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When it comes to how to handle money as a couple, advice runs the gamut from one extreme to the other. Talk to lawyers (especially divorce lawyers) and they’ll probably tell you to keep all of your money separate. Talk to your local priest or minister and he or she may say you must share everything with your spouse.
There are some edicts, however, that always ring true. The rules below will help you not only have a better financial life together, but may actually help you do more lovin’ together.
It’s not so much how you divvy your money up, but that you both agree on a method and stay informed.
Some women marry later in life and, as they’ve been paying their own way and saving and investing for 15-plus years, are happy to keep their finances completely separate. Some other perfectly happy gals walked the aisle in their 20s and immediately blended their finances with their husbands. And then there’s me. My husband and I put money into a joint household account to take care of household bills and goals, but also keep our own personal accounts—the same when it comes to credit.
Here’s what matters: does it work for you both? If it does, you’re probably OK. But, if you don’t like your financial arrangement with your spouse or partner, have that discussion and change it up.
However, if you’re OK with things because you prefer not to know a thing, it’s time for your wake-up call. I had a male guest on my show once, a certified financial planner, who told me that his wife knows nothing about their finances—nothing! My response, “WHAT?! How could you?!” (I liked the guy, but he went down several notches in my book after this revelation.) He said that she was fine with it. She didn’t want to know. This is the only arrangement that should set off alarm bells. Even if you’re a stay-at-home mom, you must know at least the basics of where the money is, how much there is, and where it’s going.
Why? Because you cannot afford to not stay informed, no matter your financial arrangement. We live longer, are more likely to have to care for children and aging parents and we’re more likely to have less money in retirement. The odds are stacked against us. Find an arrangement that makes you both secure and informed, and you’ll be happier.
Someone has to be in charge
Every household needs a Chief Financial Officer. And no, it shouldn’t automatically be the guy. Which one of you is better with money? Which of you always pays bills on time and has a great credit score? Managing the money can feel like a chore if you’re always saddled with doing all the work, but there needs to be someone who takes the initiative to keep track of everything—not just bill-paying, but your goals as a couple too.
Quelle surprise, I’m the head of the money-household at home—I make sure bills are paid, savings are made and I monitor our investments as well. And the majority of you say that you do the same. Pew Research found that women tend to rule the roost when it comes to making financial decisions. In almost half of all households women say that they are in charge of money matters while only 23% say their husbands are and 29% say it’s a joint operation.
But, that doesn’t mean that what I say goes, no matter what. Family CFO’s are not tyrants. As household CFO your job is to keep the team informed as well as to be open to changes and disagreements along the way. I make sure to communicate almost daily with my husband about financial obligations as well as upcoming big bills or purchases, and most fun of all, how we can reach goals together.
Stay informed. Feel secure. Two things that are sure to net you fewer scuffles and more snuggles!
Got a question for iVillage personal finance expert Carmen Wong Ulrich? Send it to her at email@example.com