Monday, November 06, 2006

Money in Relationships

Thanks to everyone for the supportive comments on the last post about my Mom. A couple of people brought up the issue of looking out for irresponsible financial tendencies before marriage, and let me just say, I'm all for it! I am also all for a very open approach to money between couples, and a lot of independence.
It's funny, my parents are quite old-fashioned. They seem to believe in (sort of) sticking together despite their incompatibilities. My dad resents her overspending, but he seems to want to bear the burden of being the breadwinner and money-manager in the traditional husbandy way. My mom also wanted to play the traditional wife's role of being a homemaker and mother rather than having a career. She wanted someone to take care of her and support her in doing that, and was happy to put the finances in someone else's hands as long as she had money to spend on the things she thought she needed.
[I did feel guilty that the post made it sound like my mother is personally greedy, which is not entirely the case. She did spend a lot of money on furniture and creating a beautiful new home for herself when she got her own apartment, but other than that, a lot of her spending is on gifts for people, and food for when her friends come over, just because she feels stingy doing things any other way.]

I don't remember ever feeling like someone else would take care of me in that way. As early as I can remember, I think I always had a sense of wanting to take care of myself. I sometimes had anxieties about how I would do that, but I never really just wanted to put it all in someone else's hands and just not worry about it. Even when I was in a serious, long-term, co-habiting relationship throughout most of my 20s, I kept a lot of independence. Perhaps that was as close as I've come to being supported by someone other than my parents, because my partner was a bit older and made more money than I did at the time, but I always paid a fair share of all the expenses, never less than 40%. And though we bought an apartment together, sharing those costs 50/50, we never had a joint checking account.

Relationships are complicated enough as it is... money just adds one more layer. I believe couples should be completely open with each other about their financial status, habits and goals-- and if that reveals some large discrepancies, it's something to deal with very seriously before going further in the relationship. I also think each person should maintain at least some financial independence rather than lumping everything together in joint accounts, but that is the kind of thing that works differently for each couple's situation, depending on marital status, etc. Please post comments about how you and your loved one make it work!


The Baker Family said...

Finances are a sticky situation in marriage. My husband and I danced around the issue for two years before finally confronting it and dividing up the responsibilities. Now I'm mostly in charge, which makes both of us happy (he hates to think about bills and investments). Whatever works for you, I think the most important thing to do is to talk about it, which is something a lot of couples avoid doing.

As to the details, basically everything we have is lumped together except for our retirement accounts, but even with those I make sure he's contributing an appropriate amount to his and that the investments are doing well.

tropicsaver said...

This is a very interesting post. As a single woman living alone, I have been thinking more lately about the implications for cohabitation and if I would reaaly be willing to do that in a serious relationship. I guess this gives me some more to think about.

Anonymous said...

My fiance and I are living together while saving for our wedding and our first home. Sharing the bills with him is allowing me to pay down my debt faster. But we had some long talks about money and how we handle it before we got engaged. We thought we should pay to our strengths. He's an excellent saver, so he'll be in charge of our emergency fund and saving for big purchases. I am better at budgeting and keeping a record of our accounts, so I'll be doing that.

Sam said...

My husband and split our finances from the very beginning 50/50. We have our seperate bank accounts/retirement accounts and one joint one where we pay bills from. We've decided that this works for us, I want to keep things seperate so I don't feel like I am living off of him.

I am responsible for paying bills and I track both our cash inflow and outflow in Quicken through seperate files because I enjoy doing this.

We have not had any problems with our system. When we dine out with friends, I put in my share, and he puts in his. Many of our attached friends do the same.

I suppose we will eventually combine finances especially when we decide to have a child. But up until that point, this is working really well for us.

Anonymous said...

In today times it has become essential for both partners to earn so that they can lead a good life. Expenses and expectations are increasing everyday. Plus being self sufficient makes a huge difference to ones self respect.

mOOm said...

I am in a long distance relationship. My girlfriend reads my blog now and then so there aren't any communication problems there. She seems very responsible but more willing to spend money than I am, which may be a good thing :) When we are together we take turns spending money on things, but I try to buy more expensive things because my earning power and wealth is much higher at the moment. She has indicated that when we eventually live together or get married I'll be in charge of managing money (e.g. submitting tax returns) and investments though how much we'd merge finances and how quickly isn't something we've addressed.

Anonymous said...

A little background...

My boyfriend and I have been together for over 3 years and have lived together practically the entire time. I'm 23 and he's 28, and (after taking time off before we were together to pursue other endeavers) we're both in school pursuing our Associate's degrees (almost full time).

I work two part-time jobs (although one is flexible and doesn't always bring in a lot of work) and he works full time. We rent from my parents and share my car.

Our finances are totally combined. We have a joint checking/savings account and a joint HSBC Direct account. The only things seperate are credit cards.

