Author Topic: Do you figure net worth by couple or individual?  (Read 12577 times)

reformed spendthrift

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Do you figure net worth by couple or individual?
« on: May 22, 2017, 02:13:48 PM »
My husband's net worth is primarily tied up in his business so I don't count his net worth with mine just because it could hypothetically go south in a bad economy. We are pretty much in great shape financially but I worry constantly-I tend to have my money invested much too conservatively as a result. We have money invested all over the place so it takes a spreadsheet just to keep all the accounts and financial institutions straight. Is this being silly?

rjbf65

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Re: Do you figure net worth by couple or individual?
« Reply #1 on: May 22, 2017, 02:20:41 PM »
I look at it as a couple.  My Roth and 401K is larger than DW due to starting it before we got married but it's all counted towards our total net worth in my mind.  I have also wondered before if that is the right way to look at things.

When I plug my info into a retirement calculator I put our average age of 30 instead my age of 33.     
« Last Edit: May 22, 2017, 02:33:37 PM by rjbf65 »

Scortius

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Re: Do you figure net worth by couple or individual?
« Reply #2 on: May 22, 2017, 02:30:35 PM »
I'm married, we're a family with shared finances.  There is no 'individual' for us.

MrDelane

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Re: Do you figure net worth by couple or individual?
« Reply #3 on: May 22, 2017, 02:52:11 PM »
It all depends on your specific situation.  If you and your spouse keep separate finances, then calculate separately.
If you do not separate finances then do not calculate separately.

The main question is - if your spouse's networth increases or decreases will it affect you? (I assume the answer is yes).
If so, then you should probably calculate it as a couple.

MrDelane

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Re: Do you figure net worth by couple or individual?
« Reply #4 on: May 22, 2017, 02:54:16 PM »
We have money invested all over the place so it takes a spreadsheet just to keep all the accounts and financial institutions straight. Is this being silly?

I'm pretty sure the majority of people here use spreadsheets of some kind to keep track of everything (I know I do).
That isn't silly or rare at all.

v8rx7guy

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Re: Do you figure net worth by couple or individual?
« Reply #5 on: May 22, 2017, 02:57:48 PM »
I'm married, we're a family with shared finances.  There is no 'individual' for us.

+1 for us

I'm a red panda

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Re: Do you figure net worth by couple or individual?
« Reply #6 on: May 22, 2017, 03:08:39 PM »
We have money invested all over the place so it takes a spreadsheet just to keep all the accounts and financial institutions straight. Is this being silly?

I find this extremely important. Although we take a shared finance approach, we both have accounts that aren't totally joint (his 401k, my 403b, old savings accounts, TSP, random credit cards, etc). IF something happened to one of us, this helps us know where to be looking for the other person's money!

patchyfacialhair

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Re: Do you figure net worth by couple or individual?
« Reply #7 on: May 22, 2017, 03:12:36 PM »
By couple. We're married, and we treat every dollar as "ours." We haven't even budgeted "his fun money" or "her fun money." It's just "our" money. Same goes for net worth.

ysette9

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Re: Do you figure net worth by couple or individual?
« Reply #8 on: May 22, 2017, 03:18:51 PM »
We treat it all as our money as well. I think it is important for many reasons, one of them being that you want to make sure the asset allocation is appropriate across all combined accounts. That provides more flexibility in choosing the best low-cost funds if one partner can balance out bad choices the other one has, for example, in 401(k)s.

geekette

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Re: Do you figure net worth by couple or individual?
« Reply #9 on: May 22, 2017, 03:24:24 PM »
As a couple works for us.  And simplify things!  Instead of bits everywhere, consolidate into as few institutions as possible.  The more you have at Vanguard or Fidelity, the lower your fees (probably true anywhere, but those are the ones I know).


ysette9

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Re: Do you figure net worth by couple or individual?
« Reply #10 on: May 22, 2017, 04:00:22 PM »
 One very important question, and one we are still struggling with, is whether we can consider ourselves "millionaires" if the joint net worth crosses the $1M mark or whether we need $2M together for us to each be considered a millionaire. :)

spjulep

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Re: Do you figure net worth by couple or individual?
« Reply #11 on: May 22, 2017, 05:42:59 PM »
I'll be the contrarian and say that it doesn't hurt to calculate it individually, taking into account 50% of shared accounts and assets. Especially if you're a woman or the primary care-giver, the one who has sacrificed their earning power to support a family... no matter how solid the relationship, anything can happen in the future. I suppose it's cynical but I've seen a lot of older women deserted and face financial hardships as a result. It is a fact that it's harder for them to find work, and life insurance and alimony are not givens.

