Mine, yours and ours: Marriage and your money
When you say 'I do,' it's not just your lives that are forever linked
Newlyweds face an array of decisions to make, from where to live to what side of the bed each will sleep on. But arguably none is as vital to your future happiness as how you'll handle your finances.
Marriage may be born a romantic notion, yet statistics show its foundation is built more on the management of cash than anything else. In fact, couples who fight about money once a week are 30 percent more likely to divorce than those who only quarrel a few times per month, according to research by Utah State University professor Jeffrey Dew published in "The State of Our Unions," a 2009 report released by the University of Virginia's National Marriage Project. Dew also found the more consumer debt a newlywed couple accrues, the unhappier they become.
Before the dress is picked out, tuxes rented and invitations mailed, you and your soul mate should have a heart to heart about how you'll manage your money. The question is, is it best for long-term bliss to divide finances or join them in holy matrimony?
Divide and conquer
"The biggest advantage of keeping finances separate is independence," says Maureen Farrar, an account manager for an entertainment marketing agency in Los Angeles, who's been married to Bill for 11 years. "As long as everything's paid, I don't have to justify buying a new pair of shoes, and I don't ask him about what he buys."
The biggest advantage of keeping finances separate is independence. As long as everything's paid, I don't have to justify buying a new pair of shoes, and I don't ask him about what he buys.
|-- Maureen Farrar
Independence is a common reason couples cite when choosing to join their lives, but not their checkbooks and credit cards. However, while many see it as a way to dodge disagreement, it often has the opposite effect. "If a bill gets overlooked, we fight about whose responsibility it is," Maureen admits. "We both tend to feel let down when the other drops the ball. There isn't the feeling that we're a team when it comes to money."
Mayel Vasquez, a financial counselor with Pioneer Credit Counseling in Rapid City, S.D., says in her experience, keeping finances divided is harder on couples. "It separates them in many ways," she says. "Instead of communicating and working toward a common goal, it's like the other person's finances are a secret. Sometimes it can turn the relationship into a struggle over who has the most power."
To overcome that takes a well-defined plan. "We created clear lines as to who would pay for what," says Brandi Narvaez, owner of a technology consulting business in Vacaville, Calif., about her and husband Mark's decision to each maintain their own accounts. "The only wrinkle is buying assets together, such as houses and cars. We handle each situation individually; there isn't an assumption we'll own assets together. For example, Mark's Harley is in his name, and while I've made payments toward it, I have no claim to it. It's his -- period."
Mingling your money
In financial matters, perception is reality. As reported in a 2008 multi-university study published in "Financial Counseling and Planning," those who perceived their partner's spending behaviors negatively were more likely to be dissatisfied in the marriage. As a partner spent more without consultation, relationship satisfaction further decreased. Meanwhile, joint financial decision making, no matter the outcome, wasn't associated with a decline in contentment.
Such data reveal distinct advantages in sharing. "Knowing truly what is going on with all of our money allows Stefan and I to really have control of our lives as a family," says Melissa Pia Bossola Beese, co-owner of the Hip Mama Society in New Orleans, who runs the family finances with a spreadsheet. "It also provides us a forecast on house repairs, vacations and just fun nice-to-haves. It shows us our daily budget to the penny so we never have to question, 'What happens if?'"
Getting poll results. Please wait...
The idea of joint accounts doesn't have to be all-or-nothing, either -- like Michael Touna, a magazine art director in Los Angeles, and his wife Karen, you can try a hybrid approach. "Karen kept her bank account, I kept mine, and we opened a separate joint account for bills related to anything we share in our married life, like food, rent and utilities," Michael says. "For bills related to ourselves like credit cards, we use our own bank accounts. That way, we still have some freedom."
The decision has forged a team approach to financial matters. "Michael resisted at first, but I wanted to streamline our financial management, so I convinced him that a joint account was the way to go," Karen recalls. "I think now he sees the beauty of it. It keeps us both thinking about how the household is functioning."
That healthy tactic gets kudos from experts. "Ideally, you want a partnership," says Raymond McDevitt, a staff therapist at the Council for Relationships in Pennsylvania. "That doesn't mean one person can't be more in charge of handling the finances, but it needs to be thought through. You need to discuss what money means to each of you: security, power, love, commitment? Disagreements aren't usually about dollars and cents -- they're about the underlying feelings of what money represents."
To merge or diverge?
Like many things in life, deciding whether to combine finances or not can't be summed up in a simple answer. But according to Margaret Shapiro, senior clinician and supervisor with the Council for Relationships, the approach you choose isn't nearly as imperative as open and honest communication about it -- and not just at the start of a marriage. "People may be able to keep separate accounts pretty well until they have kids, or buy a house, or one isn't working. The situation evolves, so you can't just have 'the talk' before you get married and that's it."
Michael resisted at first, but I wanted to streamline our financial management, so I convinced him that a joint account was the way to go. I think now he sees the beauty of it. It keeps us both thinking about how the household is functioning.
|-- Karen Touna
One way to ensure an ongoing conversation is to take a page from Wall Street firms -- no, not the creative accounting methods, but the regularly scheduled meetings. "Marriage is all kinds of things, including a business relationship," Shapiro explains. "In a business, you'd have meetings with your partner. I encourage people to meet at least once a month."
When you chat, don't be coy: Screwups are just as valuable conversation fodder as your bills and savings. "Neither of us is a natural saver, so we're trying to be there for each other and even share our financial failures -- which usually is buying something we don't really need," Karen Touna says. (Such as Michael's $250 for DVDs starring Dwayne "The Rock" Johnson, perhaps?) "The transgressions are getting smaller and more infrequent, so I think if we stay focused on our goals, we'll do just fine."
See related: How bad credit affects a new marriage, Come clean about debts before they damage your relationship, Don't say 'I do' to bad credit, 80 percent of spouses lie about spending, How to cope when spouse's secret debts come to light
- Should you use a credit card as your emergency fund? – Credit cards come with myriad benefits, such as rewards and consumer protections, and can be a financial lifeline on rare occasions ...
- Credit card limit decreased? Why it happens, and what to do about it – A credit limit decrease can happen because your spending habits changed, or if your good credit is mixed up with someone else's bad credit ...
- Guide to managing finances with ADHD – Tips to help offset the symptoms of ADHD that make money management difficult ...