Debt Consolidation

The Facts About Debt

Should I Pool My Finances?

Filed under: Debt, Family Finance, Saving
Tags: , , — Written by: Lyuda
March 16, 2010

Photo By Scott Maxwell (Flickr)

Recently I was discussing with a gentleman who had a bad experience with his former spouse involving pooling their finances. Specifically his spouse quit her job ran up a bunch of credit card bills on his credit and left. He was obviously unhappy about this situation but still committed to what I’d call financial teamwork. Even as a single parent now, he was absolutely convinced that pooling finances is responsible and did not blame his misfortune on having done so.

The root of any financial relationship is trust. The financial industry often uses the word fiduciary. This word is derived from a Latin word meaning trust. While it is true that trust is at the root of any relationship it’s especially true with regard to finances. Many people are rightfully concerned when considering pooling finances with a spouse or partner because of the huge impact this could have on a person’s credit rating. I think the real way to consider this is a sober look at trust not only between individuals but also within themselves.

One of the biggest issues I have seen with finances is that sometimes one cannot trust themselves to always make the right decision. There are tons of options in finance designed specifically to protect an individual from poor decisions they might inadvertently make. One of the options I have seen used is not pooling finances because either person involved may not simply be concerned how the other handles theirs but also concern about their ability to handle their own. I truly believe that teamwork is involved in any situation in which the finances of multiple individuals is at stake but this can be a good first step to being more aware of a partners habits and engaging any concerns before committing to tying ones financial future with that of another individual.

Sometimes the best solution CAN be to simply not pool finances at all, but I do believe this is an extreme. With respect, transparency, and a team minded approach that is respectful of all involved, or impacted by any negatives, pooling finances can be a useful financial strategy, and an expression of trust. That said this should take place when all involved are not simply doing so out of a perceived obligation but rather taking a rational step forward. To take this step it really helps if both parties are aware both of the others spending habits as well as their budgeting weaknesses. One of the leading causes of divorce is financial concerns. Many times this does not involve any sort of intentional deception but really a failure to communicate ones financial strengths and weaknesses.

In general handling of finances comes down to understanding one’s ability for self-restraint and protecting their finances from the potential downfalls of a lack thereof. When more than one person becomes involved this is double important. If you are considering pooling finances what is critical is to make sure you are honest about your own strengths and weaknesses when it comes to money, and to ensure the others involved are as well. This is the true measure of fiduciary responsibility but it is the only way to answer the question of whether mixing ones financial situation with others is justified, appropriate, and beneficial to all parties.

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