Want Marital Bliss? Pool Your Money
Last week, I went to Harvard Business School to talk to a number of academics, among them Michael Norton, the co-author of "Happy Money," a book about which I will probably be talking more in the coming weeks. We were discussing gifting, and one thing led to another, and I mentioned that my husband and I pool all our money. I was about to ask a question -- about why we enjoy giving each other gifts, when the money all comes out of the same pot -- but Norton interrupted with a delighted smile.
"That's good!" he told me. Apparently, there is research showing that the more you pool your money, the happier you are with your marriage. These effects seem to peter out at some very high level -- if you keep 5 percent of your income to yourself in order to have a little bit of discretionary spending, it won't make you any less happy than you'd be if you pool 100 percent. But people who pool 80 percent are happier than those who pool 70 percent, and so on. People who keep it all to themselves are the least happy.
This finding makes sense for a lot of reasons. One is just selection bias -- if your marriage is on the rocks, you're probably going to want to put some money away so you'll have something to tide you over in a split. But that's not the only reason.
For starters, if you don't pool the money, then you have to spend a lot of time arguing about the money. You have to decide how the expenses are split. Among other things, this tends to emphasize any earnings disparity between the two of you. It also provides rich fodder for fights over who should have to pay for what because I didn't even want to go to Napa and get acid reflux drinking wine all week, I wanted to go to Nova Scotia, and I'm definitely not kicking in 50 percent for a stupid deluxe winery tour so I can meet the owner and have him make me feel bad about my taste in wine.
For another, as psychologist Daniel Gilbert once pointed out to me, the act of commitment can itself create more love. The harder it is to disentangle yourself, the harder you will work to enjoy what you have. The act of trusting everything to another person is the act of looking for all the reasons that they are trustworthy -- accentuating the positive.
It's also the act of giving. And much of Norton's research shows that we actually enjoy giving to other people more than we enjoy spending money on ourselves. We don't think that's the case -- most people predict that they'll enjoy selfish spending more. But when he actually gave them money to spend, and asked them to rate the experience, they rated the money they spent on other people more highly than money spent on themselves.
Interestingly, it didn't really matter how it was spent -- giving someone a lifesaving drug in a poor country was somewhat more happiness-inducing than giving someone a scarf you bought at the mall. What was striking was how small the differences were. The act of sharing was what made people happy, not what was shared.
This is why we like giving each other gifts, even though the money is pooled, but also, I think, why we like having our money pooled. We're both enthusiastic evangelists for the 100 percent sharing method, and I think that one reason it's so satisfying is that when you put all your money at your spouse's disposal, it is something like giving the gift of all of your income. Of course, this only works with a spouse who gives that gift right back. But hopefully, you're not marrying someone who would take all your money and blow it on racquetball fees.
Keeping separate money isn't going to provide as much protection as you think. A separate bank account may keep an angry spouse from emptying your coffers in the heat of rage, but it's not going to keep a judge from giving them a cut in divorce proceedings. You'll still be responsible for their medical bills if they get sick. Nor does it really wall you off from financial problems your spouse may be having. If your spouse is broke, in debt, and under fire from creditors, that's going to make your life pretty miserable. If it doesn't, then you don't have a marriage; you have a roommate, one you don't seem to like very much.
There are a few exceptions to this -- if you have an inheritance you want to keep separate, or your spouse is a potential defendant in a nasty lawsuit, then there may be good reasons for separate accounts. But in most cases, rigidly separating the accounts just gives you more to fight about.
Marriage has enough negotiations in it. You constantly have to decide how clean you want the house, who does the dishes, where to go on vacation, who gets up with the dog or the vomiting kids in the middle of the night, how many parties to have and what constitutes a fun Saturday. The secret to a happy marriage is to minimize as many of those negotiations as possible. I'm not saying don't talk about them; I'm saying don't have them. Hire a cleaning lady and invest in paper plates, or a fancy dishwasher.
Pooling your money makes for one less negotiation. You still have to decide how to spend it. But you were already going to have to decide how to spend it, unless you thought that each of you could buy the house you want and the furniture you want and splice them together in a seam down the middle. And if you're still not willing to put your money together, after reading all the good reasons to do it, that might just be a sign that those seams are coming apart.
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Megan McArdle at email@example.com