Is it worth it to create joint finances?

How to pass, fit in, eventually set an example, and ultimately lead the way.
poleo
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Re: Is it worth it to create joint finances?

Post by poleo »

It seems like the general tone in the thread is that separate everything is the way to go, which to me is weird. For me, and in order to achieve full embodiment of the ERE philosophy, it doesn't stop at my relationship to a significant other.

ERE is to me about analysis of life and subsequent wise decision making for the individual person. I would claim it fallacious then, to limit such thinking to all one's pursuits, save romance - this also being a thing we as individuals do. Surely in order to have a romantic relationship to anyone, values must be shared?

Thus, a partner with whom one shares the ERE way of thinking, and importantly, life, is the "wise decision", or optimum one should aim for.

In addition, financial wisdom being a part of this lifestyle, the sharing of these values makes having joint finances a very good idea indeed. Two people focussed on the same kind of goals, are much more likely to succeed - for a number of reasons I would reckon. When the day comes to split the bill, reasonable people well seasoned in the ERE mindset surely will find a way to work things out?

To me it seems like some others in this thread perhaps take it for granted that such a thing is unattainable, or at least unrealistic, and therefore one must be pragmatic. I disagree, to the effect that I believe there's a strong likelihood of someone out there being a better match for you in your walk of life.

saving-10-years
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Location: Warwickshire, UK

Re: Is it worth it to create joint finances?

Post by saving-10-years »

DH and I have both separate accounts and joint accounts but we treat all the money as OURS. I don't think its so much where you keep it but how you treat it. If its small stuff that we are buying on an impulse (up to and including an occasional saxophone for DH or a spinning wheel for me, say £200 max*) then we would not necessarily consult beforehand although we'd let the other know what is happening. If its a planned purchase (rental property, car, etc) its treated as joint property and recorded/insured as such (jointly) even when one person funded it (e.g. from their pension fund or their bank account).

After 35 years together we do need to rethink this because its messy and a system that we understand but others may not (should they have to track our estate). Before we married things were messier (marriage assumes that it is all joint property which suited us). This is a very personal decision. If you are both on the ERE journey together then it will be easier than if one of you has a different plan. You obviously need to be able to trust each other with money. Joint finances should not be a surveillance method.

* We have a habit of buying these hobby things, using and then selling on for changes or upgrades, so this is not as non-ERE as it sounds.

wood
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Re: Is it worth it to create joint finances?

Post by wood »

Sure joint finances is a good idea and you are speaking from the offset of a wonderful & perfect relationship. Until you catch her cheating on you before she takes off with her affair partner.

saving-10-years
Posts: 554
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Location: Warwickshire, UK

Re: Is it worth it to create joint finances?

Post by saving-10-years »

@Wood (in this example does she take off with the money too?) I can't see that not having joint finances would have prevented this unless what you suggest is that she is taking off with your share of the money as well as her new partner? Certainly not suggesting that joint finances are a good idea if you don't know the person well or trust them. Also not meaning to sound smug.

If you have a partner who is of the same ERE mindset as you then it will probably follow that you will plan financially (and otherwise) and save together and have the same careful considered attitude towards those activities. Whether the finances come from two pots or one joint pot you should be agreeing on what gets spent and how much. If you are not on the same ERE page (or at least the same book) and there is no respect for a different point of view (on both sides) then I would be concerned about having joint finances with that person. I think of ERE as about lifestyle as well as spending habits here.

7Wannabe5
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Re: Is it worth it to create joint finances?

Post by 7Wannabe5 »

@wood: I think that those of you who are voting for strict division of finances are thinking that those of us who are voting for joint finances are being overly "romantic." It's not that. It has more to do with matching the financial functionality to the terms of the contract. Obviously, there are all sorts of different contracts one could enter into with a romantic/sexual/companionable/parenting/business/life partner. Because I have chosen to interact with men from different cultures and sub-cultures, in different phases of life and/or financial status, under different circumstances, it is likely that I have freely entered into (and exited out of :oops: ) a wider variety of contracts than most people, so my perspective is not limited to validation of my previous choices.

https://medium.com/@nntaleb/how-to-lega ... .66cd0c1ky

Taleb was also quoted somewhere on this forum as repeating the rule-of-thumb that goes something like "The three things you should always lease rather than buy all start with F. These are anything you fly, float or f*ck."

