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How to Split Your Finances: Psychological Money Laundering

Updated: May 16

How to Split Your Finances: Psychological Money Laundering

Updated post: 3/10/24

Original post: 1/30/24

“Why would you spend $59 on a fantasy football championship ring?”

That’s how it starts. One purchase your spouse doesn’t agree with, and it leads to couples slicing into each other’s personal spending habits. Death by a thousand cuts.

For most married couples, managing life with all of the money made and managed in a marriage, going in and out through joint accounts, creates happiness, or at least, it buffers the unhappiness that comes in the early years of marriage. That is according to groundbreaking research led by Modern Husbands Advisory Board Member Dr. Olson of Indiana University, along with Dr. Rick of Michigan, Dr. Small of Yale, and Dr. Finkel of Northwestern. 

Experts believe that having joint accounts streamlines financial management, simplifying some of life’s complexities. The strategy enhances shared responsibility, creates more efficiencies in financial planning, simplifies conversations about money, and improves financial transparency and trust. 

Au contraire, according to Dr. Rick, author of Tightwads and Spendthrifts.

“Complete financial transparency can lead to unnecessary fights over small purchases that don’t make much difference to your overall finances. It’s good to have a sense of what your partner is spending per week or per month, but there’s usually no need to get into the details.”

This is why Dr. Rick encourages Spendthrift and Tightwad couples to consider "Yours, Mine, and Ours."

A tightwad is not just someone who is extremely frugal. The highly frugal love to save, whereas tightwads hate to spend. With that as context, you can probably imagine how the brutal honesty of full financial transparency can be an agonizing experience for a tightwad reviewing one line after another of spending by a spouse. This isn’t financial infidelity, it’s just practical. 

The “Yours, Mine, and Ours” method is the use of a combination of both separate and joint accounts, meaning that they have a common account for shared expenses and individual accounts for personal expenses. 

What the flow looks like from income through to expenses is important. 

Some folks employ this system with the joint account acting as a pass through. Illustrated below, you can see that the amount of money spouses or partners contribute to bills can vary. 

How to Split Your Finances: Psychological Money Laundering

Couples can elect to split the expenses 50/50 or as a percentage of their income. Meaning, if the household income is $100,000, and one spouse earns $70,000 annually, that spouse pays 70% of the bills, and the other, who earns $30,000 annually, pays 30% of the bills. 

This process can become problematic if there are significant income or expense disruptions. 



In other words, one spouse could lose a job. Perhaps a partner has a serious and expensive medical issue. 

If these disruptions lead to an inability to pay the pre-assigned portion of shared expenses, what then? Does one spouse lend money to another? Do they pay interest? What is the length of the loan? 

Would the stress brought on by the loss of income or absorption of a serious expense be compounded by a spouse who is treating your problems as a bank would treat a financial transaction? 

If there's not a loan and the lost money for bills is simply covered by the other partner, what is the benefit of using the Yours, Mine, and Ours strategy you are using in the first place? 

Dr. Rick recommends a psychological money laundering approach. Illustrated below, you can see that the amount of money transferred to individual accounts can be minimal. 

How to Split Your Finances: Psychological Money Laundering

“Assuming the relationship is on reasonably solid ground, it’s good to launder all incoming money through a joint account. It helps to make any income differences between partners less apparent. It also helps to reduce scorekeeping (keeping track of what each person is contributing). Once the money is laundered, we can each spend some of ‘our money’ without close monitoring.”

The Tightwad-Spendthrift Scale

Take a couple of minutes to assess your psychological orientation toward spending money. Have your partner do the same.  Click here to begin the assessment.

Scores on this scale are important predictors of financial and psychological well-being.

Once you're done, the program will share your score and tell you how you compare to over 10,000 New York Times readers who previously completed the scale.

Modern Husbands Podcast 

We were honored to host the author of Tightwads and Spendthrifts, Dr. Scott Rick, on our podcast.

In a past episode of the Modern Husbands Podcast, Dr. Rick argues that for Tightwads and Spendthrifts who pool all of their finances and demand total transparency, that Spendthrifts could be cornered into financial infidelity. 

Winning ideas from experts to manage money and the home as a team. 2023 Plutus Award Finalist: Best Couples or Family Content

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