Should couples keep separate finances?

Megan Non-McArdle continues her transformation into a rational choice theorist:

While I can’t guess how
it will actually work out when I am faced with this in real life, I
like the idea of both partners putting two-thirds of each paycheck in a
joint account and reserving one-third to themselves.  ‘Cause why argue,
or even discuss, some personal purchases?  Buy it for yourself with your
own money, and look, no one cares!  It would also make gifts more
meaningful, if it came from your own hoard rather than shared money. 
And give you a reserve, if you are the cautious type.

Convexifying the choice set.  Who would expect that from a water engineer?  Money decisions do not have to be all-or-nothing.  Totally separate finances are undesirable, if only for symbolic reasons, but why not opt for a middle point? 

The key problem, in my view, is not overspending from a common pool of money.  Rather it is that couples use money as a medium for conducting ongoing fights, and thus the value of partially separate finances as a safety valve. 

The percentage of separate funds should rise with:

1. The age of the parties when married.  The two people might be very good together, but used to making their own money decisions.

2. The number of preceding marriages.

3. The two parties each earning decent or at least roughly comparable incomes. 

4. Small numbers of children or grown, out-of-college children.

5. Portfolio safety.  Portfolio riskiness should be borne jointly.

6. Inversely with the size of the mortgage and other fixed commitments.  The common fund should be spent on something which is not merely automatic.

Surely state property laws should matter, as should the strength of Kahneman-Tversky framing effects, but I haven’t quite figured out how.

Can you think of other relevant variables?


Comments for this post are closed