Post # 1
I thought our combined incomes would make us unstoppable but apparently it’s more complicated than I thought. Any tips for how to go about creating a monthly budget? I’m most interested in what to save jointly and how to decide who pays for what, especially when there’s a big disparity in salaries. We’re not merging our accounts but we are sitting down today to discuss a household budget. I feel overwhelmed!
Post # 3
When you have a disparity in salaries and yo uare not lumping your funds together 100% and sharing, the best way to handle bills in my opinion would be to go by percentage of income.
i.e. if your combined income is 100k, you make 70k and he makes 30k (like how I turned that around there ;)) then you would pay 70% of the bills, and contribute that much to household savings and expenses.
in order to set your budget first decide that. Next, list out all the bills you have that you are going to pay jointly, and then those you will pay separate if you are going to do so. It seems to help to write this all down on paper.
With what is left over after necessary bills, decide what you need to live on with each paycheck, and what you are comfortable with setting aside. Some people live by certain rules and money management plans etc but listing everything out seems to be the best way to start.
And it’s frustrating and hard for sure. And takes constant adjustment, at least in our household. For ongoing monitoring and adjusting after we sit down to write things out once in awhile I use a spreadsheet, and Mint.com (free, and links all of your online accounts which is awesome. Also let’s you classify spending etc)
Post # 4
Good luck! I HATE talking about money. I think it’s an important conversation to have, and one that my fiance and I have frequently to be sure we’re on the same page. It never get easier and never gets fun or more comfortable. (That’s probably my own issues, though.)
I would just make a list of everything that you spend each month. Talk about what you both think is fair, and meet in the middle. Be open and honest. No one wants hurt feelings. Also, looking at your expenses over the last few months to be sure you’re not under or over estimating things like food, household items, etc.
Post # 5
@BruinBeeMPH: Do it in percentages. 50/50 wouldn’t be fair. You pay some stuff, he pays other stuff. Do what makes sense. Like my SO moved in with me and I had a bunch of bills in my name already so we keep it that way (until we move anyway). He does the finances – I log onto my accounts for him weekly so he can move the $$ about. We have separate budgets with mutual goals, if that makes sense. Like we have our savings goals together (for trips and long-term kinda stuff) but since we have separate accounts, each have our own money designated for stuff like clothes, entertainment, food, and so on. He pays for more, like I’ll pay for our weekly dinner at our favorite restaurant, but he pays for groceries. Maybe when we marry we’ll combine more stuff, but for now it works fine like this. I like him managing the $$ because he’s better at it and I am not too interested. I just like to spend my fun money and know he’s looking after the rest lol.
Post # 6
The system we use is similar to MsJ2theZ – but we do equal proportions. I make more than my FI, but we each contribute 60% of our income to the joint account. The amount of money I contribute is more, but it’s the same percentage of my income as his. We chose 60% because many financial planners suggested that every bill we have to pay/anything you need to live (car notes & insurance, groceries, mortgage, utilities, whatever) total no more than 60% of your income. R
The remaining 40% is our personal discretionary money. I choose to save 10% of my total income as personal emergency fund and use the remaining 30% for gifts, my charity donations, things I need or want, etc. I think my FI probably saves a bit more because he doesn’t seem to love Essie as much as I do. In any case, it’s not my business–that 40% is his.
If there is leftover money in the joint account (and usually there is, ranging from a few dollars to a hundred or so) we just roll it into the attached savings account (which also has money we fronted as a joint emergency fund). That’s money is our wedding fund, honeymoon fund, future down payment–any shared savings goal.
The only time this got tricky was when we had to figure out what to do about retirement. I save pre-tax in a 403(b), but he saves post-tax in an iRA. After we did the math, it ends up that he contributes something like 56% of his monthly income to our joint instead of 60%, which allows him to save some back in the same proportion I do. Took a minute to do the calculations, but it was easy enough.
I will say, especially at the beginning of graduate school, there were times when we needed to contribute 70 or 75% of our incomes to the joint account to cover our expenses–but this would have been true if we had been living separately as well. There are simply times when you have to tighten the belt on discretionary spending. We’re working to get our monthly expenses down to less than 50% of our total income (cutting cable, shopping insurance, etc). You also *HAVE* to talk about what counts as a “joint” expense. Oil changes? His hair cuts? Replacing part of your work uniform? Furniture for the house? Date nights?
