Couple Finances: Mine, Yours, Ours?

“Couple Finances: Mine, Yours, Ours?” is a post by Adina J, a freelance writer, TimelessFinance contributor, and author of Blue collar / Red lipstick.

One of the most fun things to do when the time comes to get serious with your honey-bun is to figure out your finances as a couple. And by “fun”, I mean the opposite. Chances are you would probably choose to sit through a marathon of Jersey Shore re-runs instead – if only you got the option. Because, like it or not, dealing with your couple finances is unavoidable.

There are many philosophies on “couple finances”, and people tend to be fiercely devoted to their own particular brand. One size most definitely doesn’t fit all, and since money is the root of at least 73% of domestic strife (I made that up. I don’t have a figure to quote you, except the intro of TDDUP. That’s as science-y as I get.), it’s important to pick the one you and your honey-bun can live with. To start with, you both have to be on the same page – not about money, but about your attitude to and expectations for the relationship. Perhaps it’s because I come from a different culture, but I notice a lot of very different attitudes in North America. For some people, relationships/marriage/common law living is nothing more than what comes after a torrid courtship or a big wedding extravaganza. It’s an after-thought. For reasons that should be fairly self-evident, these people should, under no circumstances, combine, conjoin or otherwise intermingle their finances. It just makes for more math that their lawyers have to do, and lawyers hate complicated math (or love it, depending how far away from their monthly billing target they are). For other people, marriage, common law or all-the-way, is a life-long commitment … with an exit clause just in case things go sideways. These tend to be the people who advocate pre-nups, because “you never know”. For others still, their relationship with another Homo Romanticus is an indissoluble partnership “for better or worse” – which means making the best of it even at the worst of times. Especially at the worst of times. My parents, for example, fall in the latter category. They’ve had more ups and downs than the stock market in the last 5 years, but they’ve stuck together. For their own reasons (non-religious, I might add), divorce was not an option, so they made the best of it, even when the going was rough. It wasn’t all romcom-worthy, but it was an incredible lesson in loyalty and commitment for me.

As with so many other things, I’ve inherited my parents’ attitude to marriage. Luckily, my husband witnessed a very similar relationship between his parents and, as a result, shares my outlook. This was an important consideration when the time came for us to decide what to do about our finances. If I had been marrying a man with a more relaxed, shall we say, attitude to the permanence of marital commitment, I would have hesitated (and probably decided against) doing what I ultimately chose to do: join my finances with my husband’s.

Before I go on to say why I don’t recommend this approach to everyone, let me just address one thing. Frequently, partners will not come into a relationship with equal assets. That relative inequality will often act as an additional factor in their respective attitudes to the relationship. Suffice to say that the partner with the higher net worth will typically be the one less likely to see the unromantic side of pre-nups. I’d say that this is a pretty common (and normal) reaction, at least initially. After all, it pays not to trust just anyone, wily nily. But if you’re the kind of person who can’t let go of the last vestiges of doubt, as far as your life partner goes, then joint finances most definitely aren’t for you. (And one more thing: this isn’t intended to denigrate anyone’s particular attitude to marriage. I’m not saying mine is the “right” one, or that some are better than others. Your attitude can only be judged by one thing and that is what you hope to get out of a relationship. If your attitude and your expectations match up, then you’ve got it “right”. How’s that for relativism?) (Robot Editor Joe’s Note: Relativism does not commute. Error.)

So, finally, the nitty gritty. There are three general approaches to couple finances: joint; separate; and the “mine, yours, ours” approach. The latter is probably the one that suits most people’s attitude to relationships, and the one that is most flexible when it comes to accommodating all types of financial matches. Broadly speaking, it works well for people who either:

(a) are on the same page financially, but enjoy or desire the autonomy of having their “own” money, separate and apart from any contributions to the joint household; or

(b) are not on the same page financially, but still want to have a sense of partnership (whilst protecting themselves) – or want to make sure that they’re not stuck with all the bills.

There are a variety of ways to configure the “mine, yours, ours” couple finances scenario: equal contributions from both partners; contributions proportional to the partners’ respective income; set amount contributions, etc. For obvious reasons, this works best for dual income partnerships; otherwise, this can quickly devolve into a situation where one partner pays the other an “allowance”. Never having been in that situation, I can’t speak authoritatively to this, but it strikes me that this would have the potential to become a humiliating experience in short order. A joint approach would seem preferable, considering there are only so many ways you can slice one income. The difficulty comes in when the partner holding the purse strings (by virtue of being the sole income-earner) is an autocrat, or when either (or both) of the parties is financially irresponsible. Neither scenario tends to have a happy ending.

The nature of truly separate finances is pretty obvious: you’re roommates with benefits. Let’s not delve into whether this is a bad omen for a serious, long-term relationship.

Joint finances seem to be very much out of vogue these days, and probably for good reason. It takes a lot to make them work. In addition to a common attitude about your relationship, finances and general life goals, it requires complete trust and confidence. I don’t police my husband’s use of our joint account, and he doesn’t police mine. We talk about individual purchases we might be inclined to make, not because it’s a rule, but because we like to get each other’s input – even though I don’t care about bike parts, and he doesn’t care about nail polish. I’ve never hidden a bill or a shopping bag from him; needless to say, neither has he. The most important thing we have done to ensure the success of our joint approach was to “forget” that my income is considerably higher than his, and truly treat both our incomes as “joint”. I’m not going to lie and say it was easy – for either of us. But nothing will nix joint finances faster than “keeping score” about who makes what (and who gets to spend more).

Here is my final recommendation: if you’re thinking about joining finances with your honey, but you’re not yet sure what will work best, give the “mine, yours, ours” approach a try (Editor Joe’s note: based on my understanding of her session in February, this is Gail Vaz-Oxlade’s generally recommended approach; people need individual credit history, individual emergency funds, and a personal retirement account. The approach is also best suited to the current demeanor of Canadian tax law (spousal RRSPs aside) and the fact that you should never sign for somebody else’s debt, spouse or not). It’s the shoe that fits (almost) everyone. All you have to do is find a style you like. If the thought of parting with control over even one penny of your money makes your right eye twitch, your decision is even simpler: no decision. Just keep on truckin’ – and pray that you picked a partner with no “designs” on your dough. And if you’re one of those not easily daunted people who was intrigued by my description of joint finances … well, I hope you are prepared for a lifetime of complete strangers quoting divorce statistics at you. And good luck!