WSJ Your Money Briefing - Love and Money: Why More Couples Are Keeping Separate Bank Accounts

Episode Date: July 29, 2024

In some relationships, a 50/50 bill split isn’t always ideal. Wall Street Journal personal-finance reporter Dalvin Brown joins host J.R. Whalen to discuss how couples are experimenting with new ways to share household expenses. Sign up for the WSJ's free Markets A.M. newsletter.  Learn more about your ad choices. Visit megaphone.fm/adchoices

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for info on Kraken's undertaking to register in Canada. Here's your money briefing for Monday, July 29th. I'm J.R. Whelan for The Wall Street Journal. Traditionally, couples pooled their finances together in joint accounts to pay the bills. But in many modern-day relationships, people are taking a different approach. Couples today are looking for more flexibility and fairness in managing their finances. Many find that a 50-50 split isn't always practical, especially when there's a significant income disparity. And keeping separate accounts allows each partner to maintain financial independence

while also contributing fairly to any shared expenses that the family has. Wall Street Journal reporter Dalvin Brown will join us after the break. Introducing TD Insurance for Business with customized coverage options for your business. Because at TD Insurance, we understand that your business is unique, so your business insurance should be too. Whether you're a shop owner, a pet groomer, a contractor, or a consultant, you can get customized coverage for your business. Contact a licensed TD Insurance advisor to learn more.

More couples are keeping their money in separate bank accounts. Wall Street Journal reporter Dalvin Brown joins me. Dalvin, where are we seeing separate accounts among partners most often? We're seeing this trend most often among younger generations. So Gen Z and millennials are more likely to keep separate accounts compared to older generations. compared to older generations. A creditcards.com poll found that a significant number of younger adults prefer to manage their finances independently. And Experian data shows a decline in the number of joint credit card accounts per couple over the decade, reinforcing this trend. Traditionally, couples split expenses 50-50. Why are people today keeping their money separate?

Couples today are looking for more flexibility and fairness in managing their finances. Many find that a 50-50 split isn't always practical, especially when there's a significant income disparity. And keeping separate accounts allows each partner to maintain financial independence while also contributing fairly to any shared expenses that the family has. So if the money is not being split down the middle, how are they dividing it up? There's a plethora of different ways that people are dividing expenses up. One of the things that I found interesting that I talked about in my story was that more people are choosing 60-40.

So they're deviating from 50-50, but they're not going too far away from that. But it also leaves room for people who make more or less money than their partners. Yeah, it also involves a lot of math. How are they keeping track of all these numbers? Technology is sort of like the third person in the relationship. They're using Excel spreadsheets

to monitor how much they are each contributing to the household expenses. They're using apps like Splitwise or Monarch, bill managing platforms. And they're also using these platforms to communicate with one another about money if an expense pops up that they've noticed that their partner hasn't paid or something shows up that they're unfamiliar with. They're communicating through some of these apps as well because it's easier to have the conversation virtually than it is to talk about money in real life, it seems. And don't nickel and dime your partner on Venmo.

You talked about that with us before. Yeah, and I think that's also why more people are choosing 60-40. Because if you go with a ratio that's very exact, it may come across as petty or as if you're nickel and diming your partner, and no one wants that. What do financial advisors suggest regarding how couples' finances should be organized? Several of the financial advisors I spoke to

said that ratio-based splitting works for the most number of couples. While 50-50 is still a very common split, they say that a lot of couples these days feel like it's fairer when they're able to contribute based on the amount of money that they make rather than trying to make sure that everything is evenly split all the time. And then the financial advisors told me it's also just sort of unrealistic to think that in all the cases that your marriage will always be able to both equally contribute financially when things change over time. How have changes in the makeup of the workforce contributed to this trend? With more dual income households and more women entering higher paying jobs,

there's a shift toward financial independence and fairness. And women are really pushing this trend. Evidence of that is showing up in a lot of different places from the apps saying that women are more likely to download them, more likely to initiate split bills with their partners, more likely to enter bills on the app or start conversations on the app. There's a big push for this from women. And as their economic power increases, it's driving a push for more equitable financial arrangements in their partnerships. But does having separate finances

create any trust issues among couples? Studies show that married couples who don't merge finances tend to be less happy and more likely to struggle with communication, which can ultimately lead to divorce or separation. However, you can find a solution that works for both partners, and that's key. One of the researchers that I talked to said that, you know, as long as you are transparent and regularly communicating about your finances and not intentionally hiding what you're spending money on,

then you might be fine. You spoke with several couples for your story about splitting their finances. How's it going for them? They seem to have each found a system that works for both of them. So one couple that I spoke to is very intentional on updating a spreadsheet and contributing based on the amount of money that they make. The ratio changes every time one of them gets a raise, and they document everything and make sure that they are splitting things evenly and fairly. And they're documenting almost

every penny. But there's other couples that I spoke to, one of which lives solely off of the husband's paycheck, while the wife also works full time, she's able to save her money and do whatever she wants with her money. And she turns around and often surprises him with gifts. And he can't see that she bought them because they don't split an account. And there's also a couple I spoke to that does pull everything. And so when they are buying gifts, they're buying it with their money versus his or her money. So they're really figuring out what works best for them. And financial advisors say that's what's really important. That's WSJ reporter Dalvin Brown. And that's it for your

Money Briefing. This episode was produced by Ariana Osborne with supervising producer Melanie Roy. I'm J.R. Whelan for The Wall Street Journal. Thanks for listening.