When Americans Get Married, So Do Their Finances: The Majority of Married Couples put all their income in shared accounts.
In the 1970s and 1980s, not doing this was sometimes seen as a bad omen for a relationship. But this is no longer the case today. The share of engaged couples, married or unmarried, who keep at least some of their finances separate has grown in recent decades, in part because Americans tend to marry later, having already developed their own financial habits. .
However, as standards have changed, Americans did not reach a consensus on which financial arrangement is best for the relationship. Respondents in a 2016 survey were split almost exactly 50-50 on whether a married couple should merge all of their money, and two US personal finance titans are giving conflicting advice on the matter. Suze Orman said she would “never, ever have a single joint account”. David Ramsey rejected arguments for keeping accounts separate as “a bunch of bullshit”.
Personal finance experts I spoke with recently tended to side more with Orman, advocating a “hybrid” approach – splitting money and keeping money separate. And while no one system is best for everyone, I tend to agree.
The benefit of couples combining all of their money is that it can foster a sense of togetherness, as “mine” becomes “ours.” More concretely, the pooling of resources can protect both partners from the ups and downs they may experience with their respective finances.
And surely many couples are moving to fully shared accounts simply because that’s how marriage has generally worked in previous generations. Of course, this precedent comes from a time when women were much less likely to be in paid work than they currently are. “As women enter relationships with their own income, it can ease the need for a conversation in the first place,” Joanna Pepin, a sociologist at the University at Buffalo, told me.
In fact, research indicates that couples who put all their money together are, on average, more satisfied with their relationship, and this trend is especially pronounced for low-income couples. But that’s not necessarily an argument for following their lead, as this finding could mean that sharing money makes couples happier or simply that couples who are happier to begin with are more likely to share their money.
Cassie Mogilner Holmes, professor at the Anderson School of Management at UCLA and co-author of a recent study on this subject, told me that despite the lack of strong causal evidence, she personally decided to merge most of her money with her husband’s after doing this research. “It creates a sharing,” Holmes told me of her experience. “It was a one-off decision that… plays out in a general sense of ‘us’.”
A commonly reported drawbackhowever, to put everything in shared accounts is that couples sometimes question each other’s spending decisions – did we really need to spend our money on this? Keeping the funds entirely separate would preserve the financial independence that many people want and are used to from their single lives. But it would also eliminate that alluring “sharedness” that Holmes was talking about.
This is why the hybrid approach seems sensible. The basic idea is that a couple has a shared account to pay for shared expenses, then individual accounts for discretionary expenses; they can also have joint and individual savings accounts. This configuration allows couples “to feel as if they are working together to support each other and for their partnership, while giving each other a certain autonomy”, Paco de Leon, the author of Finances for the People: Master Your Finances, said. “Partners shouldn’t have to discuss every purchase.”
It’s the approach Farnoosh Torabi, a broad financial writer at consumer tech site CNET, told me she recommends for married couples as well as unmarried couples. For the latter group, an alternative she likes is to keep separate accounts but establish clear rules for who pays what expenses. Torabi advised against completely merging accounts when one partner has a large debt, to avoid tension over who is responsible for paying it.
There’s some debate over which system is more likely to lead to disputes over spending, but the benefit is likely still to be the separation of certain accounts. In 2011, in a series of articles in Slate Weighing the merits of various arrangements, journalist Jessica Grose noted that a hybrid approach means deciding, and possibly bickering, what counts as a personal or joint expense. But when she adopted this system with her husband, she wrote, she was relieved that these conversations weren’t so tense after all. (Ten years later, the pair are still happily hybrid, Grose told me recently.)
Meanwhile, “When you have a bucket, I think that’s when you have the most feuds going on,” Torabi said. “It’s like, ‘Well, I want to get a haircut’ or ‘I want to buy the latest technology by filling the void,’ and now I have to have a conversation about it.” (Also, when couples do not keep separate accounts, sometimes the partners end up secretly skimming money that they can control, which is actually just a worse version of having a separate account.)
Another thing that recommends a hybrid approach is that it is lucid about the possibility that a relationship can end. This doesn’t necessarily mean a lack of commitment, but rather simply an awareness that breakups happen. Indeed, access to money during a separation is important, but Katharine Silbaugh, a law professor at Boston University, points out that having individual accounts “does not mean that at the time of divorce , you will each leave with your separate accounts”, unless a couple signed a prenuptial agreement stipulating the contrary. “Every court in the country has a legal standard that they will take money in one spouse’s name and transfer it to the other spouse,” Silbaugh told me.
Even during a marriage, the idea that you can keep your finances truly ‘separate’ is to some degree an illusion – the money a couple has, Silbaugh argues, is necessarily the product of joint decisions they make about life. where they live, who works for pay, whether they have children, and how they share household chores and care. (In his view, trying to separate finances cleanly can in many cases be wrong for women, because the money they personally accumulate does not account for the disproportionate amount of unpaid household work they do as a result of these joint decisions.)
The tension at the heart of any financial arrangement – between autonomy and solidarity – is really only a reflection of the tension that is at the heart of marriage today: balancing being an individual and being part of an engaged unit. How you feel about this compromise in the context of marriage could shape how you feel about it in the context of money.
This way, the differences between each financial arrangement can seem smaller, as couples can customize each one, such as having shared accounts but adding a line for non-judgmental spending to their budget so they can each derive guilt from the shared account. -free. The technology further reduces the distinctions between different arrangements: couples with separate accounts can obtain matching debit cards from a new company called Ivella, and any transaction with either card will draw from each partner’s account 50-50, or whatever proportion the couple chooses. It’s like having a shared account without actually having a shared account.
Different couples will have different preferences for what seems like the right balance of autonomy and convenience, whether it’s an auto-splitting smart debit card or exclusively shared accounts. Torabi stressed that regardless of the arrangement, couples should ensure that each partner has access to the money, has control over it, and has visibility into their overall finances. Beyond that, whatever choice couples make, it would be wise to choose one that is compatible with their way of thinking about independence and togetherness, in the context of money and of their relationship.