“Our Money:” When Couples Commingle Finances

In an episode of the television show Portlandia entitled “Sharing Finances,” the unemployed Doug and his breadwinner girlfriend Claire decide to open a joint bank account after the idea is propositioned marriage-proposal-style. Things go downhill, however, when a charismatic salesman talks Doug into splurging on a hot tub, and Claire comes home to find a jacuzzi in her front yard containing her boyfriend in swim trunks.
While this is obviously an exaggeration of the experiences of most individuals, sharing finances is a serious conversation that every couple, whether married or in a serious relationship, should have, and should have early.
According to an article published by the Wall Street Journal, while it may seem like financial issues are one of the less emotional aspects of a romantic relationship, that is not always the case. According to the article by Cheryl Winokur Munk, combining finances means that a couple must have financial trust and each party must be willing to compromise and offer solutions when issues arise and must “avoid being judgmental” if their partner has different opinions than they do regarding spending and saving. Couples also need to recognize that if they are going to combine finances, “their money” will become “our money,” and relinquishing control of money in such a way may be harder for some than others.
Before combining finances, however, the articles quotes experts in stating that each party should “meticulously track expenditures and savings” to get a good idea of each person’s spending, saving, and debt habits. Next, the couple should discuss their “priorities for saving and spending, so they can come to an understanding about what they want to do moving forward and where they want to end up.”
A study conducted in 2018 by Fidelity Investments made some interesting findings. First, 73% of couples surveyed who had joint finances stating they “communicate well with their spouse.” 13% of couples stated they found it difficult to discuss finances and spending with their spouse. 56% of the individuals surveyed stated they felt an obligation towards their partner to assist in paying their partner’s debts, but only 33% of those surveyed expected a partner to help pay off their debts.
The study also looked at gender and generational factors. For example, a slightly higher number of male Baby Boomers (33%) stated they are the primary day-to-day spending decision-maker in their relationship than Millennials (29%) and Generation X (29%). Interestingly, the percentage of women polled who claimed to be the primary day-to-day spending decision-maker did not vary widely between generations, with 21% of female Baby Boomers, 26% of Generation X, and only 22% of Millennials.
As for retirement, 38% of male Baby Boomers, 34% of male Generation X, and 41% of male Millennials stated they were the primary decision-maker for long-term financial planning, like retirements and investments. This was in contrast to only 18% of female Millennials, 22% of female Generation X, and 15% of female Baby Boomers.
Some couples keep finances separate for their entire marriage until retirement, then decide to combine them, which can be a difficult transition. For example, even if spouses made similar incomes during the marriage, one spouse may have saved more for retirement than the other. One other example is if one spouse sacrificed saving for retirement by taking off work to care for children. This is where emotions can come into play and where compassion and empathy for partners towards one another is important. The primary breadwinner during the marriage may feel shorted by a perceived lack of contribution for the caretaker spouse. The caretaker spouse may then, in turn, resent the breadwinner’s feelings, as the caretaker sacrificed for the children. It is important that couples in these situations really listen to and take to heart the feelings of the other.
In addition to general empathy and compassion, keeping communication open is crucial. Many of the couples interviewed for the Wall Street Journal article stated that they had meetings together to discuss finances. Again, while formal meetings about money may not seem romantic, keeping lines of communication open can dramatically decrease the changes of issues down the road.
Parties also need to be aware of joint debts. In Nevada, absent a prenup and with some exceptions, property obtained during the marriage is community (i.e., both parties are entitled to half). But this means debts incurred during the marriage are also community – even if they are only in one spouse’s name.
Millennials in particular, per the Fidelity study, worry about debt, especially student debt. 36% of Millennials stated concerns about paying off general debt, while 24% were concerned about student debt specifically. 47% of Millennials also reported being concerned about having enough money to pay for their child’s college education.
It was Generation X, however, who were most concerned about having enough money for retirement, followed by Millennials, then Baby Boomers. In addition, 63% of Generation X and 51% of Baby Boomers shared concern about paying for health care after retirement. Though less concerned, 46% of Millennials shared this concern.
Overall, however, it appears that most couples surveyed were optimistic about their finances. 47% of individuals reported their household financial health as “very good,” with 22% rating it as “excellent.” 26% reported the financial health of their household is only “fair,” and only 5% stated it was “poor.”
Couples were also asked about whether they argue about money and spending. 46% of couples surveyed stated that money was their “biggest relationship challenge,” with 67% reporting they argue about money. Dealing with debt is “one of the biggest stressors in day-to-day life” according to the senior vice president of lifetime client engagement at Fidelity.
It is important for married couples to keep track of the other’s debt, and to do something if, as in the aforementioned hot tub episode, one party’s spending gets out of hand. If you have questions about community property and debts, how to avoid liability for a spouse’s debt, or similar issues, an experienced family law attorney can provide options and advice.