I met my wife at camp in the summer of 1989, when I randomly put my head in her lap and asked for a kiss.
Boy, did I get lucky.
I got lucky because we are both frugal and didn’t even know it. We didn’t fill out a questionnaire on money habits before we kissed each other.
Some people have the misfortune to be frugal and fall in love with a high-roller.
Marriages go sideways for a bunch of reasons. Sex problems, substance-abuse problems … but the worst problems of all are money problems.
Money problems in marriage
You might say being a miser or a high-roller is just a philosophy on money. But that isn’t accurate.
The miser is psychologically hard-wired to be a miser. The high-roller is hard-wired to be a high-roller. It is highly unlikely that either of these people is going to change.
That’s why it’s important to have this conversation and to observe the other person’s behavior before you get married.
I was thinking the other day — when I graduated from business school in 2001, my wife, my mother and I went down to this magical place called Bix on Gold Street.
Gold Street was essentially in an alley right off Montgomery Street, downtown, and Bix had a speakeasy feel to it. I remember ordering my first-ever martini. We walked out of there with a $72 tab, my biggest of all time. I was wearing one of my new Men’s Wearhouse suits and I felt like a high-roller.
I was 27.
Now that is frugal behavior.
If my wife were someone who ran around dropping thousands of dollars in high-end department stores, the marriage just would not have worked.
But she was even cheaper than me. She only stopped clipping coupons a few years ago.
Again, I cannot emphasize how fortunate we are.
I have seen marriages where one person spends and one person saves. Most of the arguments devolve into “you worry too much” or “you don’t worry enough.” Whenever the unhappy couple goes into a store, there is tension.
Misers can be unreasonably cheap and high-rollers can be unreasonably profligate. The middle ground is almost impossible when it comes to this stuff.
There is only black/white, right/wrong. My way is the right way and your way is the wrong way. The social workers and therapists who work in the marriage-counseling business are not prepared to deal with money issues.
People get divorced over money. Hell, people die over money — especially people with gambling problems.
This is serious business.
I don’t claim to have the answer for everyone, but I can tell you what worked for me.
Keep your money separate
Before we moved in together, my wife and I agreed to keep our money separate — really separate. I have my money, and she has her money.
If I want to spend it on something ridiculous, like a luxury backgammon board, there is not much she can say about it. It is my money.
If she wants to buy three dozen dresses, there is not much I can say about it. It is her money.
We split common expenses. In the old days, we split stuff 50/50. Then I started making a lot more money than her, so now we split stuff 80/20 or 90/10.
We split the groceries 67/33, since I eat two-thirds of the food. If we go out to eat or do something fun, I pay.
As for the mortgage, she pays x and I pay 5x. We keep track of how much principal each of us has paid down, in a spreadsheet as well as our percentage ownership of the house.
For example, I currently own 81% of the house and she owns 19%. So if we sold, I would get 81% of the cash and she would get 19%.
If this all seems hard, maybe it is, but guess what? We. Have. Never. Fought. About. Money.
I agree with a lot of what Dave Ramsey says, particularly about debt, but not when it comes to money in a marriage.
“Your spouse isn’t your roommate,” he says, “and this isn’t a joint business venture. It’s a marriage! You don’t run your household and your life separately. Your job is to love each other well, and that includes having shared financial goals — which is hard to do when you have separate accounts.”
I beg to differ. My wife and I just celebrated 21 years of marriage, and we have had plenty of shared financial goals: five houses, brokerage accounts, hedge funds, moving across the country, different jobs, you name it. Never has it been necessary to pool our money.
Even if it is an accounting fiction — so what? It keeps us happy, which is what it’s all about. If we combined our money, then we probably wouldn’t have the luxury backgammon board I bought not long ago — and one of us would carry a resentment.
To have and to hold
I think a lot of people feel like they’re not truly committed to a relationship unless they commingle their funds. Like, they’re holding something back.
And, yes, it’s possible to have separate accounts and still fight if one person is a miser and the other is a high-roller. But separate accounts make it easier.
I wish you luck. This stuff is hard. The important thing is to have a system that works. It doesn’t have to be precisely like my system, but it has to be an agreed-upon set of rules that creates the minimum amount of conflict.
And if pooling your money works for you, then great — I’m glad you have a system.
Jared Dillian is a former Lehman Brothers head of ETF trading. In a special report, he writes about how to properly position your portfolio for what he says is an upcoming stock market crash.
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