I love my wife. She is the love of my life. In April, we will have been married for 19 years, and we have two great sons. My wife is truly my soul mate, and I can't imagine myself with anyone else. However, when it comes to personal finance, she doesn't have a clue.
I'm not afraid she will stumble upon this post, because she would be the first to agree. When we first started living together I discovered that she was deep in debt. She had two store credit cards that were maxed out to the limit and she was upside down in a car loan with payments that were too high on a vehicle that was too expensive. She had no credit, so she got raked over the coals at the auto dealership. Meanwhile, I was driving a Chevy Impala that cost me $400 and the only debt I had was a student loan.
You might think that my wife's situation would have been a major red flag to me, but what can I say...I was in love. We got rid of my wife's credit cards, returned her car to the nearest Toyota dealership and made due with my Chevy. Then I did something that in hindsight was pretty ignorant. I let her manage the household finances and pay all the bills.
Things were OK for awhile, as far as I knew. I had Direct Deposit for my pay checks and she handled all of the finances. If I needed cash for anything, I just asked her if we had enough in the bank and then I would make a withdrawal from an ATM. Life was good...that is, until the bill collectors started calling our house.
My wife assured me that all was fine, there must be a mistake, she just mailed the payment, etc. This should have been another red flag, but this is my wife, and what is a marriage without trust?
One day, I came home from work and there was no electricity in the apartment. My wife assured me she had paid the electric bill. "Maybe they just didn't receive the payment yet," she said. Meanwhile, I was still in the dark about our finances. I didn't even know how much was in the bank. Looking back, I guess I didn't want to know.
This went on for several years until finally, things reached the breaking point. We received a notice from our landlord that we were going to be evicted unless we paid our back rent. As far as I knew, rent was being paid like clockwork. I called the landlord to find out how far behind we really were. The news was stunning: they had not received rent for six months. Against my better judgment, we borrowed money from family to pay the back rent. A few weeks later, we received an eviction notice. We were told the rent had still not been paid. I protested, and assured the landlord we had indeed paid all six months of back rent. However, we had paid with a money order, the receipt was nowhere to be found and we had no proof of payment. To this day, I am convinced someone pocketed that money order. Nevertheless, the result was the same: we were going to be homeless, and we had nowhere to go. I had always heard the saying that most Americans are one or two paychecks away from homelessness. I just never thought it would apply to me.
Fortunately, I received a job offer in another state, and we moved and did find another apartment right away. It was at that time that I took a drastic step: I would be taking over the household finances, the checking account would be in my name only, and I told my wife she could get her own banking accounts. Household bills would be paid through my account, and I would let her know how much money I needed from her to cover them. To say she was angry would be an understatement.
However, the bills got paid on time. In fact, most were paid early. My credit score started to improve. We built an emergency fund. I balanced my checkbook regularly and made my wife aware of all of our finances...how much we owed, to whom, and how much was in the checking account, down to the penny. One day, she said something that caught me off-guard.
"I never should have been in charge of the finances. I had no idea what I was doing. You're doing a great job." After months of expressing bitterness over not having a joint account, this was a pretty stunning admission on her part. She still gets comments from some of her friends and other people who know her when she tells them we have separate bank accounts. "You can't be married and not have a joint account," one told her. "I wouldn't stay married to my husband if he didn't give me access to all of our money. Your marriage will never last." To be honest, we've never been happier. My wife DOES have access to our money, but she is held accountable for every dime she spends. In other words, it must all be entered in the checkbook register, and there is no hiding how much is being spent. It's a system that works great for us.
These are the lessons that took us nearly 15 years to learn:
Talk about finances with your spouse, BEFORE you get married. Determine if you have the same financial goals, how money will be handled, how expenditures will be accounted for, and if a joint account is for you. Some people are savers and some are spenders. The spenders should not have total control over the checkbook.
Pay the bills together. This doesn't mean you both have to walk the electric bill to the mailbox, but sit down together at least on a weekly basis, and go over the bills due, payments made, and amount in savings and investments. Total disclosure is the key.
Just because you're married doesn't mean you need a joint checking account. That system may work for some couples, but not for others. Some couples have their own bank accounts for "their" money, and also a joint account for household bills. Determine what works best for you. There is no one "best" way.
Learn what you don't know. Couples don't instantly know about personal finance just because they are married. Don't just "figure it out as you go". If you don't know the first thing about setting up a budget, saving for retirement or buying stocks to save money for the children's education, ask for advice from a competent financial planner. It's OK to ask for help. You might also consider taking a class at the local community college about personal finance or financial planning. Doing it before you get married or start living together is best, but couples that have been married for several years can do this, too. It's never too late.
Money problems are often cited as one of the top reasons for divorce in the U.S. With some pre-planning, education and total honesty about finances, you can defeat money problems without destroying your relationship.