Money is an emotional subject, even for me. Before I launch into a conversation with my husband about anything financial, I take my own temperature to figure out if I’m running hotter than normal and, if so, why—because I know that at some point every couple fights about money. Still, if you set up your household finances according to a system that works for both of you, it is possible to reduce the stress that this subject puts on marriage. Talking about finances can even become an intimate way to plan your future together. First, of course, you have to figure out how to handle your accounts. Here’s how I do it, plus some things to keep in mind.
SEPARATE, JOINT OR BOTH?
Some couples—such as my parents, who shared everything during their four-decade marriage—can’t even imagine splitting up their cash. But increasingly, couples are choosing to put their money into multiple pots. In 2001, just 38 percent of married couples had more than one checking account; today it is 49 percent, according to Raddon Financial Group, an Illinois consulting firm. Many of the couples I know who take this route are in second marriages. “Usually when money is kept separately, there is some reason: ‘I’ve been burned before,’ or ‘My mother was left high and dry,’ ” says New York psychiatrist Gail Saltz, MD. “It doesn’t mean these people have no trust in their partner but that their trust has been injured overall. When you buckle your seat belt, are you saying, ‘I’m going to be in a car accident’? No, you’re saying, ‘I’m taking precautions.’ ”
I guess that makes me a seat belt buckler. My new husband and I use what I call the yours, mine and ours approach: I have a personal account, he has a personal account, and there’s a joint one for the household. I believe you should figure out how much it takes to pay the bills each month and save for your family’s goals, and then you should each kick in an equal percentage of your individual wages until you cover that household nut. (Having partners contribute a percentage of take-home pay rather than the same set amount can be fairer, because one spouse usually makes more than the other.) Whatever’s left over is yours to spend, save, invest or use as you like.
YOUR MONEY IS JOINED EVEN IF YOU THINK IT ISN’T
Almost all the assets you acquire during marriage are legally considered marital property, no matter whose name is on the accounts. This means that even if you’ve socked away $50,000 from your salary in your own account, it is still considered joint property if you accumulated it after your wedding.
There are a few exceptions. Inheritances are usually separate property, as are distributions from certain trusts and damages you receive from personal injury claims. You can also protect assets by not touching them. It works like this: If you come into a marriage with a brokerage account and don’t spend it, trade it or use it for family purposes, that money will in most cases remain yours alone. But if you even discuss with your spouse whether to sell some shares, it can be argued that part of the account has become marital property because a decision was jointly made about the money.
How the money will be divided if you divorce depends on where you live. In 41 states, called equitable distribution states, if the couple can’t agree, the courts (or a mediator) will decide how to divide the assets. In the nine other states, known as community property states (Arizona, California, New Mexico, Nevada, Iowa, Washington, Texas, Wisconsin and Louisiana), all property and debts are divided equally, 50/50. The issue is more complicated than this sounds, however; topics.law.cornell.edu/wex/table_divorce is a useful place to start your research.