Couples I meet who keep most of their finances separate are usually reluctant to admit it. It’s as if they feel it’s a relationship red flag that they don’t pool all of their money together. I’m not sure why joined finances is still seen as the only solution for married couples. As I’ve said many times before on this blog, I’ve met happy couples who have completely joined finances, happy couples who have separate finances, and happy couples who do a hybrid of both.
There are plenty of reasons why you might keep some (or all) of your finances separate: one of you has personal debt they are working to pay off; you have different financial priorities (i.e. one of you is more of a spender and the other wants to give more money away); you have individual financial goals; one of you inherited money prior to your relationship; you each have different approaches to managing your money that work for you both.
If you’re one of the many couples out there who keep some of your money separate, here are some ways to make sure your financial approach works the best it can for you and for your relationship:
Embrace Your Choice: Instead of feeling guilty about keeping some finances separate, be proud of the choice you’ve made. If this is what works best for each of you and for your relationship, then you’ve made the right decision. Stop worrying about whether or not you should combine your accounts or about what others might think.
Tip: Get clear on why this is the best choice for you both and for your relationship -- and go back to this “why” anytime you feel judgment, guilt, or shame.
Decide What You’ll Share: Keeping some finances separate from your partner doesn’t negate that you’re connected by your relationship. Imagine you had a dial you could turn from “fully transparent” to “fully hidden.” How transparent do you want to be with the accounts you hold separately? In the event of an emergency, would you want your partner to have access to these accounts?
Tip: Keeping a certain level of transparency with your separate accounts can hedge against financial infidelity, ensure your partner is prepared in case of an emergency, and allow you to make informed decisions about how you’ll split joint expenses and commit to joint goals. While you may not decide to review your separate accounts together every month like you would with joint accounts, depending on the level of transparency you want, taking a look at them together annually might be a good idea.
Ensure Financial Access: If something were to happen to you, who do you want to handle and/or inherit the accounts you hold separately? Make sure you take the necessary steps so this can happen smoothly. One simple way is to make your partner a beneficiary on these accounts, but you can also make your partner a joint owner on the account (even if they don’t plan to access it unless absolutely necessary), name your partner your financial power of attorney, or list your partner as someone who the account holding institution can speak to in case of an emergency.
Tip: If you have any solo accounts that you’d prefer your partner not have access to, be honest about these accounts and why you’d like to keep them separate. If they will not be the beneficiary on your account(s), let them know who will be and why. I know it feels easier to keep things hidden and just avoid the conversation, but being upfront now when tensions are low is likely to save a lot of grief later.
Set Clear Expectations: Depending on how separate you keep your finances, you may just have a few joint expenses or you might have a lot. Make sure each of you agrees on what you will use your money for jointly and what you will use your money for separately. Consider what goals you’d like to work toward together. Make a plan for the exciting goals (like having a child or going on vacation) as well as the less exciting ones (like emergency savings and retirement savings). Will you have a shared emergency account, or will you each be responsible for your own? Would you be willing to bail one another out?
Tip: When it comes to deciding how much each of you will contribute toward joint goals and expenses, be sensitive to any income inequality in the relationship. It may be that 50/50 isn’t the expense- or goal-contribution split that makes the most sense.
Communicate Often: Just because you hold some (or even most) of your money separately doesn’t mean you can escape talking about finances. In fact, I think it’s even more important to regularly review your joint goals/expenses, encourage one another as you work to reach separate goals, and keep each other informed about your separate accounts. Having a money date on a monthly basis can help you stay on the same page.
Tip: I find that no matter the financial system they have chosen, just about every couple wants to create financial goals together. Making this process a focus of your money dates will help you have a joint vision of a fulfilling life that happens to be funded by separate accounts.