There is no doubt that money is a leading cause of stress and divorce between married couples. Don’t believe me? This article talks about “divorce day” – the first working Monday of the year, where there are an increased number of couples looking to end marriages after the holidays.
There is a lot of evidence surrounding the fact that money causes stress and tension in relationships. I am not very interested in trying to convince you of this – I think society is pretty good at it already. Look to your social circle (family and friends) for this evidence, as I am sure you will find instances of financial stability and instability.
What I am interested in doing is telling you how and why my wife and I never argue about money. Yes, you read that correctly. We discuss, spend, and save money, but none of these ever lead to arguments.
I want to make a few things clear before diving into this discussion:
- My wife and I have argued about money in the past. When I say we never argue over money, I mean to say that we don’t anymore.
- This plan might not work for everyone. I am not here to say that this post will end all of your financial arguments with your spouse.
- This post, along with the advice given, is not a substitute for professional marriage counseling. If you feel like you and your spouse need some sort of intervention by a professional, licensed marriage counselor, please seek one!
With that out of the way, here we go!
Separate Your “Spending Money”
I am a strong advocate of combining finances with your spouse. You and your spouse are one unit. Having combined finances provides visibility into the overall financial health of your unit. There should be no secrets here, and both you and your spouse should have equal access to viewing your financial statements.
However, combining all of your money in one place does have some flaws. What happens when your spouse wants to buy those trendy new shoes? What happens when you want to buy that new video game? Can you already visualize the conversation that you are going to have with your spouse and how it might turn ugly?
My wife and I completely avoid these arguments by separating our personal “spending money” from our combined money. Before we continue, I need to clarify what I mean by “spending” money…
At the most basic level, “spending money” is considered money that is spent on personal hobbies, interests, or luxuries that primarily benefit one person in the relationship. To further clarify, let me provide some example of what is and what is not considered “spending money” in the context of my marriage.
- I want a new video game. Where does this come from? My spending money.
- My wife wants an extra pair of shoes. Where does this come from? Her spending money.
- We want to go on a date to a new spot in town. Where does this come from? Our combined money.
- We have plenty of groceries in the refrigerator, but we want takeout instead. Where does this come from? We each use our spending money.
I purposely made point number 4 a bit controversial. We both agree that if we have the opportunity to make food at home and are too lazy to cook, we should be punished by using our “spending money” to order food. It seems harsh, but don’t forget that we are seeking financial independence. These types of sacrifices are necessary to achieving our goals.
Now that you have a basic understanding of what constitutes “spending money”, let me dive into two different ways to actually implement this system.
Separate Checking Accounts
Having separate checking accounts in addition to a combined one is my preferred method of separating out spending money. With separate checking accounts, I never have to worry about either one of us overspending on our “wants”.
How does the money get there? Every paycheck of mine gets deposited into three different accounts:
- Our combined checking account (we prefer Ally Bank for this).
- My wife’s personal checking account (she prefers Chime).
- My personal checking account (I prefer Simple).
(Note: I included affiliate links for Chime and Simple for which I may get a small commission for new signups.)
Let me tell you why I love this method, and one big reason it may not work for you…
Having separate checking accounts like I described above creates an “out of sight, out of mind” mentality. I never see my wife’s portion of this and she never sees my portion. This means that when I see a package at the front door in her name, it does not bother me. When I come home with a new video game, it does not bother her.
This also creates a hard limit to what we can actually spend per month. Since we don’t use credit cards for personal spending, the balance in our personal “spending money” accounts is all we get for the month. There are times where I want to buy something for myself and just can’t do it because I don’t have the money…. and that’s perfectly acceptable.
Obviously this method does not work for you if you or your spouse cannot direct deposit into multiple bank accounts. I, and many others, have the luxury of direct depositing my paycheck into multiple bank accounts.
How can you implement this today? The most important first step is to introduce this concept to your spouse. Before actually changing your direct deposit, you both have to be on the same page regarding the following:
- How much money will each spouse get per month? You might think that this would need to be the same for each of you, but it actually does not. Each of you should pick a number up to a maximum limit that you set that fits your individual spending habits.
- For example, if you and your spouse agree that the maximum should be $100 per paycheck for each of you, but you feel like you can get by with just $75, then just do it!
- There is nothing wrong with accepting the fact that you and your spouse have different spending habits. If you only need $75 and they need the full $100, that is perfectly fine!
- You both have to discuss what constitutes “spending money”. Like I said, my wife and I are very strict with this. I suggest you be strict as well. Regardless, you both need to clearly define what it means to use your own “spending money”.
- You both need to understand that what you get is what you get. No dipping into your combined account once your personal “spending money” runs out.
Notice how I keep mentioning “you and your spouse need to….”? This is a team effort that requires communication and understanding between the two of you.
Like I said above, this is my favorite method. If you are restricted to using one bank account, or do not like the idea of having three different checking accounts, please keep reading!
Create A Budget For “Spending Money”
If keeping only one checking account is something that you need or want, then this method best suits you. Keep in mind that this method only works if you are already diligently tracking spending. If you are not, I recommend using either Mint or YNAB (“you need a budget”). Please do not consider this method until you start tracking your spending.
If you are budgeting, this method is pretty simple. Just create a monthly budget for each of you using the method you already use. Then, whenever you look over your spending (daily, weekly, whatever), just sit down with your spouse to sort out which purchases belonged to your “spending money” and which to theirs. Tada! Done!
Not so fast…. Let me tell you why I like and do not like this method.
I like this method because every dollar gets accounted for in your budget. In the separate checking account method, I do not track our individual “spending money” accounts in mint because it is such an insignificant amount of money and it is isolated from the rest of our money and portfolio – and once the account hits zero, it’s done until the next check, essentially worry free. If you are the type of person that wants every dollar tracked no matter what, then this is for you.
I do not like this method because it can be easy to overspend and there is more room for flexibility. Having more flexibility might seem good, but in this case it is not. Imagine a scenario where you only have $45 left in your budget for your personal spending and you see an awesome new pair of shoes for $50. You might think “oh it’s only an extra $5”. What’s wrong with $5? Nothing per se, but that mentality is exactly what pulls people away from their financial independence goals.
In the scenario above, the separate checking account method does not force you to exercise your willpower. The shoes are $50 but you only have $45? Too bad, no shoes for you. Wait until the next paycheck.
If you and your spouse have the willpower to not overspend, can only use one checking account, and must account for these dollars used as “spending money”, then this method is for you. Notice that I used the word “and” and not “or”. I believe you must fulfill all of the requirements above to make this successful.
I really hope you were able to understand the concept of “spending money”, the different methods to track and use it, and the reason why separating it out of “combined money” has blessed my spouse and I with no money arguments!
I truly believe that this system is flexible enough to provide you and your spouse a level of control and spending power that will enable you both to argue less over how you spend money. Maybe implementing this system successfully will give you both the confidence to discuss money in other ways that you did not think possible – like investing, living frugally, or striving to achieve financial independence.
Let me know what you think below!