For the most part, I control the finances. Not in an authoritarian sort of way, I just do all the work. Making sure the bills get paid, doing research, taking care of our taxes, and I trying to save as much as possible (we just opened our HSBC account last month and after an initial lump deposit, I'm transferring a min. of 10% of our income). I enjoy personal finance so all this stuff is fun for me, in an odd way.

We're basically on the same financial wavelength. I'm sure our situation would seem odd to a lot of people--especially those who are married and don't have joint accounts! But this just works best for us, right now. We have a very open relationship, and no conversation is off limits. We both want to wait to have children until after our finances are rock solid.

Oh, and our goals for the moment are improving our credit scores and saving, saving, saving! We want to purchase a home when we move in 2008 so I can pursue my B.A. I also want to start saving for retirement. So I'm currently researching options, and then I'll tell him about my findings. That's how we work. :)

Anonymous said...

My boyfriend and I are in what I think may be a slightly unusual situation.

He is eight years younger than me so when we moved in together - he moved into the apartment that I had bought without one scrap of input from him.

He pays me a weekly rent which is equivalent to about 30 per cent of my mortgage repayment and I pay all the additional costs associated with home ownership.

So the apartment is in my name but he gets to enjoy some of the privileges of home ownership - like being secure that he can stay for as long as he wants and having plenty of say in how it is decorated.

Most of the bills - electricity, phone, water - were already in my name so I pay them but we split the cost down the middle.

Anyway that arrangement was working fine until earlier this year I had a change in my work situation and for almost six months I only had enough income to cover my mortgage repayments that was it.

I really had to tighten the belt to get through that time and I felt an enormous amount of financial pressure and even though he helped me out a bit he really didn't feel any of the same financial pressure.

There were quite a few nights where he was able to go out drinking and I would have to stay at home eating tinned tuna - which I really resented.

I guess the whole situation just highlighted the inequality of our financial responsibilities.

Even though we talked about it at the time and afterwards we haven't made any change to the way we manage our finances.

Amy K. said...

We have his, hers, and ours accounts. We each contribute a set amount to the "ours" account each payday, calculated based on AGI from out previous years's tax returns. Yes, very anal-retentive. We were trying to split everything 50/50, but I almost had a breakdown because, like another poster, I was eating canned tuna while he was buying a $6,000 TV. He finally convinced me to swallow my pride and let him pay more of the expenses.

I keep a watchful eye over my accounts, he tracks his and also manages the "our" account. I'm more than happy to let him manage, now that I know I'm contributing "my fair share." We touch base and check on our financial goals every so often.

For what it's worth, our financial advisor tried long and hard to convince me that we should just have joint accounts. I would guess that's because accounts with higher balances can earn higher rates, fewer accounts means fewer fees, and less of everything means easier to keep track of. I, however, like my autonomy. And as 2 people living together, unmarried, I like to have some things that are mine. I'll probably continue to have my own accounts even when we are married, following in the footprints of my parents.

Anonymous said...

in most cases, 50/50 is not fair. suze orman details how shared costs should be handled, briefly, you take the gross pay then figure out what % each person makes (add together, divide, etc, see her books for more details). the only way i can see 50/50 working is if both parties make the same or nearly the same gross pay.

incidentally, she also goes into detail on how to compensate a partner who is working less due to care of the kids or etc.
suze falls short in some PF ways, but in this area she is logical and right on. if you are in a partner situation, it's worth your while to take a look.

my partner and i divide it this way. he makes more but also still has support payments for children (now adult children) from a previous relationship. we need to divy it up as gross, otherwise, why should i pay for someone else's kids in the equation?!? i had to explain it several times and we discussed it over and over until he realized he agreed....
(he had wanted to go by net pay, but my argument was about the garnished wages for support, the varying 401k amts we ea have in pay and i have fsa, etc etc. i have never even met the kids.)

we have been together for several years now and live together as of about 1-2 yrs ago. we have a joint acct and use the suze method for % each contributes. been working fine. when one of us gets a raise i recalculate it.
he does most of the recording of transactions for the joint account, but i keep an eye on all of it and help with that. keeping an eye on means i ferret out the bank statements he piles up not mentioning he doesn't reconcile them. so then i do....

Anonymous said...

addendum, i just wanted to add, it's not so much that i "haven't met the kids" but more about the fact that my choice was to not have children, he did choose to way before meeting me, they have a far-far better life than i ever did in what is paid for and done for them and i am completely opposed to supporting them with my meager wage. it's not like i even have a relationship with them. it's their parents responsibility. we may or may not marry in the future, but have discussed the possibility. we are each not comfotable with it until his financial obligations in this area are complete.
just wanted to clarify.

there are so many variables in so many couples lives. i find that a lot of people have no imagination in realizing that. once in a while someone will hound me about if i will marry him, etc. i say it's my business, and if i decide that, anyway, it's not the right time. they have no idea, and most of the time do not even try to comprehend. one friend i tried to explain it to just didn't get it. she met her spouse in college and they didn't have kids before.