“It’s good to have money and the things that money can buy, but it’s good, too, to check up once in a while and make sure that you haven’t lost the things that money can’t buy.” -George Lorimer
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There are fights in a relationship that stick with you for years or forever. This was one of them. I think I was more scared than anything. The idea of combining finances with another person… It didn’t matter that we’d been in a relationship for three years. It didn’t matter that we’d already moved in together. When the conversation came up, I panicked and tried to push Anna away.
I needed to grab some computer equipment for a customer. So, I walked down the hallway to the stairwell and headed up to the third floor where our storage room was located (it took up almost an entire floor of our downtown office building). The room was packed floor to ceiling with laptops, desktops, monitors, and other computer accessories. It was a bit of a chaotic mess because we’d order tens of thousands of dollars of equipment at a time. Pallet after pallet after pallet would show up in one order, and we’d hurriedly unload them to some area, with the intent to organize it later. But it never happened.
This chaotic system also allowed one of our co-workers to steal and later pawn dozens of laptops without anyone noticing for years. But that is a story for a different day.
It all began so innocently.
*Buzz Buzz (phone vibrating)
Adam, Hey honey, how are you doing?
<After some pleasantries>
Anna, What are your thoughts about combining finances?
In that moment, I felt like I was in the smallest room in the world. My head started pounding and I couldn’t think straight.
The first thing that came out of my mouth was, Absolutely not…
But I didn’t stop there… I proceeded to go on to say how I didn’t trust her to handle our joint finances.
That was definitely a low point in our relationship. It didn’t help that my coworkers were walking in and out of the storage room, hunting around for equipment that was all over the place. Circling around me like sharks waiting to tear my limbs off and beat me with them because I’m an idiot. If we had broken up at that point, I wouldn’t have been surprised. It took months for our relationship to recover, and to this day, I’m still amazed that Anna forgave me.
The thing is, Anna had really thought it through. She had a plan—a solid plan. In fact, it’s the same plan we still use today.
Background
Before combining our finances, I had my own setup: a checking, savings, and money market account with a credit union, which offered better monthly interest rates. I also had two credit cards—one with no international fees for our annual trips to Mexico and my occasional snowboarding trips to Canada, and another with cash back that I used for everything else. On top of that, I had a 401(k) and a Roth IRA, where I contributed a large percentage of my paycheck each month because I understood the long-term benefits of saving aggressively early on.
Anna, on the other hand, had a checking and savings account with a big-box bank, plus a handful of credit cards that periodically carried monthly balances. We were, without a doubt, on opposite ends of the financial spectrum.
At the time, I might have known more about finances, but it turns out Anna didn’t entirely trust me with money. Anna was thinking about our long-term future together and a solution that would work for the both of us. Me, where’s my hammer?
I had a stable paycheck every two weeks. I knew exactly what my expenses and deductions were. I allocated money from each paycheck for savings, retirement, and even fun money—$100 per paycheck or $200 a month. Since my finances were consistent month after month, I didn’t feel the need to track them.
Anna, on the other hand, was paid hourly, which required her to track everything at a much more granular level.
The System
The system she proposed, which we didn’t adopt until months later, was simple yet brilliant. We’d have one joint account where our paychecks would be deposited. All shared expenses would come out of this account. Beyond that, we’d maintain our own separate financial accounts and credit cards. From each paycheck, we’d receive an allowance—money we could spend however we wanted.
This system gave us the freedom to spend our individual allowances without needing to justify or consult the other person. No, asking for approval, getting reimbursed, or explaining why we bought X, Y, or Z. Plus, it made holiday and birthday shopping so much easier—no awkward moments where the other person sees exactly how much you spent on their gift. I remember those conversations after Christmas with my parents…
When we started this system, we didn’t even open a joint credit card. That came years later. Instead, we’d categorize and tally up shared expenses like groceries and gas from our personal credit cards. Then Anna would transfer money between our accounts to balance things out.
Legal
Neither Anna nor I have a legal background, so we’d strongly recommend seeking advice from someone with legal and/or financial expertise if you’re considering combining finances. Here’s why: by combining finances before marriage, we unintentionally blurred the lines of ownership. If we ever divorce, all assets before marriage are fair game. Compared to combining assets after marriage where there is a clear separation.
In our case, we didn’t have many assets at the time. But if one of us had owned a house, had significant account balances, or ran a business, things could have gotten messy. Two ways to avoid this type of situation are:
- Getting married and then combining finances
- Signing a prenuptial agreement to clearly define whose assets are whose.
Now that we’ve moved in and joined finances, in the next post, we’ll talk about how we got married and enjoyed our honey moon for less than $10k in Mexico. Talk to you next month!
