Financial Freak Show

To clean up our financial mess the first big step I took was to come together with my wife and get on the same page regarding our money (now doesn’t that sound like a fun discussion?)  From my experience this is often one of the hardest steps to actually accomplish for most couples. In many cases one person takes on the responsibility of the household finances for one reason or another and the other person is sort of along for the ride. Maybe one person likes to be in control, maybe one person doesn’t want the responsibility or the stress, maybe one thinks they’re smarter, or maybe one’s a nerd and gets off on this stuff, or maybe it was never even talked about previously and this is just the way chips hit the table. Either way unless you’re on the same page with your spouse it’s likely your household finances will not be in good order over the long term. Remember the preacher-man said “and now you are one” remember that line? Note what the preacher-man didn’t say…. “and now you are one except for the money part only one of you will need to pay the bills and carry the stress of the finances until death do you part”  (In other words you take care of it until one of you kills the other!)

Merge your money or separate the accounts – His money & Her money. This takes place, when for one reason or another, when a couple operates their finances separately from each other. In many of the cases where I’ve seen this I’ve noticed it is usually due to one of the people not wanting to bare themselves financially to the other person. They keep their money almost a secret from the other person. According to a USA Today article the FPA’s survey of financial planners nearly 55% of couples hide financial assets from one another. Hmm, I wonder what other secrets they might be keeping.

I think not coming together on your finances is often an easy way to allow people to close their eyes to the bigger picture and avoid the uncomfortable discussions that go along with shared finances. The funny thing is sometimes the processes some couples go through to keep their money separate are far more work and often more stressful than a shared approach (one person pays the cable bill and the other pays the phone bill and the vet bill – well it is her dog after all!). I even heard of one couple that would use the same credit card account then, at the end of the month, sit down and sort through all the receipts dividing up who owes how much for what then each write a check for their portion from seperate checking accounts – maybe I’m lazy but that seems like a lot of work!

In our house it’s our money, our bills, our debts, our budget, our goals, our successes and our failures. I think the biggest consequence of the separate money approach is the lack of a plan for the financial success of their family. Many couples who keep their money separate often avoid talking about difficult subjects like budgets, savings goals, and many non-life changing financial decisions they encounter in everyday spending. In my experience this slows down the progress to the goals they have since there’s less accountability with each other’s spending habits and usually they end up leaving money (sometimes a lot) to wander out of the couple’s life.

Sharing money and money goals in a relationship can help to build a stronger bond by eliminating barriers that may be building between the people involved.  This allows the couple to plan, dream, and work together as a team to accomplish goals and build trust that may not happen if they do not come together on all matters of the household.

And for those of you that are single and may be accountable to nobody I advise you get to work getting your finances organized and in good order too – believe it or not some people think that’s sexy!

What’s your take on shared vs. separate finances? How does your household function?