A couple’s choice to pool (or not pool) finances is typically the result of multiple factors such as past relationships, personal preference, parental handling of money, debt, or divorce. Someone who grew up in a home with joint finances might see it as the norm, whereas a person raised by a single parent might subconsciously see individual finances as preferential.
Still, it’s more common for couples to pool their money than not. As Psychology Today notes, around 80% of co-residential couples pool their money into a single household account. Of the remaining 20%, around half pool some of their money and split the rest while the other half keep finances separate.
If you’re in the 20% who doesn’t share their money and happy where you’re at, then good for you. But, if you’re a married couple or a partner in a relationship enduring money stress, now may be a good time to rethink your family finances.
At the end of the day, there are advantages that come with sharing your money – some of which have the potential to make your life better. Here are a few.
##1. There’s no more haggling over who pays for what.
If you maintain a single household and share everything in the home, deciding which expenses to share can be a point of contention. Who pays for shared experiences and purchases like dinners out, new furniture, diapers, and daycare for the kids? While couples who maintain separate accounts may wind up bickering over who pays for each component of their lives, couples who pool their money can avoid those conversations altogether.
##2. Learn to work as a team.
Marriage is a partnership and a lifetime commitment, yet those who keep separate finances may feel as if they are working toward their individual goals instead of the greater good.
By pooling your finances, you have no choice but to work as a team. You start thinking in terms of “us,” and you learn to see individual financial decisions from your partner’s perspective instead of just your own.
##3. Eliminate inequalities due to gender.
Parents who keep their money separate may face special challenges when it comes to divvying up expenses, especially when it comes to the kids. As Psychology Today notes, women tend to accept more responsibility for the daily costs of rearing children; they are more likely to buy diapers, pay for daycare, or give junior cash for school lunch. This can be especially problematic in typical relationships where women earn less to begin with (ahem, wage gap).
By sharing your money, you can erase these disparities and share the full cost of having kids. Your children are equally your responsibility, after all.
##4. Work toward joint goals.
One of the most rewarding aspects of marriage is having someone to plan with – someone to dream with. Sharing your money fully allows you to plan a future together and create a list of actionable steps that can bring your goals to fruition.
With money kept separate, on the other hand, you may feel as if you are working toward individualized destinies that may or may not be intertwined. By sharing your finances, you are forced to envision a future that meets both partner’s desires.
##5. Smooth out income disparities.
When one partner earns significantly more than the other, it can be near impossible to create a lifestyle that’s fair for everyone. Either the higher earner ends up paying more than their share for nearly everything, or the one who earns less winds up paying more of their expendable income just to live.
Imagine a couple shares rent but one person makes 50% less than the other. In that case, the lower earner may wind up paying a much larger percentage of their income for their half of the space.
Obviously, sharing money eliminates problems caused by income inequality. When your money sits in a single pot, it’s much easier to decide what the family unit can afford.
##6. Sharing money promotes trust.
Unfortunately, financial infidelity may be more common than we think. According to a recent study from CreditCards.com, nearly 13 million Americans are possibly maintaining secret bank accounts or credit cards without their partner’s knowledge.
At the end of the day, keeping separate finances makes it easier to hide purchases and keep secrets, whereas joint accounts promote transparency and trust. A couple who pools finances together may be less likely to hide transactions or lie since they are jointly and individually accountable for the money they earn.
If you’re part of the minority that doesn’t share money with their spouse and are struggling to find balance, now is as good a time as any to rethink how you handle your money and why. While keeping separate finances might seem like the best way to promote fairness, there are notable downsides to consider including financial inequality, unhealthy competition, and a potential lack of trust. By joining your finances, you can get everyone on equal footing and start building a life you’ll love.
Not sure how to go about drafting your family’s financial plan? We’ve got more tips for married couples looking to create a budget that works here.
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