Mindful Money: Yours, mine, and ours

By Mir
January 15, 2008
Category Mindful Money

Hopefully you read my recent post on tucking money away into savings regularly, and now you’re doing just that, even if you weren’t before. There were some great comments on that last post, some of which impelled me to say what I want to say today:

I don’t care if you work or you stay home; I don’t care if your spouse is a jerk or up for canonization; if you are married, you still need to have at least one bank account and one credit card in your name only.

There are a number of reasons why this is true (we’ll get to those in a minute), but the first thing you need to do in this matter is remember that money is money and love is love and confusing those two things never leads to anything good. I swear.

I think that long ago it used to be that people got married—and, more often than not, only the husband worked—and the man controlled the finances, giving the woman an “allowance.” Times started to change, women started working outside the home more, and there was a gradual shift to sharing everything; joint accounts all the way, for ease of bookkeeping.

Nowadays, the pendulum is swinging back towards people keeping their money separate, “just in case.” What a lot of people don’t realize is that “just in case” pertains to a lot of different possible scenarios.

Just in case of…

Divorce. The most obvious scenario of financial wreckage is divorce. This is also the scenario most people are least likely to consider as a possibility. I’m thrilled for you that you have a good marriage and/or your spouse would never do you wrong and/or you don’t believe in divorce. And I sincerely hope and pray that you never do get divorced. But it’s possible, whether you believe it or not. I didn’t get married planning to get divorced. Neither did anyone else I know who’s divorced. Just sayin’.

Death. It seems impossible that in the midst of having to cope with the tragedy of losing a spouse that anything could be even harder than the loss itself, but guess what? Here in the United States, when a person dies the IRS often freezes their assets. It’s a special little party trick of theirs, regardless of how much money is actually involved. And while those assets are frozen, if you don’t have a separate account, you might not be able to pay your bills. Huh. That doesn’t sound like much fun. (If you feel like delving deeper into tax ramifications, also go read this, which is really more about estate planning, but interesting nonetheless.)

Legal action. It’s highly unlikely that someone is going to come along and sue your spouse for something, and I hope it’s equally unlikely that your spouse has a hidden debt or gambling problem or addiction for which creditors are going to come knocking on your door. But it’s possible.

Are you starting to understand? Having separate money is not about not trusting your spouse. It’s about making sure that in the event of a tragedy that could impact your financial health, you aren’t left penniless and unable to borrow.

In my first marriage, we merged all of our finances. Every last penny. Every credit card. Because we loved each other, trusted one another, and figured that’s what you do in that situation. It worked fine for a very long time (although I never really liked being able to go through the bills and pinpoint exactly when my husband had run out on Christmas Eve or the day before my birthday to buy me a gift). And then we entered a crisis (I’m skipping over the sordid details here, obviously) wherein there appeared to be a greater-than-average chance that my husband was going to die. At that point I moved some money from our joint accounts to a personal account, because of that whole asset-freezing thing I mentioned. And just as a matter of record: I told him that I did it, too.

However. He recovered (good). But we ended up getting divorced (bad). And he hasn’t stopped accusing me of “stealing” that money, ever since.

Divorce stinks about a hundred different ways, but that was one huge way in which I never would’ve had to suffer if only we’d had separate accounts to begin with.

In my new marriage, we discussed opening a joint checking account, and how we’d handle it, and inertia and other things went into play, and it turned out that we just never got around to it. Instead, we divvied up the bills, kept our separate credit cards, and you know… I love this. It’s easy. It’s simple. We don’t argue about money. The money I make is mine and the money he makes is his and we’ve agreed on a fair split of our household expenses and it works. For us, anyway.

There are a lot of people out there who are home with the kids who say, “Well, I don’t make any of the money, so this doesn’t apply to me.” But it applies to you even moreso because you are truly without a financial safety net (earnings) in the event of catastrophe. At the very least, the wage earner should be depositing a regular amount of money into an account in just the stay-at-home spouse’s name.

How you handle that account is a matter of preference, I suppose. You should be tucking money into a relatively untouchable savings account, yes. But it would also be beneficial to be receiving a more sizable chunk of money and paying some bills out of that account, too. It builds up your credit rating, for one thing, and gives you a bigger cushion in the event of a problem.

[Sidebar: Remember not to assume credit cards are evil, and view designating a credit card for your grocery shopping or whatever as both a means towards building good credit and a handy way to keep track of your budget.]

