Could di­vid­ing your fi­nances save your re­la­tion­ship?

More and more cou­ples are keep­ing sep­a­rate bank ac­counts—but there are ups and downs (and power strug­gles) with split fi­nances.

ELLE (Canada) - - News - By Sarah Tre­leaven

over the course of their six-year re­la­tion­ship, Vanessa Far­quhar­son and her hus­band, Ja­cob, have cy­cled through the key com­mit­ment mile­stones of mov­ing in to­gether, get­ting mar­ried and hav­ing a baby boy. But none of these events has changed how they han­dle their fi­nan­cial af­fairs: They have their own bank ac­counts and in­vest­ments and di­vide all bills right down the mid­dle, in­clud­ing their mort­gage, util­i­ties, prop­erty taxes and In­ter­net ser­vice. When they go out for din­ner, they usu­ally split the tab fifty-fifty, and they take turns fill­ing the car with gas and buy­ing gro­ceries. “We keep track of how much we owe each other, right down to a measly $10,” says Far­quhar­son, a 35-year-old writer from Toronto.

The fi­nan­cial di­vi­sions and def­i­ni­tions of “yours, mine and ours” are un­der­go­ing a rapid tran­si­tion as fam­ily fi­nances are shift­ing from the male-dom­i­nated model of pre­vi­ous gen­er­a­tions to dual-bread­win­ning cou­ples who typ­i­cally want to main­tain some level of fi­nan­cial in­de­pen­dence. It’s hard to be­lieve that un­til 1961, Cana­dian women weren’t able to ac­cess credit in their own name—and that the ex­is­tence of cou­ples who h

main­tain wholly sep­a­rate ac­counts would have been al­most un­think­able even 50 years ago. For a younger gen­er­a­tion of women whose moth­ers likely had less fi­nan­cial con­trol or felt they had to se­cret away pairs of newly pur­chased shoes in the back of the closet, it’s easy to see why mon­e­tary self-re­liance has be­come a pri­or­ity. And au­ton­omy is par­tic­u­larly ap­peal­ing for women who are in­creas­ingly ca­reer-fo­cused, mar­ry­ing later (if at all) and happy to con­tinue man­ag­ing their own fi­nances.

A 2014 TD Bank sur­vey found that Mil­len­ni­als (those aged 18 to 34) are more likely to open a joint ac­count for shared ex­penses be­fore mar­riage than pre­vi­ous gen­er­a­tions—yet, like 42 per­cent of cou­ples of all ages, many are also hang­ing on to sep­a­rate ac­counts, and the key rea­son is a de­sire to main­tain in­de­pen­dence. A ma­jor­ity of young Cana­di­ans keep some de­gree of fi­nan­cial sep­a­ra­tion from their part­ners, and a 2010 RBC study found that most use some com­bi­na­tion of joint and sep­a­rate ac­counts to man­age their money— while only 10 per­cent share all fi­nan­cial prod­ucts.

“There’s a per­va­sive be­lief that mar­riage ne­ces­si­tates a blend­ing of ev­ery­thing, but I think keep­ing sep­a­rate bank ac­counts can make for a nice re­minder that, ac­tu­ally, we are unique in­di­vid­u­als,” says Far­quhar­son, who also be­lieves sep­a­rate ac­counts can main­tain a lit­tle mys­tique. “I just don’t think my hus­band needs to be in­volved in ev­ery­thing I buy. I don’t want to have to ask him or feel guilty if I want to buy an over­priced onesie on Etsy.”

Kim MacDon­ald, a 36-year-old so­cial worker in Hamil­ton, Ont., says that she and her hus­band have joint and sep­a­rate ac­counts for just that rea­son—to avoid ar­gu­ments about ex­penses that the other might con­sider triv­ial. The cou­ple has been mar­ried since April 2012, and they share an ac­count for house­hold ex­penses, in­clud­ing gro­ceries, but have sep­a­rate ac­counts for things like hair­cuts, hob­bies and cloth­ing. “I would be both­ered if, for ex­am­ple, I packed my lunch ev­ery day and my hus­band used the money from our joint ac­count to eat lunch out ev­ery day,” says MacDon­ald.

