David at Money Under 30 is getting married. Congrats David! While preparing for their marriage, he and his fiancé wisely discussed their finances and chose to keep their spending accounts, emergency funds, and debt payments separate. While I can certainly understand the reasons behind wanting to keep pre-marriage debts and post-marriage finances separate, I don’t agree with it in practice.

Combining Finances Made It Easier to Agree on Goals
My husband and I both entered this marriage with debt. Some of it was credit cards from grad school, much of it was his student loans, and another portion was my student loans. He also had some medical loan debt from the period when he didn’t have insurance.

When we got married, we decided to merge everything, except student loan accounts which can’t, and shouldn’t, be consolidated together. Then we created a joint budget and set our financial goals together. We probably still would have set joint goals if we’d had separate accounts, but we would have to divide our paychecks into different accounts and debate about who would pay for what.

Working Down Debt Jointly Paid It Off Faster
I’ll be honest, we would not be living in our new house if we hadn’t agreed on a debt repayment plan and thrown ALL of our excess income at it. Rather than paying some of my money to one of my debts and a portion of his money to his debts, we put everything we could toward one debt and paid the minimum on the rest. By doing this, we made larger payments that reduced the principal faster, resulting in less interest accumulation and a faster pay-off. Then we moved on to the next debt. Each paid off debt snowballed into a larger amount for the next one.

I believe it would have taken us much longer to pay off any one debt if we hadn’t been working on it together.

We’re Better Aligned as a Couple
It helps that we’ve become more financially similar during our marriage, but I really do think that merging our finances completely helped us to align our financial goals and plans. If we were each managing money separately, we might not be working towards our goals as a team.

When We Invest, We’ll Be Better Diversified
Money Magazine frequently presents this problem in couples who have separate finances. They choose their investments separately, but often end up choosing similar mutual funds that leave them overinvested in one sector and underinvested in another. By investing jointly, you can make sure that you’re properly diversified.

Some studies show that couples who merge their finances have happier marriages, other studies show that couples with separate finances are happier. I don’t think there’s a right way or a wrong way. Both require good communication. Only you can decide what’s right for you and your spouse.

Where do you stand on the issue? Is your money merged or separate? If you want to merge them, see my complete list of everything you need to combine.


4 Responses to “Should Couples Keep Their Money and Debts Separate?”

  1. Bucksome on August 24th, 2009 7:32 am

    Mr. Boomer and I have kept our finances separate and we’ve been married 14 years. It works for us and I think when we both retire, we’ll combine finances.

    I don’t have strong feelings one way or another, I think it’s up to each couple to figure out what’s the best solution for them.

  2. Caro on August 24th, 2009 10:42 am

    I think a lot of it also has to do with the stage of life that the couple is in. A couple getting together later in life might have separate kids/grandkids to support/plan for, making keeping separate finances a smart thing. Lots of reasons to do it and not do it. Personally, we worked out a nice hybrid. We have both joint and separate finances. The separate finances mostly represent our “mad money” that we both get each month. Of course, both of us are savers, so we have been saving a large % of our “mad money” and now we both have quite nice nest eggs in that area.

  3. dogatemyfinances on August 24th, 2009 1:25 pm

    I don’t really understand the roommates approach unless it’s a really complicated blended family. But, hey, if it works for them.

  4. TracyAtMyCESI on August 25th, 2009 9:04 am

    For me personally, I think having separate accounts to manage each spouse’s finances implies a bit of distrust. If I can’t trust my husband with my financial matters who can I trust? What is his is mine and vice-versa.

    That being said, we do find it easier to have two separate joint accounts. One to pay bills from and one for household spending. This way, the money doesn’t get all tangled up together.

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