When I met my husband in 2004, he was sharing an apartment with two roommates and I was a poor student with a low-wage job and not much else.
The fact that I almost owned my biggest asset — my car — was balanced out by the fact that my husband (then boyfriend) carried around $2,000 in credit card debt. In other words, our net worth was approximately zero. But we were fine with it and honestly didn’t know any different; we didn’t have much, but we did have each other.
With such humble beginnings, it was easy for us to meld our financial lives into one. After all, neither of us brought anything valuable to the relationship to speak of. What did we have to argue about?
But as our relationship progressed and we had children and built businesses, I’ve come to realize that the fact that we share our dollars is a huge asset – and not just in the ways you’d think. Here’s why I believe in joint finances for our situation, and how we make it work:
My husband’s first bachelor’s degree was in theater arts. Laugh all you want; he says it seemed like a good idea at the time. Unfortunately, his theater degree didn’t help him get a job that would actually pay the bills, which is why he worked a day job and acted at night year-round.
We ultimately decided we didn’t want that kind of life, which is why, before we got engaged, he went back to school for something more practical – mortuary science. Almost $20,000 later, he graduated with another bachelor’s degree that landed him multiple job offers that actually paid living wages.
We were thrilled, but immediately felt the heavy weight of those student loans. So we decided to tackle them together, first by by doubling our monthly payments, then by throwing all of our extra money their way.
And it made perfect sense to me; even though his student loans were technically his debt, I felt I had a stake in his education. His higher earnings were a direct result of our decision to send him back to school. How could I benefit from his bigger paycheck without taking any responsibility for the loans that got him there?
His student loans were one of the first issues we tackled as a team, and in a way, they brought us together. They taught us that problems were easier to solve when we had two people working toward a solution, and they helped us realize that that we could accomplish much more as a team than we could apart.
Joint Finances Mean Income Fairness
When we got married in 2005, I was earning around $10 an hour as a nanny while I attended school. We had almost nothing — an old couch, some dishes, and a few closets full of clothes. My husband made significantly more than I did, but he was always sweet about it. We had plenty of money to pay our bills, after all, and I certainly didn’t spend much.
Fast-forward a few years and we were preparing to have a family. Even though I was still earning around $10 an hour, my husband’s income had grown significantly. Impacting my contribution even more was the fact that I took maternity leave twice at partial pay.
Between maternity breaks and the high price of day care, there were years when I felt I wasn’t contributing anything, but we always persevered. And since I didn’t make much, I tried to contribute in other ways – like doing most of the housework and cooking. But it didn’t matter; no one ever kept score.
And it’s a good thing we didn’t.
After many career twists and turns, I now make more than twice what my husband does. But since we share our money, it makes little difference in our day-to-day lives. It all goes into one giant pot, a pot that is used to fuel the dreams and goals of our entire family – not just mine or his. And he isn’t one of those husbands who can’t handle his wife earning more; he thinks it’s great!
But there’s a reason why our situation has worked so well. Since we shared finances all along, we got used to the idea of pooling our resources and labor to achieve our common goals. When he earned more, he never acted as if he deserved more than I did – and now that I earn more, neither do I. All that ever mattered was the money we brought home collectively at the end of the month. And that’s the other benefit of joint finances: When one family member succeeds, we all succeed.
Another benefit of joint finances: no financial secrets. I can think of countless times when a girlfriend of mine has showed me a new purchase then subsequently sworn me to secrecy. “Don’t tell John,” she’ll say, adding that what he doesn’t know won’t hurt him.
And while that may be true — that it doesn’t hurt him — keeping financial secrets never seems like a good idea. But that doesn’t mean it isn’t commonplace. According to a CreditCards.com poll from earlier this year, one in five adults has spent more than $500 without telling their spouse. Meanwhile, another 6% of adult participants admitted to having a secret checking or savings account.
Separate accounts and secret spending seem like a recipe for disaster — and that’s one thing I love about keeping everything out in the open. Not that I am tempted to splurge, but I think the fact that we are totally transparent with one another makes it easier to stay on track.
The general rule we stick to is that neither of us should spend more than $50 without telling the other first. That rule, coupled with complete financial transparency, has served us well.