So­ci­ol­ogy pro­fes­sor Rachel Mar­go­lis, 32, came up with a more so­phis­ti­cated di­vi­sion of fi­nances.

“I just don’t think my hus­band needs to be in­volved in ev­ery­thing I buy. I don’t want to have to ask him or feel guilty if I want to buy an over­priced onesie on Etsy.”

She and her part­ner—who have been to­gether for six years—both teach at Western Univer­sity, and when they moved in to­gether, they cre­ated a spread­sheet to track pay­ments made by each part­ner. They now con­trib­ute to joint ac­counts for shared ex­penses, like the mort­gage and util­i­ties, while also main­tain­ing sep­a­rate ac­counts and credit. “I think it works be­cause nei­ther of us ever feels like we’re be­ing taken ad­van­tage of, and we never feel strange about of­fer­ing to pay for things be­cause it all evens out,” she says.

Keep­ing fi­nances sep­a­rate might even pro­vide a safe­guard against con­flict. Cou­ples now fight more about money than they do about house­work, sex or even snor­ing—a 2014 Bank of Mon­treal sur­vey found that Cana­dian cou­ples are more likely to for­give in­fi­delity than a part­ner’s fi­nan­cial mis­man­age­ment. But re­search from Jan Pahl, a Bri­tish so­ci­ol­o­gist, in­di­cates that when fi­nances are split, women end up tak­ing on a dis­pro­por­tion­ate amount of fam­ily ex­penses and that ex­pen­di­tures still tend to break down along con­ven­tional gender lines. In other words, he pays for the cars and al­co­hol, and she pays for the kids—even if she makes less money.

Other ev­i­dence sug­gests that com­mit­ment can be com­pro­mised when love goes Dutch. A 2010 U.S. Na­tional Cen­ter for Fam­ily and Mar­riage Re­search study of over 1,000 cou­ples found that mar­ried cou­ples who do not pool their in­come are 145 per­cent more likely to di­vorce, com­pared to cou­ples with just a sin­gle shared bank ac­count.

Karin Miz­gala, co-founder of Money Coaches Canada, cau­tions that solo ac­counts can also lead to se­cret debt—when it’s your sav­ings ac­count, no one watches the bal­ance dip ex­cept you. “Cou­ples who man­age money to­gether tend to do it bet­ter; it’s much eas­ier to de­lude your­self when it’s all up to you,” she says. When she and her hus­band first mar­ried, they had trou­ble shar­ing fi­nances. “He’s an artist and was much looser with money,” she says. Com­mu­ni­ca­tion was the key. “It was only af­ter be­ing open and hon­est about what we wanted that we made it work.”

Har­vard Univer­sity mar­ket­ing pro­fes­sor and Happy Money co-au­thor Michael Nor­ton posits that cou­ples who pool their fi­nances re­port greater re­la­tion­ship sat­is­fac­tion. Nor­ton’s re­search shows that the more cou­ples com­bine fi­nances, the hap­pier they are: Cou­ples who share 80 per­cent are hap­pier than those who share 70 per­cent, and so on. The ef­fects can be seen even for h

cou­ples who are dat­ing—the more fi­nan­cial com­min­gling the stronger the in­ten­tion to marry. “It’s a re­ally strong sig­nal that some­thing good is go­ing on if I trust you with my debit card,” he says.

When Heather Livingstone, 32, and her en­gi­neer hus­band mar­ried in 2007, they didn’t share fi­nances. “It caused noth­ing but trou­ble,” she says, cit­ing dif­fer­ent spend­ing styles and dys­func­tional com­mu­ni­ca­tion. “I’m re­ally cheap and will spend hours look­ing for the best deal. He’s more of a ‘We need this, so let’s just buy it now’ type. I also like to track my spend­ing, and I’m way more likely to men­tion a pur­chase be­fore I make it.”

But when Livingstone, who lives in Prince Ge­orge, B.C., stopped work­ing five years ago to stay home with the first of the cou­ple’s two daugh­ters, things got tricky. “I had to ask my hus­band for money, which isn’t ex­actly good for a re­la­tion­ship,” she says. Since 2013, the cou­ple has pooled ev­ery­thing into joint ac­counts, and Livingstone says that she feels more like they are work­ing to­ward com­mon goals. “As a stayat- home mom you’re kind of vul­ner­a­ble, and I felt like I didn’t have the whole fi­nan­cial pic­ture. The money he brings in is my fi­nan­cial fu­ture, and it seemed weird to me not to have some know­ledge and con­trol. I’m also a bit of a wor­rier, and now that I can see ev­ery­thing, I re­al­ize there’s noth­ing to worry about.”