But on the flip side, if your partner is in a risky position, you'd have to take into account that you might need to work longer to support him if things go south.

KMMK

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Re: Do you figure net worth by couple or individual?
« Reply #12 on: May 22, 2017, 08:55:10 PM »
I'll be the contrarian and say that it doesn't hurt to calculate it individually, taking into account 50% of shared accounts and assets. Especially if you're a woman or the primary care-giver, the one who has sacrificed their earning power to support a family... no matter how solid the relationship, anything can happen in the future. I suppose it's cynical but I've seen a lot of older women deserted and face financial hardships as a result. It is a fact that it's harder for them to find work, and life insurance and alimony are not givens.

But on the flip side, if your partner is in a risky position, you'd have to take into account that you might need to work longer to support him if things go south.

I agree.

I always calculated it individually, then just added it together for combined net worth. Really, no extra trouble at all. You don't know what's going to happen. My ex and I knew each others money situation and I tracked his, mine, ours. For my current partner, I don't know exactly what he has, as the majority of it is future pension so I don't bother. I just track mine and have a general idea of his.

I also don't see any reason why couples have to retire at the same time, or to necessarily use the same pool of money. If one has enough to cover their expenses and wants to retire, fine. So it's useful for several reasons to know your individual and joint net worth, both.

 

babystache89

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Re: Do you figure net worth by couple or individual?
« Reply #13 on: May 22, 2017, 09:09:25 PM »
I only count my own net worth - separate finances seems like the easiest way to avoid any potential money conflicts.
« Last Edit: August 31, 2017, 09:57:41 PM by babystache89 »

okits

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Re: Do you figure net worth by couple or individual?
« Reply #14 on: May 22, 2017, 09:38:58 PM »
We calculate it as a couple but:

I'll be the contrarian and say that it doesn't hurt to calculate it individually, taking into account 50% of shared accounts and assets. Especially if you're a woman or the primary care-giver, the one who has sacrificed their earning power to support a family... no matter how solid the relationship, anything can happen in the future. I suppose it's cynical but I've seen a lot of older women deserted and face financial hardships as a result. It is a fact that it's harder for them to find work, and life insurance and alimony are not givens.

But on the flip side, if your partner is in a risky position, you'd have to take into account that you might need to work longer to support him if things go south.

as this person I am aware of what I have to work with if my spouse dies unexpectedly or does something completely out of character (spends every cent he can get his hands on, runs out on the family, etc.)  It's far-fetched, but as a parent I'm responsible for looking after my kids no matter what, and looking after myself so they won't need to.

itchyfeet

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Re: Do you figure net worth by couple or individual?
« Reply #15 on: May 22, 2017, 10:05:22 PM »
I am another with no individual net worth, just a combined.

These days I earn maybe 6x what DW earns. I have always earned at least double, and when we first met  I already owned a house etc (sure, with minimal equity) whilst DW was a penniless student.

it has never made any sense to keep a separate track of things when my earning power has always been so much greater.

If I just look at our employer funded retirement accounts as an example, as this is the only place where we have "unpolluted" his and her accounts. My funds are 6.5x the size of hers. I really cant see the point of me saying "look hon, I have saved 25x what I need to spend annually for the rest of my life and I notice you have saved F&ck all. Enjoy working until you're 80, I'll be down the beach if you need me".

If for any reason we were to split, I'd be fine for her to take more than half of everything, as my earning power is almost certainly higher due to the support and sacrifices she has made over the past 20 years.

My sister and her hubby keep their finances separate. My sister is the high earner and has always resented her husband's choice of a low paying career. She owns their house (her house), and her husband is basically a rent paying tenant. Every year (often several times every year in fact) my sister takes her daughter on vacations all over the world, but maybe only once every 3 or 4 years does her husband join them, as he doesn't have the money. This set up seems totally alien to me, but it works for them. I think my brother-in-law  is happy to pay his own way, and not be living off my sister's income. I do wonder whether in my sister's will she has named her husband or her daughter as beneficiary. I suspect it might be her daughter. Lol.

