Okay Okay here we go again - another week and another major publication talking about couples sharing their finances. We might be a little biased here but this type of press validates what we're building SO much.
Below you'll find a deep dive on the recent article in The Atlantic with some of our key takeaways and perspectives sprinkled in.
"Americans haven't reached a consensus on which financial arrangement is best for relationships. Respondents in a 2016 survey were split almost exactly 50–50 on the question of whether a married couple should merge all their money, and two titans of American personal finance give conflicting advice on the matter. Suze Orman has said she would “never, ever have just one joint account.” Dave Ramsey has dismissed arguments for keeping separate accounts as “a bunch of crap.”"
We've been beating this drum since day one. There is not a one size fits all solution for couples sharing their finances.
Everyone is in a different boat and couples should address the topic and figure out what makes the most sense for their circumstances. That said, at Smoov we want to provide a platform to make those conversations easier, especially because this is clearly such a polarizing topic even for those with the deepest understanding of it.
So instead of the awkward venmo request that's left up to interpretation, Smoov allows both partners to easily mark transactions as shared and keep track of all the math over time while splitting expenses in a way that's most fair for them as a couple based on their unique financial situation.
"Many couples switch to fully shared accounts simply because that’s how marriage has typically worked in previous generations. Of course, that precedent comes from a time when women were much less likely to do paid work than they are now."
This right here is one of our biggest gripes - society has changed and moved forward, we're in a new era of gender norms and equality, women are making more than men in major US cities like NYC and in DC yet still we maintain dated traditions because that's just the way things always were.
Relationships have changed - banks have stayed the same. If only there was a better way...
In a world where the dynamics of relationships have completely shifted, where both partners are working full time and getting married later in life, why wouldn't we adjust the way we introduce sharing finances in a way that reflects these societal shifts.
Now that being said, we are by no means advocating for never putting everything together in the same pot. In fact, the Atlantic article cites a lot of good research indicating the benefits of doing so and how it creates a sense of "We" and "Shared-ness" in the relationship.
At Smoov we simply believe there is a time and stage in the relationship where this probably doesn't make sense for most couples.
Along with that, merging finances is a double edged sword...
"One commonly reported downside, though, of putting everything in shared accounts is that couples sometimes question each other’s spending decisions—did “we” really need to spend our money on that?"
As couples are getting together later in life and further into their respective careers, they are used to having a deep sense of financial freedom and autonomy which completely disappears when their finances become merged. There needs to be a better way because these feelings only continue to grow and fester which can cause major issues in the relationship long term.
"The hybrid approach seems like a wise one. The basic idea is that a couple has a shared account to pay shared expenses, and then individual accounts for discretionary spending; they may have joint and individual savings accounts as well. This setup lets couples “feel like they are both working together to support each other and their partnership, while also giving each other some autonomy,” Paco de Leon, the author of Finance for the People: Getting a Grip on Your Finances, told me. “Partners shouldn’t have to have a conversation about every single purchase.”"
Okay, so this is great but what happens to all the years that couples are dating where the idea of sharing a bank account would be "too soon"?
While creating a shared bank account for expenses is a solution that is effective and helpful, it does not take into account the fact that couples generally start splitting expenses around month 6 in their relationship and no one would realistically create a shared bank account that early on. Furthermore, couples typically get married around month 58 of their relationship and very seldom does a couple create a joint bank account before marriage. So now there are 52 months in the most important part of a relationship where there's not a great way to solve the challenge of splitting shared expenses.
For example, couples spend money on groceries, travel plans, dinners, utilities, rent, car payments etc... for many months and years before it would be considered wise to create a shared bank account.
"When couples don’t keep separate accounts, sometimes partners end up secretly squirreling away cash that they can control—which is really just a worse version of having a separate account."
Smoov aims to offer couples an alternative solution early in their relationship so they can avoid the deception and secrecy that doing something like squirreling away cash brings into their world. Smoov users have a private screen and a shared screen where they can easily move expenses from one to the other while maintaining their own independence. By offering a platform for couples to automatically manage and share expenses, creating a joint bank account isn't their only option.
"Whichever choice couples make, they’d be wise to pick one that’s compatible with how they think about independence and togetherness, in the context of money—and of their relationship."
At the end of the day this is exactly what we've been saying all along - every couple needs to come up with an arrangement that works best for their unique situation and there's not a blanket solution that works for everyone.
Smoov aims to offer a flexible avenue for couples to discuss and agree on what makes the most sense for them. This is why one of our core product features offers couples the ability to personalize a default split percentage in a way that makes sense for them. If they're at the stage in the relationship where they share income, they can simply put in their respective incomes, and we'll give them the most equitable percentage to use.
That's all for now - love to see major publications digging in on the same problem we're talking about. That's what we like to call, market validation folks. The best is yet to come.
Until next time - take it easy and keep it Smoov.