Still, fi­nan­cially in­de­pen­dent women (and their mates) on the cusp of se­ri­ous com­mit­ment need to think about what can go wrong. Di­vorce in Canada is on the de­cline, but ap­prox­i­mately 40 per­cent of mar­riages will end in that way.

“I want women to be­lieve that they need to have a solid fi­nan­cial foun­da­tion of their own,” says Gail Vaz-Oxlade, a thrice-di­vorced fi­nan­cial con­sul­tant. “You can­not be so tied to your part­ner that you could never find a way to leave, be­cause things hap­pen.” Vaz-Oxlade rec­om­mends a joint ac­count for shared ex­penses but sep­a­rate sav­ings ac­counts and no shared credit (other than a mort­gage)—but she also points out that the only di­vorce ad­van­tage to hav­ing sep­a­rate ac­counts is that your sig­nif­i­cant other won’t be able to empty out your ac­count. “My per­sonal fi­nan­cial in­de­pen­dence has al­ways been

“You can­not be so tied to your part­ner that you could never find a way to leave, be­cause things hap­pen.”

very, very im­por­tant to me,” says Vaz-Oxlade. “If I want to be a good life part­ner, that means be­ing able to stand on my own two feet fi­nan­cially.”

Prob­lems can also arise for cou­ples who mostly keep sep­a­rate fi­nances when one is ex­ceed­ingly out-earn­ing the other. If both part­ners con­trib­ute an equal amount of money to a joint fund but that con­tri­bu­tion amounts to 80 per­cent of one per­son’s in­come and just 30 per­cent of the other per­son’s, it can eas­ily lead to re­sent­ment be­cause it cre­ates two dif­fer­ent stan­dards of liv­ing.

Colleen Gau­thier, a 36-year-old who works in mar­ket­ing in Toronto, and her hus­band keep all ac­counts sep­a­rate, with the ex­cep­tion of a joint ac­count for their mort­gage. She doesn’t be­lieve that ev­ery­thing has to be shared in or­der to have a suc­cess­ful mar­riage—yet she still feels she has ad­di­tional fi­nan­cial stress be­cause she pays most of the house­hold bills out of her ac­count. “Some­times, I feel like he doesn’t know how much we’re spend­ing on things,” she says. “I’m the one who wor­ries.”

It isn’t just about keep­ing track of dol­lars and cents, of course. In­ten­tions mat­ter. “We of­ten have a be­lief that if we keep a lit­tle for our­selves on the side, then that’s go­ing to give us some free­dom,” says Nor­ton. “And there’s noth­ing wrong with that idea. But if you’re in a re­la­tion­ship and you feel like you need to keep an out, that’s a sig­nal that it’s not re­ally the right re­la­tion­ship.” If you’re not shar­ing a bank ac­count be­cause it makes sense for tax pur­poses or be­cause you don’t want to jus­tify ev­ery time you go for a pedi­cure, that’s one thing. If you can’t share a bank ac­count be­cause you’re wor­ried the re­la­tion­ship will break down one tear­ful night, it’s an­other thing en­tirely.

Even as some ex­perts ad­vise cau­tion, many of the women who main­tain largely sep­a­rate fi­nances in­sist that it has no im­pact on com­mit­ment. “Hav­ing chil­dren and owning a home to­gether is a pretty huge com­mit­ment that is hard to ‘get out of,’ and I don’t think sep­a­rate fi­nances would make get­ting out of the re­la­tion­ship any eas­ier,” says Gau­thier. Far­quhar­son agrees that a solid re­la­tion­ship is a lot more than shared in­vest­ments or per­fectly com­pat­i­ble spend­ing habits. “Whether or not you have a joint ac­count shouldn’t make or break a re­la­tion­ship,” she says. “I think if your com­mit­ment to a ro­man­tic part­ner re­volves around money, you’ve got big­ger prob­lems to deal with.” n

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