How Spending Limits Help Partners Avoid Money Conflicts
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Here's your money briefing for Thursday, July 27th. I'm J.R. Whelan for The Wall Street Journal. When couples combine their finances, their bank account is at the mercy of both partners' spending habits. So to protect their balances, some couples have imposed spending limits.
So the spending rules gives both people a no questions asked threshold under which you're allowed to do your thing. I'm allowed to do my thing. If it exceeds this, let's have a conversation.
We'll talk to our personal finance reporter, Julia Carpenter, plus one woman who set and broke a spending limit with her fiance. That's after the break.
Some couples trying to make ends meet but also avoid money conflicts have set spending limits for each other. WSJ personal finance reporter Julia Carpenter joins me. So, Julia, how does this work? What kinds of purchases are couples putting a spending limit on?
The purchases that don't need prior conversation. So the purchases under $100, for example, or under $1,000 for some couples or under $25 for other couples. Things that don't need approval or discussion for the household, something like buying a new blender or – Buying a piece of exercise equipment, things that won't break the bank, but also talking about them and getting them the sign off from both people would just sort of gum up the process or lead to one partner feeling restricted or somehow like held back.
That sounds very corporate.
Yes. I spoke with one couple who quite literally describes themselves as the CFO and the CEO. Him being the CFO, her being the CEO.
What problem do spending limits aim to solve for couples combining finances?
And in this case, she identifies CEO as chief entertainment officer. That she's the one who plans the activities, who books the appointments, who schedules the programming. And he's the one who looks at the budget and researches the big purchases and balances the spreadsheets. And that together, that's how they run what they call their family business, which is just the maintenance of their household and the daily life.
So what's brought couples to this point of setting up this spending rule?
There's a sense of autonomy and a sense of financial freedom that a lot of people have when they're single. Even if it's a burden, spending on your own and managing your own life and all these other things that having a partner helps with, you still feel unrestricted. You don't feel surveilled. And you feel that your money is sort of your own. When you are combining your financial life with a partner's, just by the very nature of it, you are sharing things. There's more transparency. But there's also more a sense of restriction for some people. They feel like, oh, I can't buy my favorite kombucha every day because they'll see that I'm just spending $8 for no reason. So the spending rules gives both people a no questions asked threshold under which you're allowed to do your thing.
I'm allowed to do my thing. If it exceeds this, let's have a conversation.
But whether you're finding a path to a solution or not, isn't money sort of a third rail in relationships? It just seems like it stirs up nothing but trouble.
So not always. I know from previous reporting and from talking with financial therapists and financial advisors that couples who can have healthy conversations about money are often happier. And there's a lot of research out there that shows that couples who combine finances are wealthier, happier, and have higher levels of relationship satisfaction.
So if couples have this spending rule, does it matter if they're married or not?
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