Why Couples Need Their Own Slush Funds

Some no-questions-asked cash can help sidestep spending squabbles.
Liz Weston, CFP®
By Liz Weston, CFP® 
S-Why Couples Need Their Own Slush Funds-story

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My husband likes designer clothes. Half of my wardrobe is from Ross Dress For Less.

That’s just one example of how different our spending habits are. Thanks to a system we implemented 20 years ago, though, we’ve avoided a lot of squabbling over who spent what.

Every month, we each get a certain amount of “no questions asked” spending money. His is transferred from our joint account to his separate account. I take mine out in cash.

Liz Weston
Not only does that reduce conflicts over day-to-day spending, but it also allows us to surprise each other with gifts. I never have to see a credit card charge for a Christmas present that might take my breath away, and he never has to know I got a killer deal on his birthday gift. (Unless, I choose to brag. Which I don’t. Usually.)

We’re not alone in finding this middle ground between keeping all our finances separate and throwing everything into one pot.

“It seems more common now for couples to decide that a combination of both separate and together works best for them,” says Megan Ford, past president of the Financial Therapy Association and a couples and financial therapist at the University of Georgia's ASPIRE Clinic.

Most people in committed relationships combine some, if not all, of their finances, but 4 out of 10 couples with joint bank accounts told a TD Bank survey in 2014 that they also had separate accounts.

Younger people may be more likely to keep things entirely separate: while 76% of all couples told a 2016 TD Bank survey that they shared at least one account, only 68% of millennial couples said they had a shared account.

Separate slush funds work best when people trust each other, agree on their big financial goals and together determine amounts they can spend that won’t crater the family budget, says Willa Williams, an accredited financial counselor with Trinity Financial Coaching in Grosse Pointe, Michigan.

Separate slush funds work best when people trust each other.

Williams also recommends setting a limit for how much can be spent out of joint funds without consulting the other. Like “no questions asked” money, the amount can be adjusted up or down depending on the couple’s situation.

“Typically, I recommend couples to agree on a specific amount, usually $100, before reaching out to each other for discussion,” Williams says. “In good times it can be more, but when things are tight, the amount should be lowered.”

What separate money shouldn’t be is secret money. People who are supposed to be on the same financial team shouldn’t hide money, or debts, from each other. My husband and I have online access to each other’s accounts and we’re willing to discuss everything we spend.

“There absolutely must be agreement on how much privacy is OK, and with that, a level of transparency and willingness to share that account information with one another,” Ford says. “It is essential to talk through the details together and continue checking in.”