My wife and I have been married for seven years this February. We get along great, except for one minor issue. Well, it’s not that minor. She spends a tremendous amount of money, which makes achieving our financial goals nearly impossible. We have a joint checking account and, as soon as our paychecks hit the account, she goes shopping. Fortunately, we don’t have any debt, but we’re struggling to save for our kids’ college, and I’m not that confident our retirement is looking good either. Do you think separate checking accounts are a reasonable solution? It seems like I’m abandoning her, but I’ve gotta do something.
May I just say, you’re incredibly level-headed given the situation you’ve just described. It’s as if you know most people have one aspect of their lives they struggle with. Your wife’s particular problem area happens to be money. Your language and viewpoint are very empathetic. And, as you surmised, your checking account is part of the solution.
For an embarrassingly long time, I believed if you didn’t trust your spouse with money, then you didn’t trust your spouse. I no longer believe this. There’s a reason why your wife struggles with money. I don’t know what that reason is and, to be honest, she may not even know what that reason is. That’s why handling your situation with grace and transparency is especially important.
You said it yourself: Everything else in your marriage is great. Assuming you really do have joint financial goals, and they're not just your goals disguised as your household’s goals, your wife shares your vision of what your financial future looks like, not just what your financial present looks like. Your goal should be to ensure your long-term goals get funded first. And lest others reading my answer feel as though I’m perpetuating arcane gender socialization by showing you how to dictate this to your wife, I gave this same advice last month to a woman who was struggling with her overspending husband.
Long-term stability is the key. This happens when you both contribute to employer-sponsored retirement plans, and it happens when you save or invest your take-home earnings, too.
I include college savings for kids into this line of thinking as well. Together, decide how much money you’d like to set aside each month for them, and then have it automatically deducted into a fund on payday.
All of your financial priorities should be fully funded this way. The “fully” part is important. Partially funding retirement while accommodating one person’s lifestyle makes zero sense.
For your wife, money may represent control. This is precisely why I believe this plan works better with separate accounts than a joint account.
If you do choose to go the separate account route, one I personally employ, ensure that your incomes are evenly distributed into both accounts and set automatic deductions from those accounts into savings and investing accounts.
Then turn your focus to expenses. Evenly divide your household expenses and have those expenses automatically deducted from both accounts on paydays, too. Whatever’s left is fair game to spend.
This method is a form of budgeting that removes temptation, as long as you collectively agree to avoid credit card debt and you disable overdraft protection on your checking accounts.
Many couples I've worked with over the years take a different approach and keep a joint account while employing an allowance system. It’s been my experience that an allowance system adds a tremendous amount of stress when someone's already demonstrated problems with financial impulse control.
Based on the way you described your challenge here, you should split your income evenly into separate accounts, set up automatic deductions to fund your investment goals and household expenses, and then allow both members of your household to do what they want with the rest.