Some people find a joint account the way to go, either on a practical or an emotional level. I’m not saying don’t have one; I’m saying don’t rely on just that. The most rued words in the English language, I believe, are “It will never happen to me.”

It might not. It probably won’t! But in case it does, be prepared.

(Folks have been asking, so just to let you know—retirement savings and life insurance will be upcoming topics in the next few weeks. All of this stuff fits together, but I can only cover so much of it at a time.)


  1. I think your advice is very good.

    Money is money and love is love. They are not one and the same, and everyone should always prepare for the worst and hope for the best… Especially when it comes to money….

    Thank you for a gentle reminder!!!

  2. Any thoughts about custodial accounts for kids? Reading this, I remember that my mom had a joint account with me but under my SSN, so just in case something happened to her, I’d have access to money. I should probably do something like that for my kids too.

  3. Lauren: My kids have accounts in their names/SSNs for which I’m the designated adult, and I’m not sure what happens there if something happens to me. Generally speaking, I assume children will be taken care of from life insurance funds in the event of a catastrophe. But I will look into that, because now I’m curious as to how it works.

  4. Thanks for this article – it comes very timely. My husband and I have joint everything, but I have been thinking lately I want separate everything, not only because he can see everything I get him for Christmas, but it would cut down on some argument, I think. I just haven’t figured out how to tell him and this article makes tons of sense.
    Now I am going to repeat something I saw commented on here a few weeks ago when you asked us what we would like to see (besides your sweetheart deals) – advice on which credit cards with bonus points/miles/benefits are really worth it and which ones aren’t. There are so many out there it makes my brain implode. Thanks!

  5. If your state has the same laws as IL (entirely possible it does not) then a child’s account is set up in one of two ways. The child and and the parent are joint owners, meaning that if something happens to one of them the other still has ownership of that account. This would be an account where the child has access to the account (can make withdrawels w/o parent’s signature). Or an account is set up with a parent as a custodian and the child as the beneficiary, so if the parent were to pass away, the child would receive the $ w/o having it going through courts. This would be the type of an account where they couldn’t make withdrawels by themselves until they are no longer considered a minor.

    I agree with what you said above but I would just make one change…have your spouse as a beneficiary on your accounts. In case of a death, they can have access to that $ faster. And since they are only a beneficiary, they have no legal right to the money unless you are dead. They won’t receive any info about the account, they don’t even have to know it exists. And then in the case of the divorce, all it takes is a quick trip to the bank to change the beneficiary to someone else. I’m not married and I have my father listed as beneficiary on my accounts.

    That’s all I have, hope it helps. I love this blog, always check it to find the deals!

  6. Holly: Great point! Thanks for chiming in. 🙂

  7. Great post… This is something I’ve been thinking about, as well. Like Candi, I just can’t really figure out how to go about it, and how to bring it up.

  8. I commented on the savings entry and I’ll say it again – listen, please listen. It’s not about love, it’s not about trust. Loving your partner MEANS preparing for the worst-possible-scenario. Separate accounts are for both of you, in case something happens to either one. It’s an act of love to say to each other, “sweetheart, just in case, I want to make sure we’ve done everything we can…”

  9. Part of my regular Saturday night schedule these days is to watch the Suze Orman Show on CNBC. She gives out a lot of good advice mainly in answering calls or letters from people who find themselves stuck in these types of situations. I’ve learned a lot of invaluable information. She’s pretty entertaining, though I found her a bit abrasive/abrupt at first (but maybe that’s just because I’m a Southerner, and we just react to folks that way sometimes).

    She’ll tell you exactly why she believes you should have term life insurance instead of full life, or a living revocable trust instead of a will, or when you should take advantage of your company’s 401k versus an IRA or pay off your mortgage instead of saving for the kids college education. Good stuff.

  10. Along the same lines though a bit more morbid…

    Everyone who has a child should have a will. In case the worst happens, it will make the aftermath a LOT simpler. And you can name your child(ren)’s guardians (both physical and financial) and make arrangements for their care.Come to think of it, everyone should have a will, not just parents.

    Having your estate go into probate just makes everything slower and more complicated.

  11. I totally agree. I’ve been through a divorce, and it ASTONISHED me how fast things went from amicable to not-even-slightly-amicable. It was EERIE. We started out being like, “We both want this; we can do this no problem; we agree on everything,” and within a week it was…awful.

    In my second marriage, I have my own checking and savings, in addition to our joint account, which I manage. I’m a stay-at-home mom, and I worry a lot about what would happen if…well, I don’t want to talk about it. But it’s stupid to be naive, is what I’m agreeing with here.

