It might seem odd for a married couple to keep their finances separate, but it’s a strategy that has worked well for Peachtree City, Ga., couple Sharon and Michael Marchisello for more than two decades.
“We’ve got something that's working,” says Sharon, 64. “Why change it?”
A 2016 TD Bank survey of 1,900 people currently in a relationship found 84% of respondents chose to merge finances with their significant other in some way, while only 16% keep everything separate.
For Sharon, an author and personal finance blogger, and Michael,62, a flight attendant, their decision to keep their money separate was easy.
The couple was in their thirties when they met and lived together for eight years before they married. As individuals, they already had established separate bank accounts, credit cards, investments, and other accounts. It seemed too complicated to try to merge everything.
“If I were younger and going straight from my parents’ house, I would have probably put everything together,” Sharon says.
Simplicity wasn’t the couple’s only motive. They watched several friends and family members’ marriages implode over financial disagreements and hoped to avoid the same issues.
“We’d seen some people we never thought would split up, split up,” says Sharon. “We also had friends who were married young and had gotten divorced that had a hard time getting credit or loans.”
Watching Sharon’s parents bicker every time her father forgot to keep track of checks he wrote from their joint checking account only made separate accounts seem all the more logical.
For the most part, they don’t keep one another updated on their day-to-day purchases. “If I want to buy something that he doesn't approve of, I can just go ahead and buy it,” Sharon says. “We each have some control over our [own] funds.”
That’s not to say they don’t collaborate on major purchases. But even then, they try to keep things 50/50. They jointly purchased their home five years before they married. At the time, Sharon didn’t have enough for her half of the down payment. Her husband fronted the money, and she treated her half like a loan, paying him back over time.
They also maintain a spreadsheet where they track both of their individual expenses in one place.
“We both sort of have similar attitudes about money so I think that has been helpful,” says Sharon.
4 Times It Makes Sense for Partners to Keep Their Finances Separate
You find it makes your lives easier
Choosing to merge or not to merge finances as a couple is a very personal issue. “At the end of the day, I always recommend that couples decide what they believe is ‘fair’ and ‘acceptable’ to both parties,” says Lauderdale-by-the-Sea, Fla.-based certified financial planner Tom Balcom.
“At the end of the day, I always recommend that couples decide what they believe is fair and acceptable to both parties,” says Balcom. That might look like splitting things 50/50 or more like 30/70, depending on each spouse’s income.
Balcom often recommends couples try a mixed approach to merging finances in marriage: yours, mine, and ours accounts. He says the method allows some flexibility for those who get married later on in life.
“It allows each person to do their own thing because they can both maintain some sense of independence,” he says.
You have different investment needs
For couples who may be considering investing together, Frisch says keeping separate investment accounts can help make life easier for pairs with different risk levels.
“You may have a more conservative account, and I may have a more aggressive investment style. There is no fighting,” says Frisch. For example, women on average live longer than men, which may mean they can afford to invest a bit more aggressively even as they reach retirement to ensure that they’ll have enough funds to sustain them.
“The one main thing is what works for one couple may not work for another, and there is no one-size-fits-all answer,” says Frisch.
It isn’t your first marriage
Jonathan Swanburg, an investment adviser at Houston-based Tri-Star Advisors, says he often sees more older, remarried couples choose to keep separate financees, especially if they have children. One common scenario is that one or both spouses may want to ensure that their children remain the sole beneficiaries of any financial assets they’ve accrued before their new marriage. That can get complicated if they throw everything into one pot, he says.
You expect an inheritance
If you’re married and receive an inheritance, the recommendation is to place the money into a separate account.
Swanburg says this is in part to navigate community property laws. He operates in Texas, a community property state, where “it is assumed that any assets acquired during the marriage are community property. When you are in a community property state, you can only give away what's yours,” he says. This applies to everything except gifts given to one spouse, assets owned by one spouse before the marriage and kept separate, and inheritances.
For example: One spouse inherits $1 million from one of their grandparents. If the spouse converts that account into a joint account used for joint expenses, the assets can now be subject to community property, which means the other spouse would have a right to some of that money if the couple divorced.
Swanburg says a lot of the details related to community property can be handled with estate planning or pre- and postnuptial agreements.
3 Keys to Managing Separate Finances
Managing money separately but functioning as a unit isn’t easy for everyone, but if you’re considering doing so, you can apply the following tips to help ease your transition into married life.
Align your goals
Make sure you and your partner are on the same page about your goals. Getting all of your goals laid out in the beginning can help you avoid arguments over money and keep your finances aligned.
Keeping to those goals might be more difficult if you’re not as lucky and one spouse is a saver and the other is a spender.
“I generally have couples do goals worksheets separately then come together and compare them,” says Lauren Lindsay, a certified financial planner in Covington, La. “Generally the people who think they are polarized are more on the same page than they think.”
Be honest and transparent
Communication is the key to maintaining peace in any relationship, especially when it comes to sensitive topics like money. It’s important that both spouses are involved in the discussion.
Both of you should be aware of where all of your income comes from and what obligations you have to each other. If you split bills each month, make sure you both know how to make payments and agree to make those fixed payments before spending your flexible funds.
Tell your spouse if you need things set up a certain way to keep the peace before the issue later becomes an argument.
“I have this emergency fund and it’s a separate account, and it drives my husband crazy, but he understands why I need it,” says Lindsay.
When you’re married, you’re on a team, and teams need to know which play to run. Meet regularly to discuss finances.
Balcom says the downfall with money management is accountability. “Agree on how much you want to save in investment and household accounts each month, fixed expenses, and then savings; the rest is yours,” he says.
You can meet as often as you need to. Frisch says keeping track of your expenses with budgeting tools can be a huge help. MagnifyMoney lists a few top tools here.
If you’ve set savings goals, this is a good time to make sure you and your spouse are keeping up with them similarly. If you’re saving for a home, for example, you’ll want to keep enough money in both of your accounts for approval.
“Marriage is a partnership,” says Swanburg. “Yes that’s your account, but the bank is looking at that when they consider us.”
MagnifyMoney is a price comparison and financial education website, founded by former bankers who use their knowledge of how the system works to help you save money.