*Today I have a guest post from my now husband! I’m embarrassingly behind on wedding thank-you notes, so he was happy to step in and write about how we handle our finances together, since our situation is a little unique. Whether you’re newly married or just thinking about the next step with your significant other, I hope this provides some entertaining insight on the age-old question: to merge or not to merge finances?*
As you’ve probably read, Luxe and I tied the knot earlier this summer! Everything went splendidly, mostly no thanks to me since my only responsibilities were to a) show up b) remember to bring my vows and c) not sweat all over everyone. Luxe, on the other hand spent the run-up to the wedding in full-on Ed Harris Apollo 13 planning mode:
As a result, the ceremony was choreographed perfectly, the flowers were exquisite, and the cake…oh man, the cake. Let’s just stop right there for a second. I’d never had a slice of Lady M Mille Crêpes cake before our wedding day. I swear I heard literal angels singing when I took my first bite. Of course, now I want it every day. Don’t we deserve all the things we want? Damn right! Except for the one very tiny problem that it costs…EIGHT. DOLLARS. PER. SLICE.
As you’ll recall, pre-Luxe me would have happily indulged this self-destructive and obscenely expensive cake habit and ended up fat, broke and in personal finance rehab. But now that I’ve earned AT LEAST an associate’s degree in frugality I can manage to restrain myself. Not only that, Luxe and I, now married, are a legal financial entity. I can’t just run around spending hundreds on my raging cake addiction without ramifications for us both, right?
Yeah, we’re officially a team now, and whatever money decision I make affects her, too. Luxe and I have talked about our joint approach to money ever since she moved in with me early last year. We came up with a plan that seemed fair and have been comfortable with it ever since. But now that we are legally hitched, don’t we need to elevate our game? Better still, aren’t we SUPPOSED to merge our finances now that we are married? I can’t pinpoint the reason, but merging felt like a requirement, a mandatory step once we got married, and yet both of us have found ourselves asking, “But why?”
The Five Whys
Jeff Bezos is famous for employing a technique called the “five whys” to root out the essence of a question or problem. Let’s assume the richest man in the world knows a thing or two about problem-solving and try it out here:
Now that we’re married I think we need to fully merge our finances.
Why is that?
Because, well…it feels like we’re supposed to.
OK, why is that?
I guess it’s neater and more efficient to have everything in one place.
Uhhh, because it represents our unity as a couple to have our money together.
You can see where this is going. Four Whys in and no compelling argument is materializing in favor of a couple’s money merger. The Five Whys was originally developed by Toyota management as a framework to understand that behind every technical question is a human question. In this case, merging money is simply a technical concern, right? The heart of the matter here is the human question: now that we are married, how best to organize our money in service of our lifestyles and goals?
I think for any couple, a healthy money arrangement needs to meet three criteria. It has to be transparent, it needs to represent shared goals, and it needs to be fair. If you do all of these things, the question of where your money sits is beside the point. As you’ll see outlined below, I think Luxe and I satisfy all three criteria. For now we keep our money separate because overall we have a system that works and we haven’t found an advantage to combining our money.
The Three Pillars of Marital Money Bliss
You should know all of each other’s assets and liabilities, and also be able to see each other’s spending. Mint is perfect for this. Even though Luxe and I maintain all of our checking and savings accounts separately, they are all linked to a Mint account we both access. That way she can see the results all of my Lady M visits and also my occasional ATM fee or *gasp* credit card late fee.
There is a special (and richly deserved) doghouse for me when I get hit with a credit card late fee, from which I can only emerge after I’ve groveled with the credit card company to reverse the fee and also demonstrated that I’ve devised a system to keep it from happening ever again. Coming home with green tea mochi can also help expedite this process. As for Luxe, it frustrates me to no end that there is ZERO cause for any outrage on my part about her Mint activity. A $27 charge at Sephora? How worked up can I possibly get over that, especially when there’s a 90% chance she’ll end up returning it anyway?
Shared Goals and Priorities
Logically speaking, if we got married in the first place it would follow that our short and long term goals are aligned. I have this very clear vision of a woodsy clapboard cottage by the lake, with a screened-in porch from which I sit with my early morning coffee and watch mist rise from the still water. Luxe, not AT ALL a morning person, would probably skip the early coffee with me. Small differences aside, we both feel strongly about owning our living space someday, retiring fairly early, and living sparely, but comfortably enough to travel, a priority we both share.
