This post is part of Women's Money Week 2017. Learn more about Women's Money Week, and how you can take charge of your finances at WomensMoney.org.
We hear all the time that you should combine finances when you combine lives. Here are some reasons to keep your finances separate even after you get married.
It's pretty much taken as an article of faith that marriage means combining finances with your S.O.
When I married, my husband and I put everything into a big pot. It was simple and straightforward. It worked reasonably well, for the most part.
However, it's not something I would ever do again.
I'm not planning on getting married again anytime soon, but if I ever get super-serious about someone again, I'm not merging finances. Here are some reasons to keep your finances separate:
It's Much Easier to Financially Manage Your Separation if Things Go South
No one likes to think that they will break up or divorce. And, even though the divorce rate has been falling for a few years, it's still a very real possibility.
Combined finances are harder to manage during a divorce. I know. My big pot finances were a struggle to separate after my husband asked for a divorce. Some of the issues you run into include:
- Closing joint credit card accounts.
- Having someone's name removed from a joint loan (or paying off the loan).
- Closing joint bank accounts or having one person's information removed from the account.
- Figuring out what to do with joint investment accounts.
- If you have a business together, you need to dissolve the business and distribute the assets.
In my case, it wasn't as difficult as it could have been because my ex is a reasonable person who isn't a jerk. We both wanted to have a good start in new life. We had his name removed from the joint banking accounts, and we didn't even try to deal with the joint car loan. I have the car, so I'm just paying it off.
But if you have an ex who isn't as awesome as mine, trying to separate your finances can be an absolute nightmare during divorce.
It Forces You Both to Pay Attention to Finances
When you keep your finances separate, it means both partners have to pay attention to what they're doing with their money.
In some cases, combined finances mean that one partner doesn't pay attention to what's happening with the money. This isn't always a good thing. If one partner doesn't pay attention, it can bring stress into the marriage — especially if one partner is always picking up the financial slack.
It's true, though, that you can have money discussions with combined finances. In fact, it's best that you do. In an ideal situation, whether you keep your finances separate or combine them, you should be talking about money and touching base.
No matter your money personality, and how you interact with your finances, keeping them separate can ensure that you both pay attention. Meet up regularly to touch base — even if you don't share everything.
One of my friends told me about how they manage their finances. She was a little surprised to discover how much debt her husband had when they applied for a mortgage. However, it wasn't enough to stop them from getting the house, and she knew that he had some debt because they talk about money.
He manages his finances pretty well. He has to pay attention because no one else will for him. While he has some debt, he keeps it under control, and he pays attention to other aspects of his finances. It means they are both keeping on top of things, in ways that work best for each of them.
You Can't Blame Spending Problems on Anyone Else
One of the biggest reasons to keep your finances separate is because it ensures that you can't blame your spending problems on anyone else.
It's tempting to close your eyes to your own habits when you combine your finances. You can tell yourself that it's your spouse's fault. Separating things can ensure that you both approach your budgeting with eyes open.
Make it a point to stay connected to your money. Separate finances can help you remain connected to your budget, and it also means that you make most of your own choices.
At the very least, it also means that you can protect yourself (to some degree) from your partner's poor spending habits. While you're more likely to have long-term success if you are on the same page financially, you can protect yourself a little bit if you keep your finances separate.
No matter who is bad with money in your relationship, dividing it up can offer a bit of protection. (You might also need to re-evaluate how you prepare your taxes, depending on your financial situation.)
How you manage your finances as a couple depends on your style and preferences. It can make sense to keep your finances separate in some cases, although there are some advantages to combining finances.
Carefully think about what makes sense in your situation and manage your finances in the best way for you. Just remember that, no matter how you do it, you need to keep communication open and stay on top of your finances.