TartanTallulah

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Re: Do you figure net worth by couple or individual?
« Reply #16 on: May 25, 2017, 12:01:25 PM »
I definitely see my husband and me as a unit when calculating our finances in retirement, but, having been the sole earner for much of our marriage and still having by far the larger income, I find myself forgetting to account for the fact that my husband will have some passive pension savings from previous employment (though he lost half of it to a pension-sharing arrangement when his first marriage broke down) plus his own state retirement pension entitlement, and only accounting for the assets that are "mine" and "ours". He's not particularly money-minded, and it's only in the past few months that we've got round to setting up some investments in his name rather than mine.

He's also a little younger than I am, and if I decided to convert my planned mini-retirement at 55 into permanent retirement we'd either be fully reliant on "my" pension income or he would have to work for a few more years. But that's a decision that's subject to so many variables that we don't need to make it yet. It's important to me that I'm not seen in any way to undervalue the years he spent holding home and family together so that I could work as much as I did.

Jenny1974

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Re: Do you figure net worth by couple or individual?
« Reply #17 on: May 25, 2017, 12:06:08 PM »
Our net worth is combined.  At this point in our marriage (17 years), it would be hard to actually separate it any meaninful way other than to split it down the middle.  If we were to divorce, our state laws would likely split it that way.

That's neither here nor there as we currently have no interest in divorce.

catccc

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Re: Do you figure net worth by couple or individual?
« Reply #18 on: May 25, 2017, 01:14:50 PM »
Combined finances with DH (and our kids?  529s.) So I do a combined net worth.

We used to have $$ all over the place, but over the last couple years I have simplified/consolidated it significantly.

AriesFire

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Re: Do you figure net worth by couple or individual?
« Reply #19 on: May 25, 2017, 02:03:11 PM »
I would calculate mine separately from my husband as we don't combine our finances. I don't keep track of his accounts or budget at all, which is sometimes frustrating if I'd like to define a household budget, but I have no desire to merge my finances either. It seems to work for us!

EdwardMM

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Re: Do you figure net worth by couple or individual?
« Reply #20 on: May 25, 2017, 02:11:32 PM »
My wife and I are in the combined camp. For a few reasons:

1) We had a core principal when we got married that we were a team in every possible way. That included finances.

2) My wife left her career to stay at home and subsequently home school our five kids. It wouldn't be fair for me to consider a "mine vs. hers" approach in this situation. Also, see #1.

3) From a pragmatic standpoint, we share many of life's living expenses, like our house and vacation property. The reality is that a couple with $2 million is far richer than two individuals with $1 million each.

meghan88

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Re: Do you figure net worth by couple or individual?
« Reply #21 on: May 25, 2017, 04:52:00 PM »
We do both.  We are common law, but even if married, break-ups happen.  I've worked too hard for my stash to think of it as anything other than my own if anything happened.  So I know that I am at at X and he is at Y, and together we have Z.  The only reason we have a joint account is to transfer money between us for bill payments.

daverobev

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Re: Do you figure net worth by couple or individual?
« Reply #22 on: May 25, 2017, 05:34:45 PM »
Separate, but mostly because we're not on the same page in terms of retirement - as in, I'm ready to go any time now, where she is driven/wants to work on the stuff she cares about.

I mean, then I add it up to give an idea of what the bare minimum we could draw to support us as a family, sure, but in terms of "ownership" we have separate accounts.

Spork

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Re: Do you figure net worth by couple or individual?
« Reply #23 on: May 25, 2017, 05:40:15 PM »
We combine net worth and have for 22 years.  I have no desire to try to sort out the "mine" and "hers".  It's easier this way. 

