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What we're trying to get rolling--still in the middle of it--is this:
One primary account where paychecks go and through which bills are paid and groveries are bought.
Each of us has a separate account and a set amount is transfered every 2 weeks into our separate accounts for "other/fun" money.
We've set up the accounts but we still need to sit down and decide on an amount, since we're pretty poor atm.
It sounds like the biggest problem is that you guys don't agree on what is an appropriate amount of fun spending. Why are you penny pinching if he's spending his money on whatever he wants? I think you need to have a conversation about that and say, look paying the credit card debt should be our priority right now. That means that we need to set up a monthly budget, in which we each can spend up to x amount on "fun" stuff.". That way it's clear, and you don't feel like you're the only one saving, because that doesn't really seem fair.
I'm a little confused by your description of how you guys do stuff...if you're each on each other's bank accounts, why should be be writing you checks? MY DH and I also have two bank accounts, because we didn't want to give up our banks. We added each other onto the accounts, and we both withdraw from them whenever we need money, or use either one to pay bills, depending on how much the bill is/how much is in that particular account. We also have two joint credit cards, and we pay each credit card out of the accounts, again depending how much money is in each one. We don't have a limit on our "fun" money, since it isn't an issue for us at the moment.
@hilsy85: He does the check writing thing to 'my' account because there are still some bills he handles and his paychecks are never the same amount. So, he takes whatever is left over (after whatever spending) and puts it over to my account.
Unfortunately, neither of us have been very good at establishing a budget of any sort. I have a really hard time figuring out what should be set aside for groceries, etc.
The way my brain goes about it is what bills need to be paid - and spend what's left over. That does nothing for our savings plan - which is my main concern. Meaning - if we do nothing, we are just going to spend a ton of money, when we should be saving it.
I guess I need to do some tracking to figure out how much to set aside for groceries and going out. That way, I can have a realistic idea of what we should be putting in savings and what we can use for discretionary stuff.
In theory, I really hate the idea of an allowance, because I feel we both work hard and if we want something and deem it necessary, we should just get it... but, I also don't feel like I have a good handle of what we are spending, etc.
So, we have the discretionary spending accounts that you are talking about. We each have an account that $150/month gets automatically transferred into. It's a small amount right now because we are aggressively saving for a 6-month trek through Asia and a house - otherwise it'd be more like $250. Purchases for hobbies/extra stuff we don't need individually come out of that. (for example, let's say my winter boots wear out. If I get the reasonable replacement pair, that comes out of joint funds. If I want the awesome $300 pair, I make up the difference out of my own account. Or, if I want to buy camera gear, that always comes out of my own account). Food and going out come out of a joint account, so for us, that's not included in the "allowance".
Figure out what dollar amount you guys are comfortable with and what the ground rules are that you are comfortable with!
Also, if one of us really wants something and it is more than our individual accounts, we talk to the other person first. I really wanted a $1200 camera lens for our trip but obviously $150/month won't support that purchase! We decided it was worth it, that we make a lot of money, and that I should get it. Just because you have groundwork to make yourself aware of spending habits doesn't mean you can't bend the rules!
IMO it works great to have one bill account and each spouse have their own checking. Each paycheck, put a portion into the bill account to cover all bills. Then agree on an amount to save each month. Put that in a shared savings account. The rest is spent individually.
@crayfish: what do you do for 'going out with friends' type money? Is that your joint money or your fun money?
In my head: hobbies or things outside each other would be the 'allowance'. The number we randomly came up with last night was $400/each.
I'm a little confused about how to handle clothes and stuff like that - although, I like how you divided up your boot purchase!! :)
We're are also trying to figure out how to handle food. For insance - I always pack a lunch and DH goes out. So, while I'm eating stuff bought from our joint groceries - he's probably spending $40 a week on lunch. I'm thinking we may just up our 'fun' money and include any going out to be part of that....