Post # 7
I’d like to get in on the topic.
No suggestions to give, unforutnately.
However, my FI and I make about the same and we have established bank accounts with different banks. Now we have a mortgage and joint account with a 3rd bank.
It costs money to do an e-mail transfer so i’m stuck writing myself cheques to deposit into our joint account or withdrawing cash to walk over to our joint account.
Apparently this is the only way to do it without incurring charges 🙁
How is everyone transferring funds back and forth?
Post # 8
I calculate 2 months in advance how much money each fortnight is required for bills. I deduct that from dh’s fortnightly pay also take out dh’s fun money and mine. From the money left over I place 3/4 into a separate account for a house deposit ( we already own a home but we had to move for work so it’s being rented out) and the other 1/4 goes into a saving account for our trip to Europe next year. This means we save a heap of money and can’t overspend since once the money in our own a counts is gone there is no more to use since its already gone from our joint bank account. Works for us.
Post # 9
Posting to find later, I will definitely need to refer to this in a few months.
Post # 10
It turns out that our bills combined are almost exactly 60% of our combined income! I’m honestly kinda shocked. Where is my money going?? It’s not that I’m irresponsible with money, but we both usually just buy something if we want it. There’s no real resolution yet… if anyone has any more suggestions, keep them coming! You guys seem really money savvy and I feel that my education has failed to prepare me to manage my finances.
Post # 11
If you are familiar with Dave Ramsey’s envelope system, we do something similar. In his plan, you fill envelopes weekly, bi-weekly or monthly depending on pay schedules. The envelopes are for specific purchases- Grocery, Gas, His spending, Her spending, etc. and only use the cash in the envelopes. No cards. We do something similar, but we use our debit card and an app called EEBA. You set up virtual envelopes that you “fill” depending on pay schedules. When you buy groceries, put it on the debit card and subtract from that envelope. When an envelope runs out- no more spending in that category until the next pay day.
Post # 12
@BruinBeeMPH: I think the first thing to do is for you BOTH track your everyday spending separately. You need to et an idea of what you each spend money on before you can come together – I think. Otherwise you have no idea if $400 budgeted for food is even realistic or not.
I’d also do the percentage thing if you dont want to merge funds. Maybe make one joint account where all the joint bills come out of (rent, mortgage, food, vacations, utilities, cable, etc.). You two just have to decide which categories you both want to cover. Then total is (it’s going to be a guess as each month’s expenses are really different, but go on the high end), then do the percentage. You each put that much into the account. Get paid every two weeks? Then divide that in half for the month. They can be linked so money can be moved online.
Then you might have individual categories like cell phone, car insurance, car payment, student loan payment, gifts, etc.
What are you going to do about retirement? Both just do your own thing on the side? Of cousre retirement accounts are individually named (not joint), but when you’re retired, you’re both going to be using that money anyway. Or what if one of you wants to use ALL their personal for retirement while the other goes out and spends all their personal money – how would that work when you’re both 70?
PS I’m an advocate of merged money. It makes you discuss and communicate while working together as a team.
Post # 13
Me & my SO have seperate finances, but we live together so it started to make things a hassle (who pays for what & writing checks back and forth). What we did about a year ago made things SO much easier (sorry if I’m repeating other posts, I didn’t have time to read them all)- we each have a seperate account and one joint account. Currently, because we aren’t engaged/married we only combine our mutual expenses for this joint account.. It looks something like this:
Rent + Utilities
total / 2 = what we each deposit into this account each month. This works out great.. If we go to dinner & a movie, we pay with the joint card, etc.
I make a significant amount more then my SO, but I also have school debt, etc so that’s why we’ve kept it seperate for now. Currently, it’s 50/50 but after I make my student loan payment and a couple of other things, we are almost 50/50.. Maybe more like 60/40.
Anyways…what I plan on doing after we get engaged (hopefully soon!!) is to pool almost all our money into this joint account, and pay all bills out of this account. I want each of us to have a seperate account where we can have spending money. I haven’t decided this figure yet, but it will be in the $100-$200 range (monthly). Because I like to keep savings/checking seperate, we will probably also have a joint savings. I like the idea of having a seperate spending account for each of us. I’ve known SO many couples to get in fights about money & spending- I want to avoid that big time!
I’ve read a lot about finances and what’s the “best” way to handle them. I know it’s different for everyone… But for me the joint account with seperate accounts definitely makes the most sense for us!