One of the biggest causes for divorce or separation is money. So, it’s one of the things that you really have to figure out early in a relationship or marriage. The default seems to be that couples share a joint account. That is not and never is how we have operated – we keep our money separately.
I have heard radio segments and podcasts lately bashing couples that keep their money separate – saying that they must not trust each other or that it’s too secretive. I think that this is a really judgmental attitude! Trust has nothing to do with why we keep our money separate!
Separate finances for married couples
Now, there are a few things that make us good candidates for keeping separate bank accounts. I wouldn’t say that you have to have all of these characteristics, but they certainly help.
- Income equality – We both make about the same income. If one of us made a lot more than the other, it might make it feel “unfair.”
- Debt equality – We have both paid off all of our debt (student & car loans) and our only debt is marital debt – the mortgage.
- We are both established – we both already had careers, bills, and ways of managing our money when we met. Had we been broke, it might have made sense to pool our limited stash, but we both were already set up and it was very easy and comfortable to stay that way.
- We have different saving styles – Sean keeps 2 accounts – a checking and a savings. His paycheck goes into his savings account and he transfers money to pay his credit card bill at the end of the month as he needs to spend it. On the other hand, I have nine savings accounts. Yes, nine! The people at the bank always say “Wow you have a lot of accounts!” I use savings accounts like the “envelope method” and automatically transfer certain amounts to each account weekly or monthly to save towards goals. Sean couldn’t handle this – it’s too much for him! I would have a hard time budgeting and saving without it. This is the biggest reason that we keep our money separate.
- We have a similar money philosophy – Neither of us have debt. Both of us charge everything on credit cards for the points and credit but pay them off in full at the end of each month. We both are really big savers but value spending money on big vacations and smaller house projects. Our priorities are aligned so no one feels like they are carrying any of the big burdens.
Now, with that being said, how do we actually manage our money? Sean and I not only keep our money separately, but even keep it at different banks! But, we do have one joint bank account. To determine how much we needed in that account, I added up all of our monthly bills over six months and took a maximum. You could do an average – but I didn’t want to fall short! I then divided that in half and that was how much each of us “owes” towards the bills each month. We allocated that amount to come out of our direct deposits, and by never “seeing” the money in our personal accounts, we don’t really miss it.
Our method is not much different than a more popular method, whereby couples add all of their money to a joint account and then transfer an “allowance” to each of their personal accounts. Our method is just the opposite of that!
What do we pay for out of the joint account?
- The mortgage
- All utility bills (water, solar, cable, and cell phone)
What don’t we pay for out of the joint account?
- Home projects
So how do we pay for those other things? We take turns. We “treat” each other to dinners at restaurants. I buy what is important to me and Sean gets what he needs. I think that for some people it might cause resentment or anger, but because of those points above – our relatively equal income means we know what we have to spend and what we need to save.
Just because this works for us doesn’t mean that it would work for you. But I wanted to stick my neck out and share why separate bank accounts works great for us!
If you enjoy this, you might enjoy my tips for tackling student loans!