From the description of "Designer Relationships" by Michaels and Johnson.
http://tantrapm.com/wp-content/uploads/ ... elease.pdf
Non
-
monogamy is NOT the same as cheating.
Designer relationships are based on
egalitarianism and mutuality, not on
proprietary thinking. From this perspective,
if people decide
they will have multiple partners, the approach is the antithesis of cheating.In the conventionally
monogamous model, each party owns the other (a modern variation on the more antiquated view
of
woman as property).
In designer relationships,
each party
voluntarily owes the other
transparency, some measure of emotional loyalty, and a determination to abide by agreements. (bold mine)
I am not going to develop my argument at length, but I will note that it is based on my experience of the modern mating/dating/marriage market, and rational thought processes inclusive of theory suggested above, and other reading on the history of the mating/dating/marriage market. In short, the problem with the long-term monogamous egalitarian separate finances relationship model, whether it is a legal marriage with significant pre-nups and other safeguards put in place or a "forever live-in girlfriend" cluster of contracts is that it is often inherently unstable because the female party to the contract or set of contracts is getting a poor deal for what she is bringing to the relationship vs. what she could get on the open market. The reason this is not apparent to many men is that they are not acting in self-aware accordance with the reality that any contract puts two obligations upon both parties. The obligation to honor your end AND the obligation to enforce fulfillment of other end. IOW, the overt desire to not put any skin at risk in the game is usually indicative of a covert desire to avoid or evade the necessity to enforce fulfillment of contract. IOW, the desire to cling to the romantic delusion that another person will behave counter to their own self-interest because that is what they "should" do. In any circumstance in which you are confident about your ability to fulfill, enforce and revisit/renegotiate contract as needed, in alignment with your own self-interest, why wouldn't you choose to profit from continuing and expanding investment in joint enterprise?

wood
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Re: Is it worth it to create joint finances?

Post by wood »

7Wannabe5 wrote:In any circumstance in which you are confident about your ability to fulfill, enforce and revisit/renegotiate contract as needed, in alignment with your own self-interest, why wouldn't you choose to profit from continuing and expanding investment in joint enterprise?
Because people change, and very few actually revisit the terms of the contract later in life, when perhaps it would be due. You are adding circumstances and assumptions to the question of joint finances when making a case for it:) But I guess so am I... I'm only pro-joint-finances if I'm okay with losing what I potentially could lose in a shtf-scenario. It's just that when someone asks if its worth it to create joint finances, my general answer is no because a shtf-scenario will most likely contain one of the following for that person:
1) getting more than they deserved
2) getting less than they deserved
And most likely, you will find men asking this question because their female partner wanted joint finances, and most likely they will find themselves in 2) if shtf:) And you cannot rule out shtf-scenarios when your life is at stake like that.

I see your points though and agree with them in theory, but I still think separate finances is generally the way to go because...reality.

In any case, a deeper discussion about this becomes meaningless unless we specify exactly what the prenup/joint finances means in practice, or specify the situation more.

@saving-10-years: In the examples that comes to my mind, she ran off with either money or kids. In either case, the outcome was unfair. Of course, joint finances was worth it for her.

7Wannabe5
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Re: Is it worth it to create joint finances?

Post by 7Wannabe5 »

wood said: my general answer is no because a shtf-scenario will most likely contain one of the following for that person:
1) getting more than they deserved
2) getting less than they deserved
And most likely, you will find men asking this question because their female partner wanted joint finances, and most likely they will find themselves in 2) if shtf:) And you cannot rule out shtf-scenarios when your life is at stake like that.
You are actually supporting my argument. One hallmark of independent adult functioning is to recognize at any point in any game or state-of-contract that where you are at and what you are left with is exactly what you deserve. I will concede that insisting on pre-nup and/or any other means of putting boundary on possible loss at point of initiation or subsequent renegotiation of contract is one method of insuring against risk which may result in achieving (or deserving) the lower possible loss. However, I do not agree that it is the method or practice by which one would achieve greatest expectation (or just desserts) of profit.

A good strategist will always consider the point of view of the "other." So, let's examine the old school garden variety female worst-case scenario fear:

1) Marries at 22 fresh out of college.
2) Works as kindergarten teacher supporting husband through med school for 6 years.
3) Stays home to care for their 3 children for 12 years. Gains 20 lbs. post-partum. Hair is graying early. Youngest child suffers from autism. Teenage daughter is out of control. Husband is too busy to help much with children or day to day management of household and household accounts.
4) Husband dumps her for either 22 year old nurse who looks just like she did when she was 22 OR or a female neurosurgeon who never had kids and doesn't want them. He chooses to live in a one-bedroom luxury apartment with his new partner.