  12. Thanks Mir! Great advice. 🙂

    Dh & I are actually in the process of buying Life Insurance but we still haven’t had a will drawn up (and we have two young kids). I KNOW it’s important, but shopping around for one and making an appointment with a lawyer and having to drag the kids along to an appointment? Not going to happen.

    Are there any “do it yourself” wills out there that can actually be trusted? Can I draw something up and then take it to someone to be signed or whatever? I know I have to do this, but I need a push in the right direction. Help please!

  13. As something to consider when it comes to life insurance – while it’s a big help, it does take time. My mother died last year, and my sister and I wound up borrowing a lot of money from our father (my parents were divorced) in order to pay for her funeral expenses and the like. And then, because she died alone at home, there was an autopsy, and we had to wait for the autopsy report – which can take as long as six weeks! – before we could submit the life insurance claim.

    Thankfully my dad wasn’t in dire need of us repaying him right away, but I know in those first few days after my mom died, when my sister and I were struggling through not only our grief but trying to make all these arrangements and pay for them, neither one of us had any inkling that it would be over two months before my mom’s life insurance money would actually become available to us.

    So for any SAHM/Ds out there (and I’m one who just opened an ING account last week myself, thanks to pretty Mir), if you’re thinking, “Well, if heaven forbid my spouse passes away, we’ll have his/her life insurance to get us through,” keep in mind – you still have to pay your bills and keep your family fed until it actually arrives.

  14. To ChristieNY–I’m also needing to get a will done and have heard good things about legalforms.com.

  15. Thankyou for this post. I’m preparing to get married in June and we’ve already decided on separate bank accounts for personal use and joint for household needs. I’ll have to think about your idea of having completely separate money. Unfortunately I did not always see the wisdom of handling money this way. I was engaged a few years back, and because I was going to be in China for 4 months before we got married and wouldn’t have a good way to access my accounts other than to withdraw money, I suggested we combine our finances. He broke off the engagement while I was abroad, and although we weren’t dealing with large amounts of money (we were both students at the time) it caused undue drama. Lesson learned.

  16. I love your blog, pretty Mir, but my opinions on both joint accounts and the idea of keeping a credit card in order to have a good credit score to rely on differ from yours here. I like Dave Ramsey’s take on these things.

    There are ways around the frozen assets thing, and I’ve never heard of a tidy divorce. Credit and credit scores are another kettle of sushi…

    But I still heart your blog for the tips and absolutely love most of the advice as well.

  17. “Here in the United States, when a person dies the IRS often freezes their assets. It’s a special little party trick of theirs, regardless of how much money is actually involved. And while those assets are frozen, if you don’t have a separate account, you might not be able to pay your bills.”

    Not according to my bank. As I understand it, iIt depends on what kind of joint account you have. Is it truly owned by both of you, or is one of you merely a signatory? Can either of you sign a check, or do you need both of you to sign? (“or” vs “and”) In most cases it’s not going to be an issue – you’ll still be able to pay your bills. If you have a question, however, talk to your bank. They’ll be able to tell you what will happen with your joint account(s).

  18. Miriam: (Nice name, BTW) 😉 I’ve written a bunch about credit cards, and I do agree that if you cannot use them responsibly you’re better off avoiding them altogether. However, I think there are many perks to utilizing them which are worth it if one can use ’em right. As for joint accounts… well… once bitten, twice shy. There’s no question that my personal experience colors my view here. I don’t pretend otherwise.

    Jennifer: I know of lots of cases where the bank “shouldn’t” have frozen joint assets but did. And the time it takes to unravel the error can be critical if you have bills and no money. That’s my only point with that one.

  19. Another point to consider is whether you will have immediate access to your own parent(s)’ bank account if you need to. If they’re hospitalized, are you authorized to write checks from their accounts to pay their bills? Can you deposit a check that is written to your parent (will your bank allow someone else to endorse a check made out to your parent?) Think it though. If you are not on the account in some way, there can be trouble. Take it from someone who had to drain her own account to keep the rent paid and the water on, among other things, when her mother was hospitalized!

    And ladies, please please please set up a spousal IRA and create some sort of financial safety net that is just yours … your children deserve that security and stability in the worst-case scenario.

  20. My husband and I have seperate accounts, but it was because of laziness; when we got married we just never got around to getting to the bank. We split the bills, and it works out for us. Everybody thinks we’re strange, but we don’t fight about money. Ever. It’s never been an issue.

