Many couples keep their finances partially (or even completely) separate. One big reason is that spending joint money on individual expenses can lead to disputes, and keeping separate accounts can reduce that. There is, however, another reason to keep some amount of personal money: Simplifying budgeting.

Lots of couples merge their finances to some extent. From completely merged to completely separate, you'll find someone at every point along the way--for example, joint accounts for handing certain joint expenses, but not others. As far as I'm concerned, anything that works for you is fine, and I don't much want to advocate that any point along that spectrum is better than any other (especially with regard to dispute avoidance).

Having said that, I think keeping a certain amount of personal money in personal accounts can simplify budgeting.

Once you get past the big budget categories (taxes, housing, groceries, medical, transportation, utilities), what's left are a bunch of smallish categories that can end up being very fiddly to deal with properly. Does going to a pottery class count as education or entertainment? Does a toothbrush count as household, grocery, or medical? What category do sheets and towels go in?

If you've got a working budget, you've probably answered all those questions already--but you probably also have stumbled over some expense, somewhere along the line, that doesn't seem to have an obvious category. Especially problematic are unusual expenses that are rare enough that they don't have their own budget line item, but large enough that you really can't just shove them in "miscellaneous" and leave it at that.

For example, I just went to an Esperanto conference. What budget category does that belong in? Education? Travel? Vacation? Entertainment?

It was within driving distance so the travel expense was modest, and the conference fee itself was quite reasonable, but the hotel costs added up (even though I shared a room with my brother). It was enough money that it couldn't just be ignored, but it wasn't obvious what category to put it in--which worked out fine, because I paid for it out of my own personal money.

By creating personal accounts and allocating a certain amount of money to them, my wife and I greatly simplified our budget. For example, we don't budget any money for books or magazines--we buy what we want with our own personal money. We don't budget for meals out, except for entertaining guests. (Meals out with just the two of us, one or the other of us pays with personal money.) Personal money also covers things like hobby tools and supplies, premium booze, and electronic gadgets.

We could budget for all those things, but it'd be complicated. Lots of those categories would be small, and they'd also be very inconsistent. (Years go by when we don't buy any electronic gadgets.) By just allocating a lump sum to "personal money" we get the important part taken care of--we know the total amount of spending--but we don't have to fiddle around with details.

Take the idea of personal money all the way, of course, and it's kind of like having no budget at all. I wouldn't recommend that. There's a lot of benefit in having a budget, as a way of keeping your spending in line with your values. But you get a lot of the benefit early--in those first seven or nine categories that eat up eighty percent of your money.

It's a personal decision, of course, but I think the simplicity of leaving a bit of money unallocated--except to be spent on one person's whim--is an overall win.