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.)