Plus, I live in a community property state.  "My" net worth is, effectively, "our net worth" / 2.
« Last Edit: May 25, 2017, 06:04:04 PM by Spork »

Pigeon

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Re: Do you figure net worth by couple or individual?
« Reply #24 on: May 25, 2017, 05:57:20 PM »
Combined.  I make more money than dh and have much more in retirement savings, but he will be entitled to a pension and I won't.  We're the same age and will retire at about the same time.  We keep joint finances.

libertarian4321

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Re: Do you figure net worth by couple or individual?
« Reply #25 on: May 25, 2017, 06:01:15 PM »
Both. :)


Lady SA

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Re: Do you figure net worth by couple or individual?
« Reply #26 on: May 25, 2017, 06:46:25 PM »
Combined. Our paychecks are deposited into a joint checking account and all bills/after-tax investing flow from this shared money. We share all expenses, so it just makes sense to keep all of our calculations joint too.

We consolidated all our various accounts into just a few accounts to keep things simple.
Joint checking
Joint Savings for EF
My roth IRA
DH roth IRA
my 401k
DH 401k
joint brokerage account

If we were to split for some reason, we live in a state where things would be split evenly anyway.

Though now I'm interested just for curiosity's sake to see which one of us, me or DH, is technically the "wealthiest"!

Spork

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Re: Do you figure net worth by couple or individual?
« Reply #27 on: May 26, 2017, 07:57:01 AM »
Though now I'm interested just for curiosity's sake to see which one of us, me or DH, is technically the "wealthiest"!

I wouldn't even know how to compute this.  For example, I've worked more years and "earned" more.  But DW has made most of the investment research/decisions over the years.  (And did lots of things to curb spending like cooking, gardening, etc.)


itchyfeet

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Re: Do you figure net worth by couple or individual?
« Reply #28 on: May 26, 2017, 11:58:15 PM »
Though now I'm interested just for curiosity's sake to see which one of us, me or DH, is technically the "wealthiest"!

I wouldn't even know how to compute this.  For example, I've worked more years and "earned" more.  But DW has made most of the investment research/decisions over the years.  (And did lots of things to curb spending like cooking, gardening, etc.)

Yeah, this is a key point that I forget. Saving is not just earning more, but also saving more. There is no doubt that I would not cook at home much if I was on my own. But DW is a great cook, who loves cooking. That saves us a fortune. She also makes lunches for me to take to work, which would prob never happen if I was solo.


mies

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Re: Do you figure net worth by couple or individual?
« Reply #29 on: May 27, 2017, 01:52:25 AM »
I calculate both our combined and individual net worth. It's trivial to do with a spread sheet. My wife started investing way sooner than I did, so most of our net worth is her net worth.  I don't feel like I can claim that money as part of my net worth. If you asked me what my net worth is, I would give you the value of my portion and not our combined value.

o2bfree

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Re: Do you figure net worth by couple or individual?
« Reply #30 on: May 27, 2017, 08:45:29 AM »
Individual. We've been together 22 years, but have always kept our finances separate, except for owning a house together. Part of the reason is that DH is divorced and was paying child support for the first eight years of our relationship. We didn't want to take any chances on his ex trying to raise his payments because of combined income, so we kept things separate and didn't get married during that time. Also, I guess we've been wary of mixing finances in case the relationship falls apart. We did finally get married last year for health insurance reasons, but still keep things separate, though I know there are community property issues now that we're hitched.

Stache-O-Lantern

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Re: Do you figure net worth by couple or individual?
« Reply #31 on: May 27, 2017, 10:40:47 AM »
It sounds like in the OP's situation the two asset pools are very different, which will probably matter for planning for FIRE.

I treat our pools together, but b/c most everything is in separate 401k's, IRA's, etc, it's easy to separate by individual.  Over the last few years i've always calculated our combined FIRE number.  But she is not as excited about FIRE as I am, and I don't know if i can wait long enough to hit the combined number.  She isn't spendypants, and saves more than the average American, but she isn't really mustachian either.  This has raised the possibility that I may FIRE earlier than her, which isn't really an option i had considered before, and am currently thinking about.  (i still have years to think about it anyway).

Perhaps the answer to the OP's question comes down to, do you plan to FIRE simultaneously with your spouse or not?  If yes, then net worth by couple is probably all that matters, but if no, then net worth by individual is more likely to matter.

This is a reasonable question at least in my case because we have similar incomes and childcare responsibilities, share expenses, etc.  A situation where one spouse made a lot more than the other would probably skew this decision.

lemonde

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Re: Do you figure net worth by couple or individual?
« Reply #32 on: May 27, 2017, 10:31:54 PM »
I'm married, we're a family with shared finances.  There is no 'individual' for us.