In your opinion, what would constitute a fair financial settlement and division of custody likely to be in the best interest of the children in this case? I am rather selfish and forward-looking, so I might advise a female friend who found herself in this situation to just sell the house, dump the kids on his doorstep, and check herself into a spa for a month, but most women would tend towards getting too mired down in resentment/martyrdom etc. etc. What I am trying to communicate is that when a man is all whiny about not getting what he deserved after a divorce, it is just a variation on the exact same theme of resentment/martyrdom, but usually having to do with him putting in too many hours of drudgery/submission at a job he didn't like, and almost always combined with something along the lines of "...and she didn't even have sex with me for the last 5 years of the marriage!" (Waaaaah. Waaaah. Waaaah.) Like it's her fault that he spent too many years of his life functioning like a zombie under gunpoint.

wood
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Re: Is it worth it to create joint finances?

Post by wood »

7Wannabe5 wrote:
A good strategist will always consider the point of view of the "other." So, let's examine the old school garden variety female worst-case scenario fear:

1) Marries at 22 fresh out of college.
I believe its at this point one should decide whether or not to have joint finances.

If joint finances, the typical outcome after 2) 3) and 4) assuming both parties claim both kids and assets in a court case would be that she gets the kids and assets are split pretty much 50/50.
If prenup, both would keep whatever was in their individual bank accounts at the time and assets would be split according to who paid for it. Kids would likely end up with mum if both parties claimed custody.

But.

If joint finances, the guy should be OK with the potential financial loss he is facing in case of a breakup.
If prenup, it might be likely that this couple would make different life/career choices. It is also likely the financial profit from those choices would be smaller than in the joint-finances-case.

The way I understand you is that you would prefer joint finances because it increases "expected total profit" for the couple. I agree with that, but I still think prenup is the way to go because its fair that both went into it knowing what would come out.

7Wannabe5
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Re: Is it worth it to create joint finances?

Post by 7Wannabe5 »

wood said: The way I understand you is that you would prefer joint finances because it increases "expected total profit" for the couple. I agree with that, but I still think prenup is the way to go because its fair that both went into it knowing what would come out.
Maybe I would prefer joint finances because it would increase "expected total profit" for me-lol. Anyways, my current status is something between 1 and 2 time loser, so...grain of salt. My parting ultimatum to my first husband (with whom I did share joint equity and parenting, but not much else) was "Either we start having sex, dates and working together on projects on a regular basis, or I am out of here." My second "marriage" had plentiful sex, dates and project-sharing. However, the fact that we didn't share joint equity, and most of the projects we worked on together added value to his much bigger asset base (renovations of his rental property, assistance with huge lawsuit, etc. etc ), meant that in order to keep things fair, he would occasionally give me lump sums of money, above and beyond "keeping" me. Even though I didn't have a quibble with the essential fairness of this in terms of tit-for-tat, it eventually drove me right over the edge to the point that I was practically demanding that he sell his house and live in a camper with me. So, that's why I'm a little bit afraid that the young guys on this forum who save up so much money so early, and so desperately want to protect it, might have problems with their relationships.

poleo
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Re: Is it worth it to create joint finances?

Post by poleo »

Mainly @wood, but also generally:

My point earlier was that separate finances are definitely a very good idea if one has low skill in finding a life partner/doing well the things Wannabe is voicing.

If, on the other hand, one is good at finding a partner/organizing one's love affairs/having one's shit together, then this is largely overestimating risk. In a shtf-scenario, shit hits the fan. Trying to plan for that ...well, good luck with your "because reality".

I'm not trying to make a point out of an implication that someone is bad at something, stupid or whatever. All I think is that selection of mate/partner/whatever, and subsequently type of "contract", is a skill - something one can be more or less good at. Thus far, trying to develop this skill and the results of this process has been working well for me, which I presume is why I think this way.

belgiandude
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Re: Is it worth it to create joint finances?

Post by belgiandude »

This is subjective and should be seen from situation to situation. We are in our mid-thirties, DINKS (and will always be childfree), spend and earn about the same, and have no need to share finances. We each contribute about the same amount to our shared expenses account and we do have a joint financial plan.

