My wife likes to shop around and works to save money on all her purchases. I shop like most guys. I go into a store, find what I want, and buy it. That is just one example of how different our spending habits are. To avoid arguments over money and how to shop or spend it we agreed a long time ago to each have our own "Mad Money" to spend with no questions asked.
Every month, we each get a certain amount of “Mad Money" that we can spend with no questions asked. I track my on the credit card. She takes out cash and squirrels it away in a tattered up old envelope to spend on special occasions. Not only does that reduce conflicts over day-to-day spending, but it also allows us to surprise each other with gifts. I never have to see a credit card charge for a present that she has thoughtfully found for me, and ruin the surprise. She never has to know how much I actually spend on whiskey.
We are not alone in finding this middle ground between keeping all our finances separate and throwing everything into one pot. "It seems more common now for couples to decide that a combination of both separate and together works best for them,” says Megan Ford, past president of the Financial Therapy Association and a couples and financial therapist at the University of Georgia’s ASPIRE Clinic.
Most people in committed relationships combine some, if not all, of their finances, but 40% couples with joint bank accounts told a TD Bank survey in 2014 that they also had separate accounts. Younger people may be more likely to keep things entirely separate: while 76% of all couples told a 2016 TD Bank survey that they shared at least one account, only 68% of millennial couples said they had a shared account.
Separate "Mad Money" account work best when people trust each other, agree on their big financial goals and together determine amounts they can spend that will not crater the family budget, says Willa Williams, an accredited financial counselor with Trinity Financial Coaching in Grosse Pointe, Michigan. Separate slush funds work best when people trust each other. Williams also recommends setting a limit for how much can be spent out of joint funds without consulting the other. Like “no questions asked” money, the amount can be adjusted up or down depending on the couple’s situation. “Typically, I recommend couples to agree on a specific amount, usually $100, before reaching out to each other for discussion,” Williams says. “In good times it can be more, but when things are tight, the amount should be lowered.”
What separate money should not be is secret money. People who are supposed to be on the same financial team should not hide money, or debts, from each other. My wife and I have online access to all of our financial account, and we routinely discuss our spending and savings.
The end result with each of your having some "Mad Money" is to have some financial freedom, and to enjoy life and splurge occasionally. But you must have trust in each others judgement and know that your overall joint financial situation is secure.
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