Arguably the most important (and complicated) of the three, which is why I saved it for last. Having a fair economic arrangement is a cornerstone of a good marriage, regardless of whether your finances are merged. For us, this means a sense of equality about what we each contribute and consume. A few things to understand about us:
- I make more money than Luxe—far from “crazy money” (I wish!) but enough so that it needs to be taken into account when we talk about expenses and savings.
- I have a son from my previous marriage who lives with us half the time. I have a separate custodial savings account for him (in his name), but again, it’s still in our Mint account so we can both see it.
- Our consumption habits are WILDLY different. Luxe can survive on almost nothing. Give her a handful of quinoa and a couple of those little fish cake squares and she’s pretty much set for the week. As for MY consumption habits…let’s just say my spirit animal is the raccoon rummaging through your garbage at night. Not only do I eat A TON more, I also generate approximately 7,000% more laundry. My stacks of t-shirts, pants, underwear, etc. waiting to be put away look like Stonehenge compared to her two tank tops and a dainty pair of socks. Additionally, I have the body heat of a small nuclear reactor and require full-blast air conditioning basically from April through October. So yeah, on top of having the carbon footprint of a brontosaurus I also make poor Luxe have a mild coronary every time she looks at our energy bill.
If I make more and consume more, it is fair that I am responsible for a proportional share of our expenses. You’ll notice how none of this has anything to do with whether we merge our money or not. Given that we are transparent, share goals, and have a fair money arrangement, IT SIMPLY DOESN’T MATTER.
Separate Finances Logistics
OK, since you’ve all come this far now you get to read the sexy part. That’s right, here are our domestic finance LOGISTICS! I wanted to give a rough outline of how we do money so you can see the three pillars of shared money harmony (Transparency, Alignment, Fairness) in practice at Chateau de Luxe:
1. We agreed on a budget and how much each person would save. Then we created a shared Mint account and plugged in all the individual accounts and amounts for each budget category. Luxe and I sat down together to change my 401k selections and increase my contribution to what we agreed upon. This established a mutual understanding of day-to-day spending and monthly saving targets.
2. We don’t use a joint account for shared household expenses. This would only add yet another account for us to keep tabs on. All of our accounts are individually held.
3. We prorate our rent payments: since I make more and my son is with us half the time it seems fair that I contribute more.
4. I handle the majority of food and utility expenses, with Luxe often buying grocery store gift cards to meet credit card spends. This works for us since, as noted, I am the big consumer and it’s a great way to help subsidize our travel with points.
5. We don’t “take turns” paying for restaurant meals. Whoever feels like paying, pays. We also use Venmo to settle up little things here and there, like if Luxe uses my Amazon account (and card) to buy something specifically for herself.
6. We focus on our strengths. Luxe is the bigger saver by far, saving around half of her income when she was single, although she needs to recalculate her savings rate now that we’re shacked up and her budget is different. She also contributes more to travel expenses, although this is mostly handled through a system that, to me, is so absurdly complex that basically I just go along and trust that I’m not getting ripped off. Also, the nine billion hours she spends researching a trip has material value.
7. We both use credit cards and track e v e r y t h i n g in Mint, except when I misbehave and *GASP* use cash. No secret accounts or anything.
8. We respect each other’s independence. Luxe gets a high off of watching her own money grow in her own accounts. Sometimes she even falls asleep with the Mint app open on her phone. If we combined accounts it would be a lot harder to track each person’s financial progress.
9. We trust each other’s spending habits. Neither of us asks “permission” to spend money unless it’s something big, say >$200. No need for “allowances.”
That’s how we roll, at least right now. Things can change of course. We could have a child, invest in real estate, one of us could suddenly need to care for an aging parent, or we could encounter any number of scenarios that forces us to reassess this. We are debt free (with the exception of a 401K loan I am repaying), giving us flexibility in planning. So for now we’ll leave our money where it is. Merging it simply because it feels like “we’re supposed to” will never be a compelling reason. Our accounts may be separate, but we both consider it all “our money,” united, working for us!
Now, if you’ll excuse me I need to go dig up enough loose quarters to go sneak a piece of that Lady M cake.
PS. If you’re interested in seeing how I survived living with a “saver”, check out my other guest post.
How do other couples out there approach shared money? Have you merged? Do you have a system? Do any of you have a “special doghouse” for your partner’s financial blunders?
Image: The Luxe Strategist