Our marriage contract basically states that assets and income are individual, but that we do need to take care of the other when s/he is without income (during marriage). If there is a divorce, you take your own assets and that is it. This is one of the standard three contracts within Belgium (others being everything shared (uncommon), everything after marriage shared - default).

Fish
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Re: Is it worth it to create joint finances?

Post by Fish »

+1 to what poleo said above. If you don't possess a sense of agency over your relationship destiny then it is practical to separate finances or avoid marriage.

Another way of reducing the consequences is to diversify into other forms of human capital, e.g. social, technical and physical (health). A truly wealthy person does not fear a potential financial divide by 2 (or even multiply by 0). I would have to think that it should be reassuring that things like social connections, skills/knowledge/experience and years of life cannot be so easily taken.

7Wannabe5
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Re: Is it worth it to create joint finances?

Post by 7Wannabe5 »

From "Designer Relationships: A Guide to Happy Monogamy, Positive Polamory, and Optimistic Open Relationships." (highly recommend)
Despite their usefulness, contracts are legal documents that are based to some degree on an adversarial as opposed to a collaborative model...
Composing a statement of purpose together can be far more valuable than signing a contract. It can help to reinforce the sense that your relationship is collaborative and co-created. Be clear, and try to be specific about your intentions and aspirations. Instead of thinking of this as a negotiation, think of it as an exchange of ideas, hopes and desires for the future, while keeping in mind that you are seeking common ground, areas where your sense of purpose is shared or congruent. Remember that your purposes may change over time, and you can craft and re-craft your understandings to suit your circumstances, so think of it as a work in progress, something that can be modified and amended.
What I was attempting to communicate earlier was that it has been my experience, whether in personal relationships or business relationships, that to the extent you share clear purpose, sharing joint functioning is rarely a problem. You both want to take a trip to Japan, so one of you chips in cash and the other chips in travel-hack skill and social connections with whom you can couch surf. Yay! You both want to have a baby, so one of you breast-feeds in the middle of the night and the other one buys and changes diapers. Yay! So, the question becomes why would you want to enter into marriage with somebody with whom you do not share a great deal of shared purpose?

James_0011
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Re: Is it worth it to create joint finances?

Post by James_0011 »

@7wannabe5,

I wouldn't consider "travel hacking skills and social connections" a contribution, if I wanted to go to Japan with someone they either split the bill with me or they don't go. It sounds to me like your talking about one person paying for everything and the other parasitizing off of them. Hence joint finances are important.

Fish
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Re: Is it worth it to create joint finances?

Post by Fish »

@James_0011 I suppose that's one way to look at it. Value is definitely psychological and if you don't see @7w5's examples as equal contributions between the paying and non-paying partner, maybe you are a type of person who is better off with separate accounts. And it would require a partner who feels the same way about money, otherwise resentment builds because each person's contribution is not being appreciated by the other.

Those more appreciative of non-financial forms of value might be the types who do better with joint accounts.

steveo73
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Re: Is it worth it to create joint finances?

Post by steveo73 »

I'm married and our finances are just one pool. I don't see how you can really do it any other way. Maybe if you didn't have kids but I also have 3 kids.

7Wannabe5
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Re: Is it worth it to create joint finances?

Post by 7Wannabe5 »

James_0011 said: I wouldn't consider "travel hacking skills and social connections" a contribution, if I wanted to go to Japan with someone they either split the bill with me or they don't go. It sounds to me like your talking about one person paying for everything and the other parasitizing off of them. Hence joint finances are important.
Maybe that was a weak example. Let's consider the general equation. How much would you consider fair compensation for agreeing to share house-space with a grouchy old man as opposed to simply enjoying the pleasure of your own amiable company? (I should note for the record that it has been my experience that most grouchy old men would prefer that I take some measure of this compensation in the form of entertainment provided or gifts rather than being a stickler in my hard demands for sexual performance or manual labor. They say things like "Stop that and go to sleep. I need to finish these work e-mails and then I will maybe take you to see "La La Land" after your nap." and "F*ck your everybody should know how to do everything philosophy. You can't afford my rate for digging fence posts." Why I continue to choose to associate with such individuals is a matter perhaps better reserved for session of therapy, but not unrelated to the tension developed by the writers of the Looney Tunes in the characterizations of Bugs Bunny vs. Daffy Duck and/or Yosemite Sam.)

wood
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Re: Is it worth it to create joint finances?