  21. The VERY IMPORTANT thing to remember, though, is that you should be doing this all aboveboard: I know of too many people who’ve been blindsided regarding their spouse’s ‘secret’ accounts and such. Lying about such things is never good.

    And to add to that: Make sure you have the account number of your spouse’s separate account. You shouldn’t be a signer on the account or anything, but if your spouse does indeed pass away, it will save you a lot of time and heartache (assuming he or she left you as the beneficiary of that money, of course).

    I’m all for separate accounts, but also all for honesty, and sometimes the two don’t mix so well. You seem to have done it perfectly, Mir, but there are lots of folks out there who don’t, and I’ve seen one too many cases where the fact that one spouse couldn’t keep an eye on where the other spouse’s money was going led to some ugly situations.

  22. TC: Great qualification there. I of course meant that everyone knows what everyone is doing, but you’re right, it absolutely bears repeating. Thanks!!

  23. Excellent advice, as always. I’ve been a bit lazy about this and the hubs has been putting me off, but I think it’s time to push the issue.

  24. All great advice. How much do you suggest having in each separate account? Enough to pay bills for a month or two for each of you?

  25. As far as the comments on wills, just do it! We had been meaning to do one since our son was born (he’s almost 8 years old!) and we JUST finally did it in December. Even though my hubby is an attorney, he couldn’t do my will because it may look like coercion or what have you. So, I called a few local lawyers and found one who does simple wills for $100 each, which included a consultation and then the executing/notarizing appointment. We brought in a draft but the attorney already had a basic format he uses, so he asked us a lot of questions about our wishes. It is not fun to think about your passing, but it is nice to know that our child will be cared for physically and financially should something happen. Great peace of mind!

  26. As for wills: Dh & I don’t have much in the way of assets, but we did draw up a will because of our two young kids. We avoided paying attorneys by going to http://www.Legacywriter.com

    I highly recommend their site – it walks you through everything and only costs $20 per person. If nothing else, it will give you a starting document.

  27. Did you use any fancy math to split up the bills? I would love to split the bulls but some odd reason “fear” not being fair!

  28. oops..not split the bulls…split the bills!!

  29. Thank you Laura for the website. Love it.

    Thank you Pretty Mir for all the other info.

  30. Mir, Thanks so much for all of this. You’re helping out tremendously on a topic that I know that I’m kind of embarrassed that I don’t know more about. Have I told you lately how pretty your hair is? ‘Cause seriously, it stops traffic, girl. 😉

  31. Just a side note to the whole joint account issue. This can be handy when filing your taxes. In order to have a direct deposit (the quick-cheap way to get your money) on a joint return, the IRS requires a joint account. And they highly prefer that the primary on the return (usually the guy) is the primary on the account.

    I’ve seen this cause unnecessary delays in getting refunds.

  32. We have a setup similar to Mir’s, but with one “in case of disaster” difference. Each of us is technically the joint accountholder on each other’s savings & checking accounts, so that if something happened, we would already just have access to that money. But for practical day to day purposes, we have separate accounts.

    Of course, the fact that we can’t legally get married leads to all kinds of other complications and expenses, like the fact that we’re each earmarking half our bonuses this year to pay for a lawyer to help my partner legally adopt the next baby as a second parent. And until that happens, said baby won’t be able to go on her insurance with our toddler, so both of us will be paying family rates for our insurance for a good chunk of this year.

  33. Steff– The ‘fancy math’ I’ve seen people use which seems to make sense is to make the amount each person pays match proportionally to their income.

    For example, if one person makes $25k/year and the other person makes $50k/yr (using nice round numbers here), then the total income for the household is $75k/year.

    Person #1 is making 33% of the total household income ($25k divided by $75k or one-third).

    Person #2 is making 66% of the total household income ($50k divided by $75k or two-thirds).

    When splitting the household bills, person #1 would pay 33% of the total bills and person #2 would pay 66% of the total bills. This way each is taking the same proportional chunk out of their income. Make sense?

  34. We have a joint checking and savings, but we also each have our own separate “allowance” accounts that gives us the freedom to make small purchases and such without consulting the other person. I googled joint checking and death of spouse and found the term “Joint Tenants with Rights of Survivorship.” In the event of spousal death, your joint checking should still give you access if you have the joint tenants with rights of survivorship. Divorce or separation would be another matter. We were married right after college, so we’ve always had a joint account. However, many of my coworkers and friends who were married in later life or remarried have separate finances. The allowance account is a nice compromise for us.

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