Boy, this can be a tough one.
I came into marriage with some baggage from my childhood and a vision for what it meant to be a professional woman. Both of these put me in opposition to the ways couples traditionally treat money in their marriage.
First, the baggage. My parents fought about money . . . a lot. It was a constant undercurrent in their marriage. My Dad was what we’d call frugal today. My Mom was more towards the middle on the frugal-spendy spectrum.
I met my husband when I was barely 22. I had graduated cum laude, passed the CPA exam before graduating and landed a position in what was then a Big Eight public accounting firm. I wanted to be in charge of my destiny.
The future Mr. Ms. Liz was a super saver; we’d call him frugal today. He has become a bit more moderate over time. I started our marriage more towards the middle of the spectrum and have moved more towards the frugal side as I’ve gotten older. I didn’t want to have to negotiate my financial needs and wants with him.
So when we married, we decided to keep our money separate. We opened a joint account and paid the house related (mortgage, taxes, utilities) bills from that. We each contributed to the joint account based on our relative salaries. When Mr. Ms. Liz made twice what I did, he contributed 2/3 and I contributed 1/3. Other expenses (food, boat, vacation home, etc.) were split 1/2 and 1/2. We settled up these other expenses at the end of each month.
We were free to do what we wanted with the rest of our money. He never got upset when I went shopping–in fact he’d usually request a fashion show (though fashion is an overstatement when it comes to my wardrobe!).
We invest independently of each other and have different philosophies.
I’m an invest it and let it ride girl–almost all of my money was in the stock market until very recently. Even in retirement, I have three years of expenses in cash, 10% in a balanced fund and the rest in stocks. This is very aggressive for a retiree but I subscribe to the philosophy that the market always goes up. I also know I will not sell on dips because I’ve been through some crazy market gyrations and held on.
He is more conservative and holds more cash and bonds than I. He has also attempted to time the market and has missed some large dips as a result (but he’s also missed some significant growth). He recognizes now that he would have been better off to just let it ride.
We balance each other out. I don’t know if I would have been comfortable being so aggressive if he wasn’t more conservative.
Our money is separate but it doesn’t mean we’re not on the same team. We each budget, track spending and calculate our net worth regularly. We discuss our spending and investments and celebrate our milestones together. I was able to get comfortable with retiring in part because of the resources he has. He would help me if I got into a bind with cash flow; as you just learned, he has cash sitting on the sidelines.
This works for us because we don’t mind the pesky bookkeeping and because we came to have similar philosophies for saving. If one of us had blown the rest of our money and not prepared for retirement, it wouldn’t have worked. One would have had to carry the other in order to retire or we couldn’t retire at the same time. Though Mr. hasn’t fully retired yet but that’s by choice, not by necessity.
I’ve been thinking about other methods that would have been easier but still give us the autonomy that we needed. I think we could have put our money together and come up with an allowance for personal expenses, gifts and such. It would have had to reflect that it’s more expensive to be a girl. Just look at the cost of hair maintenance if you need proof!
How do you handle money in your marriage? What works for you?