Post by wood »

steveo73 wrote:I'm married and our finances are just one pool. I don't see how you can really do it any other way. Maybe if you didn't have kids but I also have 3 kids.
Quite simple:
1. Estimate/budget expenses for kids
2. Create a joint account
3. Both contribute to that account
Do the same for other shared expenses like food and household items.

This is not considered joint finances, just to be clear:) This is sharing some costs. You still keep assets/debt separate if you want separate finances. Your savings are yours. Stressing this point makes me wonder whether everyone is talking about the same thing when we say "joint finances"?

@7Wannabe5 in your examples you set one party to contribute the financial part of the deal, while the other contributes manpower/entertainment/body fluids/whatever. But what if both contribute equal amounts in all categories? Wouldn't that be considered fair and pretty much joint?

One major reason I'm advocating separate finances is that finances in a marriage/partnership can, just like a family relationship, be completely subject to override by rules and regulations in spite of personal contracts. Many things can be set up and later cancelled, deals in the form of "you scratch my back, I scratch yours", but joining finances, ie in my country: marrying without a prenup, is a permanent decision that can fuck you over just because someone else did something none of you expected they do. Its a low-risk-high-damage thing but separating finances provides insurance. There is a difference between the value you (7Wannabe5) put on "travel hacking skills" on the value a court judge would put on it. Again, I'm talking about joint finances in the form of assets/debt/everything, not just costsharing something you did together.

Maybe being able to choose the right spouse is a skill, and some think they have a good skill in it. Problem is they won't know until its too late:p

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Ego
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Re: Is it worth it to create joint finances?

Post by Ego »

wood wrote: One major reason I'm advocating separate finances is that finances in a marriage/partnership can, just like a family relationship, be completely subject to override by rules and regulations in spite of personal contracts. ......

Maybe being able to choose the right spouse is a skill, and some think they have a good skill in it. Problem is they won't know until its too late:p
One of the functions of dating is as a process of sorting people into one of three categories.

1) Those who you know to be unreliable.
2) Those who may or may not be reliable.
3) Those who you would trust implicitly.

Enter a relationship as a 3 yourself and look for partners who show characteristics of 2 or 3.

Spend enough time with them and have enough experiences together so that you can determine their category.
Absolutely positively do not marry a 1 or 2.
Absolutely positively remain a 3 throughout.

If you do those things you have eliminate most of the risk. If you demand a prenup or separate finances you are entering as a 2 with a 2.

Separate finances could potentially evolve as a logical solution to some logistics problem among a couple of 3s who remain 3s throughout.

7Wannabe5
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Re: Is it worth it to create joint finances?

Post by 7Wannabe5 »

wood said: @7Wannabe5 in your examples you set one party to contribute the financial part of the deal, while the other contributes manpower/entertainment/body fluids/whatever. But what if both contribute equal amounts in all categories? Wouldn't that be considered fair and pretty much joint?
I think any relationship contract two free adult people continue to maintain is by definition fair and joint. I do not think that "fair and joint" requires "equivalent." I also believe due to basic economic theory that if two individuals bring exactly the same contributions to the table then there is no benefit to be derived from trade or inter-dependency. Since it is not the case that a relationship in which no benefit to be derived from trade will have reason to continue, it must be the case that although what is being brought to the table appears to be equivalent, there is actually some other level of trade/contract that is covert. Engagement in covert contract, which could also be described as unspoken expectations for future benefit, is one of the primary destructive forces within relationships. If you imagine a couple who are exact twins in terms of market value of what they bring to the table besides gender designation, then it is obviously the female who is getting ripped off in a closed (monogamous/forever) relationship because her sexual value alone is worth much more on the open market. This is why although polyamorous couples are happier on average than monogamous couples, the females in polyamorous relationships are even happier than the males in polyamorous relationships. This is true even though it is usually the male who suggests open relationship. In simplest most ideal terms, polyamory allows the female the benefit of stable reliable pair-bond partner and the benefit of courting behavior from additional swains, whereas the polyamorous male still has to bear the expense of courting behavior on the open market. Therefore, it makes no kind of economic sense for a female who does not currently require a great deal of support in child-rearing to accept an egalitarian contract from a male. This might not be apparent to you youngsters, but those of us old enough to interact with Baby Boomer generation men who were S-P-O-I-L-E-D by having stay-at-home mothers in their youth and a "free love" environment in their adolescence, have a wider, better-informed perspective on such matters.

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