mate.
When we first merged lives some 15+ years ago, finances were totally separate. For many reasons including the rose colored glasses I’ve talked about, it just plain made sense to be 100% separate. Not to mention our philosophies, outlook, relationship with money, and debt/asset situations were wildly different. You might also say there was a hint of doubt (can this relationship that was only “supposed” to be a friendship really last?) as well. Well, we certainly answered the last part and longevity is not a problem. However, differing styles and financial situations remain.
I’ve toyed with the idea of completing merging finances like a happy Ozzie & Harriet couple (minus the Ozzie) but it has never felt right to me. And, of course since LGBT relationships have the legal weight of a paperweight, in many ways it makes things easier to be separate at least in some ways if only for tax purposes. (Note: I’m not sure if a professional would agree with me or not, just my personal perspective, so seek your own advice from a qualified source before making a final decision.)
So, to date we’ve remained a separate but proportional couple. By that I mean we maintain our own separate financial accounts (although we do share some joint accounts for savings and easy access purposes) and divvy up expenditures based on a proportional share of who earns what. So, for the sake of an easy mathematical example (and not our real salaries) if the total household income were to be $100,000 and I earned $70,000 and she earned $30,000, then we would share a 70/30 split of joint expenses while paying our own individual expenses (like car insurance). For the most part this has worked well with annual reviews of who is paying for what to ensure we’re still in alignment with reality – sort of like rebalancing the allocation of your investment portfolio periodically.
Lately, though, I’ve been wondering if it would make more sense to take an approach recommended by Suze Orman in her recent Women & Money book (or at least I think that is where I heard it!). The approach being to still follow the proportional approach but instead contribute that percentage to a common joint account from which all household bills are paid. The remaining money is kept “separate” and can be used for individual bills, savings, or mad money as each sees fit.
This all sounds good to me in theory but my hesitation remains because of the following questions:
- What happens if the joint account doesn’t have enough money in it one month?
- How do you best handle the cash flow?
- Why do I want yet one more account to manage, reconcile, and track?
- Is it more work than it is worth?
- Who manages the joint account?
- Is this approach any better in the long run than what I am already doing?
I am certain that any of the approaches I mention can and do work. After all there are plenty of us out there! I have personally test driven two of the three approaches with good to moderate success (the totally separate thing crashed and burned because we didn’t do anything proportionally and we were young, clueless, and without any household responsibilities besides rent).
So, this installment of sleeping with money doesn’t offer you any scintillating romance or even juicy hard facts, but rather invites you to consider – is it best to merge or not merge or somewhere in between? What has been your experience? And to borrow a phrase from another Queercents series – What do you do and how is it working for you?
My partner and I have been together for 8 1/2 years. We both have seperate checking and savings accounts but we also have a joint checking “House account”. We feel it is very important to maintain credit in each of our own names. However, having a joint account with both names used to pays bills like the mortgage, utilities, give gifts etc., helps to establish us as a couple. The record is there – a check with two men’s names on it. More then once I have had comments from straight people who think that having our 2 names on a check is”so cute”. UGH ! Our view is that it makes economic sense, establishes a legal history and is one of many small ways to say to the the world that we are a COUPLE not just 2 people living together.
My partner and I have been together for 23 years. Almost from the beginning we pooled our funds even though she made more than I did. Now we make about the same and I handle all things financial. We occasionally have discussions about investment options, paying off debt early on our home, etc. but she prefers not to know much about our family money matters… and she is a CPA! (Actually, we both are.) Putting our funds together bonded us as a couple. We have never fought over money because we think like a team and trust each other implicitly.
A married friend of mine who keeps all separate accounts once explained to me “If what you’re doing works, don’t change it.”
Speaking as one of “just 2 people living together,” we keep all accounts separate. But I think that even if things change, we might still keep accounts separate because we have very different money styles. He pulls out his savings at the beginning and keeps checking balances online. I keep track of everything on paper, subtracting monthly expenses at the beginning of the month even if they don’t actually get paid until later in the month. We each pay some of the bills, and one of us writes a check to the other each month to make up the difference.
I think that for us, merging might be very messy, and I don’t like the idea of a third account either because of the added hassles. I think your finances can be quite mingled de facto even if they are physically in separate accounts each with only one name.
However, the legal issues are worth looking into. I don’t know the ramifications of having accounts in only one name versus both names.
When my partner and I merged finances, we did it in the way Suze Ormond suggests… we created a checking account at our credit union in both our names. We make all our joint purchases from that account and pay all our joint bills from it as well. We did this because at the time I was making significantly less than my partner and each month we’d sit down and assess how much we’d spent, what we needed to spend and such, and then split the total down proportionately. Even though I was paying a lesser percentage of our joint expenses, I felt that there was no control in how our finances were being spent and I never knew how much I was going to need to pony up. Creating this new account was a relationship-saver in that it gave us a set amount to budget from while still allowing us some independance in our own private purchases.
As for the questions in your article:
The account isn’t that much more work than we were already doing; all our accounts are at the same credit union and our credit union is set up so that we can do transfers between linked accounts via the internet so we can move money around from account to account as needed without going to an extra hassle. As for who’s responsible for the joint account, well, in our relationship that has been primarily my partner because she’s the one who’s more anxious about money issues, but if she’s going to have a stressful stretch of time at work or school, then I take over keeping tabs on the account and paying the bills (though, to be honest, we have had arguments before because I didn’t realize that she was wanting me to step up and take responsibilty for the account for a while).
If we’re doing the bills and we realize that the joint account doesn’t have enough money, then we both chip in and bail it out. But again, honestly, this is rarely a problem for us. Mostly because the majority of our money goes into the joint account: we each only keep what we need to pay our individual bills (student loans, car insurance, gas, doctor’s bills) plus an allowance, so it’s more likely that one of us is the one who’s needing to be bailed out. In that case we borrow money from the joint account and pay it back on payday.
For us, this system is the simplest and easiest for us to manage. We’re able to budget, as well as save for both trips and large purchases as well as save for emergencies and retirement. The only stress is what I noted above and that’s easily rectified with a discussion.