Yup. We do the money pot.

Blissful Biker

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Re: Do you figure net worth by couple or individual?
« Reply #33 on: May 28, 2017, 12:18:59 PM »
We define our net worth as a couple and have a diversified portfolio across all our accounts.  For example I primarily hold the bonds because his registered retirement savings plan (RRSP in Canada) needs to grow to equal mine to minimize taxes when we retire.  He runs the house hold day to day finances.  I am responsible for the retirement planning and investing.

TravelJunkyQC

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Re: Do you figure net worth by couple or individual?
« Reply #34 on: May 29, 2017, 12:08:45 PM »
We think about it both ways. We aren't married, after 6 years of a shared life, but simply because it isn't necessary for any tax benefits. We may get married eventually.

We have our individual investment accounts, individual net worths, as well as our combined net worth. Investments are discussed together, no matter whose name they are in, and long-term plans are made together.

Each is individually protected by law in case our relationship goes south, but our planning is made as if it won't go south.

Inaya

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Re: Do you figure net worth by couple or individual?
« Reply #35 on: May 29, 2017, 12:39:21 PM »
I'm the sole earner most of the time, so "our" NW is my NW.

Retire-Canada

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Re: Do you figure net worth by couple or individual?
« Reply #36 on: May 29, 2017, 12:42:43 PM »
My husband's net worth is primarily tied up in his business so I don't count his net worth with mine just because it could hypothetically go south in a bad economy. We are pretty much in great shape financially but I worry constantly-I tend to have my money invested much too conservatively as a result. We have money invested all over the place so it takes a spreadsheet just to keep all the accounts and financial institutions straight. Is this being silly?

If you know your investments are "far too conservative" and you have so many have trouble keeping track of them all I'd say that was something I would take action to correct. You need an investment plan that meets your objectives. Depending what "far too conservative" actually means you might be negatively impacting your FIRE success by being "too safe".

Unkempt Stash

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Re: Do you figure net worth by couple or individual?
« Reply #37 on: May 29, 2017, 12:57:22 PM »
Separate, with a yearly "lets look how we are together!" calculation.

DW has no interest in FIRE and doesn't particularly like me thinking about it. (Yet still has ~50% savings rate...)
A happy retirement will only be possible when I am able to retire and contribute my full share to everything without her.

Also, I have been divorced. DW has far more assets than I and I don't expect to ever catch up.
I'm not comfortable retiring on her smart decisions before I was in the picture.

dreadmoose

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Re: Do you figure net worth by couple or individual?
« Reply #38 on: May 29, 2017, 02:12:34 PM »
I have always calculated mine individually. This means half of all shared assets (though now I refuse to count the equity in my house as a profit).

For background I am recently married (Dec), and the DW has only finished her school a month ago. She is currently setting up all of her actual budgets (always been more frugal than me but doesn't track NW at all). I can see us running OUR Net worth together once she's set up as I earn about 3x what she does and may feel bad FI/RE'ing while she still has to slog it out.

Abe

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Re: Do you figure net worth by couple or individual?
« Reply #39 on: May 29, 2017, 08:46:51 PM »
It seems people who have had relationships other than a single long-standing one are more likely to consider separate net worths. That would make sense if, say, one is a millionaire and then met someone - you would feel that million is yours since your partner wasn't involved in earning it.

My wife and I are in the opposite category; we've been together our entire adult lives and would find it unnerving to consider our incomes or savings as separate since unquantifiable sacrifices were made by both of us. Yeah I'll be soon making twice as much as her (while for years she's made three times as much as me!), but I definitely didn't get to where I am by myself and feel she is entitled to half of the earnings. She feels the same way also.

I am annoyed that 401k accounts are individual and can't be made joint. Everything else is, and I worry if something happens to me she will get locked out even though she's the beneficiary - don't trust people to not mess up the paperwork. If anyone can talk some sense into me on this, it'd be appreciated.

Step37

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Re: Do you figure net worth by couple or individual?
« Reply #40 on: May 29, 2017, 10:42:30 PM »
I consider our NW as a couple, probably because we've been together through all of our adult lives and earning years. Everything that can be joint, is.