Marriage Is About Teamwork
In December, my husband and I will have been married 10 years. We’ve had ups and down during that time, had two kids, and built a wonderful life together from the ground up. Many things have changed, but one thing has remained constant – the fact that we are a team.
When we were starting out, we had little more than the clothes on our backs. But we had one thing many other people didn’t; we had each other’s backs in every way possible. We were each other’s inspiration, support, and biggest cheerleaders. We would rise or fall together — and only together.
Obviously, that theme carried through to our financial lives as well. And it’s amazing what can happen when two people are truly on the same page. Together we’ve started two businesses, purchased rental properties, started saving for our children’s college, and socked away tons of money for retirement and for our future.
I wholeheartedly believe that we couldn’t have done any of those things if we were living separate financial lives. How can you be a team when you don’t share something as essential and personal as your paycheck?
Joint Finances Make Parenting Easier
Still, marriage has never just been about us; it’s been about our family. One of the biggest reasons I’m glad we have joint finances is because we are parents to two small children.
Maybe it’s because I’ve never done it, but I can’t imagine divvying up the cost of having a child with my spouse. So many questions come to mind. Who would cover my bills during maternity leave? Who pays for diapers? Day care? Doctor visits? What happens when one spouse wants to put Junior in expensive soccer lessons while the other spouse does not?
I’m glad I’ll never have to answer any of those questions. When you have joint finances, you never do. When you have a child together, all the costs incurred belong to both of you, as they should.
Obviously, things get more complicated in blended families, but I still think the basic principle remains. When you’re married, your family should come before your personal financial goals. Having joint finances makes that easy – and, truthfully, automatic.
How We Make Joint Finances Work
Even though we’ve had joint finances since the beginning, there are certain steps we took that made the situation work for the long haul. Here are some moves we’ve made that have helped us stay on the same page over the years:
We started using a monthly budget. Several years ago, we started creating a monthly zero-sum budget to use as an outline for our spending every month. Even though I pay the bills manually, our monthly budget sessions are a time where we sit down and talk about our financial goals that month.
The strategy behind this is twofold. First, it forces us to compromise on that month’s expenditures. What do we plan to spend this month, and how much do we plan to save? And second, it forces us to create a specific plan for each dollar we earn. And once we sit down and hash things out, we simply have to follow our plan through to the end of the month.
We created a spending rule. With few exceptions, we never spend more than $50 without consulting one another first. This rule has worked well for us because it not only helps us stay on budget, but it also make sure that neither one of us strays from our long-term goals. Although the $50 rule seems to work for us right now, I could see us adjusting that amount up or down as we earn more or less or reach retirement age. Still, the basic principle will always apply; this is our money, and big decisions should always be made together.
We agreed on a list of short-term and long-term goals. Our monthly budget serves as a plan or outline for the short term, but we also feel it’s important to plan for the years and decades ahead of us. That’s why we created a document that lists both our short-term and long-term goals; that way, we can make sure the actions we take now will ultimately lead us there.
For example, we decided that we wanted to pay for at least part of our children’s college education, which is why we worked a monthly contribution to their 529 accounts into our zero-sum budget. Meanwhile, we also plan to retire early, which has helped us focus together on contributing heavily to our retirement accounts today. The bottom line: Creating short-term and long-term goals has helped us create a plan for the future that we can both be excited about.
Why Joint Finances Work
Marriage isn’t always easy. There will be tragedies and triumphs, and moments where you question why you got married in the first place. Still, I’ve always found it most helpful to see my spouse as my “teammate” in life, and that attitude carries through to everything we do — from raising children to saving for retirement.
Having joint finances has made every aspect of our lives easier while also fostering an environment where we get to join in each other’s successes and achievements. And in my eyes, that spirit of teamwork is one of the biggest reasons to get married in the first place.
Joint finances may not work for everyone, but I truly believe the concept makes sense in most marriages. “Til death do us part. For richer or for poorer.” Most of us realize we are in this together. And with joint finances, that’s exactly what you’ll be.
Do you and your partner have joint finances? Why or why not? What strategy works best for your family?
Holly Johnson is an award-winning personal finance writer who is obsessed with frugality, budgeting, and travel. She blogs at ClubThrifty.com and teaches others how to write online at EarnMoreWriting.com.