Two weeks ago, I started a discussion on sharing finances in relationships. A BMO survey found just 1/3 couples share most of their financial accounts. The rest are evenly split between sharing just some finances, or sharing nothing at all.
The survey stated nearly 70% of non-sharing couples would start sharing if it saved them more than $15 a month. Between tax efficiency, account fees, planned saving we know a couple can save much more than $15 a month sharing finances. The long term benefits of working together are substantial.
The survey also shared some interesting reasons for not sharing finances. No surprising, independence and fighting over money decisions were at the top of the list. So I talked about these issues last week. Another one that scored high is the fear of a break-up.
Makes me wonder if we plan on breakups when we enter long-term relationships... Maybe an unfortunately reality of our footloose, commitment-free, marinated in debt, financially upheaved society?
When You Should Have Separate Finances
There are couples that should have separate finances. Typically they came into their relationship with very lopsided finances. They are smart people. So they entered into a legal form of marriage contract.
This is the first thing all financially unbalanced couples always do. Go to their lawyers, draft conditions, review these extensively with their individual lawyers, sign, witness, and finally file same away at each law office. Laughably not!
Actually--despite a huge increase in later in life relationships with undoubtedly lopsided finances--statistics show less than 10% of all relationships are bound by enforceable relationship contracts: prenups, cohabitation agreements, marriage contracts, etc. And guess what... without these legally binding agreements in place pretty much everything is up for grabs. That includes retirement accounts, the successful business one partner ran for years before even meeting the other partner, shares in family businesses, your mansion that your squeeze moved into, your philatelic collection, everything!
If your finances are lopsided, especially before your romance started, get a relationship contract done! Don't ever count on verbal assurances--amnesia is real!
Moose Tip: Start the discussion with a nice bottle of wine.
And When It Doesn't Matter...
However, if you are one of the more than 90% of couples who don't have a legal contract governing your assets in your relationship, just share your finances. There is no financial or substantial legal benefit in not doing so. Working together on finances is likely to prevent a lot of problems that could lead to a relationship failures.
Take the leap and share your financial accounts, start reverse budgeting now, teach each other about wise investing, discuss all major financial decisions, respectfully hold each other accountable, and trust each other's daily choices. This is the recipe of millionairism for long-term, bottom up successful relationships.
After a string of articles blowing past my 500-700 word target, finally we've got a shorter post! Come back Monday to read about the link between housing, personal savings, and Alpenhorns.