Linea_Norway

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Re: Do you figure net worth by couple or individual?
« Reply #41 on: May 30, 2017, 02:13:18 AM »
I count net worth as a couple and look at what we need as a couple. My DH and I are married without children and own everything together. But I guess our pensions from the age of 67 are separate, because that follows the person. But we would spend the pensions as a couple, as long as we are living as a couple.

I have been thinking about what to do in case of a divorce. This is not an unrealistic scenario as I have seen it happen with friends who have been together forever and still split up unexpectedly. Things can happen, obviously. In our case it is simple enough to just split everything in 2 (probably sell the house) and leave each other without much drama. I just like to hire a lawyer as an official, neutral part to make sure my DH hands over half of what is in his savings account, which is more than in my account. He once mentioned that he didn't consider this jointly money. I was flabbergasted to hear that, because we signed a contract that we own everything together in our marriage.

For FIRE purposes I am a bit uncertain about my state pension. The pension fund is still not finished defining the new pension rules for younger people, after the reform that found place 5 years ago. That means that for people of my age (43) and younger it is impossible to find out how much we will get from them at 67. I am supposed to have a good and solid pension fund with a guaranteed pay until my death, but I can't check how high it is. They told me to wait for several years until the rules are fully defined. In my spreadsheet I have just taken an extremely conservative guess at what the amount might be and count on very little. My DHs pension is fully clarified and that amount is higher than my conservative guess. He has also had a higher income all those years, so my pension might turn out to be lower than his pension also after it has been clarified.

But I guess, that if we were FIRED and we would divorce, I could always go back to working part time if that was necessary. I also think I could be living more badass cheaply by myself than what we would do if we were two, by e.g. taking a roommate, or living in a caravan. So I think FIRE would still be within reach even if I ended up being alone.

Case

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Re: Do you figure net worth by couple or individual?
« Reply #42 on: May 31, 2017, 01:31:00 PM »
My husband's net worth is primarily tied up in his business so I don't count his net worth with mine just because it could hypothetically go south in a bad economy. We are pretty much in great shape financially but I worry constantly-I tend to have my money invested much too conservatively as a result. We have money invested all over the place so it takes a spreadsheet just to keep all the accounts and financial institutions straight. Is this being silly?

You do it as a couple.
Unless you are going to leave your husband when the economy goes bad, or you two handle your finances desperately and don't share much significantly and essentially don't operate as most couples do, it is not realistic to only look at yourself.

Case

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Re: Do you figure net worth by couple or individual?
« Reply #43 on: May 31, 2017, 01:34:48 PM »
I'll be the contrarian and say that it doesn't hurt to calculate it individually, taking into account 50% of shared accounts and assets. Especially if you're a woman or the primary care-giver, the one who has sacrificed their earning power to support a family... no matter how solid the relationship, anything can happen in the future. I suppose it's cynical but I've seen a lot of older women deserted and face financial hardships as a result. It is a fact that it's harder for them to find work, and life insurance and alimony are not givens.

But on the flip side, if your partner is in a risky position, you'd have to take into account that you might need to work longer to support him if things go south.

Except that when you divorce, you split things up 50/50 (ideally) unless there is a pre-nup in place.  So I completely disagree (unless again, pre-nup).  If a pre-nup is in place, then there could be some mathematics in place to estimate your net worth.  It would be something like this.
Net worth = (amount that is mine in the pre-nup) + (stuff we share / 2)

The devil is in the details always, but this is more straight forward I think.

talltexan

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Re: Do you figure net worth by couple or individual?
« Reply #44 on: May 31, 2017, 02:35:17 PM »
I think OP is asking the wrong question. The real issue is how to value the business her husband manages, as well as how to account for it in planning the asset mix of their stache.

jbfishing

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Re: Do you figure net worth by couple or individual?
« Reply #45 on: May 31, 2017, 10:21:26 PM »
We are a millionaire but if we split our NW neither is a millionaire.  I prefer being a millionaire so we have a combined NW.  We have both alternated in who makes the most so its hard to sperate based on income.  We saved together based on a family budget and what we could afford to save not what he or she saved individually.  We've had differing access to retirement savings vehicles, 401ks for both in past, but now SIMPLE ($12500 limit) for one and 457 + 403b ($36000 limit), plus IRAs for each.  We can really only take advantage of these opportunities by working together with combined finances.