When my partner and I got married, we made the decision to keep our finances separate. The reason for this is that our income levels would put us in a higher tax bracket if we filed jointly. Additionally, we both have different investment preferences and spending habits.
By keeping our finances separate, we have been able to save thousands of dollars each year. Here’s how:
1. I can follow my own savings strategy: I chose to put the majority of my cash into high-yield savings accounts and CDs, earning around 4% APY in interest. This has allowed me to make a significant amount of passive income. On the other hand, my partner prefers to trade stocks with his money. If we combined our finances, I wouldn’t have been able to pursue my savings strategy and may have been pressured into riskier investments.
2. We’d pay more for taxes if we filed together: When we consulted our accountant, we learned that filing our taxes jointly would put us in a higher tax bracket and result in us owing more money. By filing separately, we were able to stay in a lower tax bracket and save thousands of dollars.
3. I can stick to my own budget: We have different opinions about budgeting, particularly when it comes to spending on food and entertainment. I prefer to cut costs in these areas and save more each month, while my partner prefers to spend more and save less. Keeping our finances separate allows me to have full control over my personal budget and save at least 20% more than my partner. If our finances were combined, we would likely argue about budgeting and I would have to compromise my saving habits.
Overall, keeping our finances separate has been beneficial for our financial goals and has allowed us to save a significant amount of money.