The following post is from Melissa Batai
The overwhelming majority of baby boomers merged their finances together when they got married. However, each progressive generation from Gen X to Millennials, have increasingly kept their finances separate after marriage. Turns out, the younger generation is on to something. There are five main reasons why you should not merge finances.
To Maintain a Sense of Independence
For some, keeping separate accounts allows them to maintain a sense of independence. This is especially important for two reasons. If you marry after you’re already established and have your own financial system, you may not want to upset that by merging finances with your partner. If it’s not broke, why fix it?
Another reason is to maintain some freedom. If you have your own money, you don’t have to ask your spouse if you can buy that tool box or get your nails done this week. As long as you’re acting financially responsible and paying bills, you can choose independently how to spend the rest of your money.
In Case of Divorce or Death
Keeping finances separate is also a way to protect yourself in case of divorce or death. My friend, Stacy, watched her father manage all of the family’s finances; her mother just wasn’t involved. Years later, when they divorced, Stacy learned that her dad had racked up a significant amount of debt in the marriage. She vowed to always keep accounts separate so that wouldn’t happen to her should she get divorced.
Being in the dark when it comes to finances is never a good idea, whether it comes to divorce or death. Elaine had a traditional marriage with combined finances that her husband managed. When he had a stroke and became incapacitated, she had no idea what bills were due, how to log into the accounts online, or even all of the accounts that they had. Keeping finances separate from the beginning can help couples avoid these types of situations.
Partner Isn’t Good with Money
The majority of divorces in the United States occur because of disputes about money. If one partner is a spendthrift and the other is a saver, they may bicker constantly about spending or not spending if their finances are combined. However, if each person has their own account using their own income, the saver can be more comfortable financially by focusing on saving her own money and building a strong financial future. The spender can be more comfortable because his partner isn’t constantly nagging him not to spend. He can spend his own money from his own income.
Partner Has Bad Credit
If you enter a marriage with a partner who has bad credit or who has previously filed bankruptcy, not merging accounts can protect the credit of the other partner. This may be important to both partners. For instance, my cousin, John, had previously filed for bankruptcy, while his new spouse, Rita, had stellar credit. They kept their finances separate, and when they bought a house, only Rita applied for the mortgage loan. She was able to get a low interest rate on the loan, something that wouldn’t have been possible if she had applied with John.
Partner Has Addictions
If your partner has an addiction like drugs, alcohol, or gambling, you would do best to keep your finances separate. While you may not be able to help him with his addictions and the outflow of money to fuel those addictions, you will be able to keep your own income and assets safe if you have separate accounts. This is especially important if you have kids or if you decide to file for divorce.
More people, especially millennials, are choosing to keep their finances separate. Although this is a change from previous generations, there are good reasons to choose to keep your finances separate.
My Question for You
Do you keep your finances separate or combined? Why? Any other reasons you would add to this list why it’s a good idea to maintain separate finances?