Relationships and investing are both complex subjects in their own right – mixing the two can sometimes be a recipe for disaster. Here’s what you should (and shouldn’t) do with your money when you are seriously involved with someone.



Love and money point one: Single versus joint accounts

Couples and experts alike have debated over single and joint accounts for as long as most people can remember. The two sides are both striving for the same goal – creating a stronger marriage while maintaining financial responsibility.



The arguments go something like this:

1.) Joint accounts create a sense of unity that is vital to a relationship. If you separate the money, you take away a degree of integration that should be present in any long-term relationship, or

2.) Separate accounts allow each the ability to retain their independence, actually strengthening the relationship.

Which side is right? That depends.

Before you can even consider planning a financial future with someone, you have to look at what type of personality you each have. If you managed your finances, made your own investment decisions, and had qualified retirement accounts before you got involved, you will probably be very hesitant to give up that control to anyone – including the person with whom you may spend the rest of your life. On the other hand, if you were prone to spur-of-the-moment spending and liberal use of credit, odds are you would more readily opt to open joint accounts. In the end, the accounts should only be merged if (and this is absolutely vital) both parties have the same type of financial personality.



Love and money point two: Both parties should be accountable for the money



Realise this doesn’t mean that one of you has the right to ask for money whenever you feel like it. Often, I’ll receive letters from couples who complain that the husband or wife feels like a child receiving an allowance. In some cases, this is a valid argument. More often than not, when the entire story is told, it turns out that the party in question simply cannot handle money.



Love and money example: The story of Kent and Elizabeth

We can all take a lesson from Kent and Elizabeth Washington, a real couple whose names I’ve changed. Before they met, Kent owned a restaurant and made around $40,000 a year. His wife was an elementary school teacher who brought home about $23,000. Elizabeth was given $200 every week to buy groceries, and take care of small household expenses. She became so frustrated at receiving her ‘allowance’ that she actually gave Kent separation papers because he refused to change the way the finances were run. She felt that, as an educated woman earning her own salary, the money was rightfully hers.


The truth of the matter was, at one point, both had separate checking accounts. Elizabeth took her weekly paycheck of $442.31 and deposited it into her account, just as if she were single. The total household expenses were just over $35,800 annually including rent, food, etc. Because she brought in 36.5 per cent of the income, Kent decided that she should pay the same percentage of the bills. This worked out to around $13,067 annually. Two weeks into the new arrangement, Elizabeth had spent her paycheck and not paid any of the bills. She went to her husband and told him he needed to pay them. Kent refused. In the end, the bills were not paid, and she had no money left. This led to the current arrangement of an “allowance”.

The moral? As cruel as this sounds, Kent was absolutely right. If you or your spouse cannot be responsible with the finances, you do not deserve to have control over them if you have any hope of building wealth as a family, securing a comfortable retirement. This is especially true if you have children. The fact of the matter is, if Elizabeth had been on her own, her monthly expenses would have been higher because the cost-savings of living with someone else would have been eliminated. In only a few months she would likely be facing the possibility of bankruptcy.

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