How we do it:
50% goes into a joint account that pays for all "our" stuff, insurances, grocery, bills, and when we go out together. Anything we dont spend just accumulates, but not usually very high because vacations etc come out of this, furniture etc.
Pre-tax we max out our retirements so 15% is automatically going into 401K
The other 50% goes into our personal checking. We agree how much we are going save in cash and that gets automatically transferred to a joint savings.
We don't touch our savings unless its a discussion and we agree. We will however give each other money from our "personal accts" if its needed for a larger purchase.
The remaining amt is used for "us". Fun with friends when the other is not there, lunch out at work, shoes etc.
So it looks like this:
Pretax check 15% to 401K
50%- joint checking account for all shared/housing expenses
15%- joint or personal savings
35%- personal checking or "fun" money
Remember, money is "fungeable" meaning it can be moved around to pay for things. The important piece is to remember that you both are on the same page in regards to spending and saving and investing.
Have a long term plan on what you want out of life. This helps put on on the same page.
Do you want a house? how much will you need to buy one? When do you want to buy it?
Kids? How much do you want to be able to save first? Once you have the kids what are your expectations for vacations, college? This will help you determine how and where you want to spend money now.
etc..
@lefeymw: Thank you! It's super helpful to see how others have figured it out. I like the idea of joint and personal accounts - I have a feeling we'll be playing around with this until something 'sticks'.
Our big thing is saving up to buy a house. We have no equity in our current one - and I don't see that changing any time soon. So, anything we buy, we'd need a hefty downpayment. No kid plan, so that takes the edge off things somewhat.
We had to be super agressive saving for the wedding and super aggressive paying off DH's debt. We both ideally want to be super aggressive saving for a house - but we are also pretty tired of being super agressive ;)
One more question for you - do you and DH carry around two cards to pay for things? Meaning - if you go get groceries you use the joint account card - and if you go shopping for you, you use the personal one?
I got into the habit of throwing all expenses onto one credit card. I'm kind of leaning towards having DH do the same thing (for all joint expenses) and then him having his personal checking for his 'fun' money.... but, for some reason, opening up a new credit account for this purpose seems like 'one more bill' to manage. Certainly not the end of the world... just trying to think through it :)
We do have two debit cards for the joint account which we rarely use except to get money.
But I pretty much use my personal CC that has a great rewards program and I pay that bill from our joint account often due to the type of expenses. Its such a good program that I am getting DH one. Itll still be my account, but hell have his name on the CC to use.
I do most the shopping and when we go out I pay with that CC so pretty much all expenses go on that. I pay it several times a month so its always a 0 balance, but I pay it from different accounts depending whats on it. I dont worry about exact dollars so is always "about". So if most the expenses are grocery except for one lunch out then itll come out of the joint. If its a clothes shopping trip but also a dinner out with DH, then itll come out of my account.
The easiest solution we could think of is what others already mentioned:
It will take a while for us to get our system down. But we will end up doing the same as previous posters said, giving ourselves an "allowance" of sorts for individual spending.
@Gemstone: do you each have an individual fun/discretionary spending account? Or is there one that you share? I'm also wondering what you consider fun/discretionary vs. what comes out of the joint account. This is something I've been pondering a lot lately... maybe I'll start another thread to see how people do it....
Here's how we do it:
DH and I had separate checking accounts until a few months before we got married. We decided to move everything to my bank because it's nationwide and therefore more convenient than his credit union (it sounds like maybe you guys need to draw up a pros/cons document for each of your institutions and then pick one to use for your joint stuff - it will def. make it easier).
Then we set up a monthly budget (we calculated our ongoing expenditures - mortgage, car payments, cable, gym memberships, insurance, etc. - that we can't really change and figured out what we had left over, which became our "monthly budget").
For our monthly budget, we each get $150 that can accrue for our "discretionary funds". We track this on an Excel spreadsheet along with the regular budget items.
The other joint expenses that we document are: groceries, gas, social activities (dinners out, drinks with friends, weekends away, etc.) and a household discretionary purchases (hair cuts and other random things that you need to live).
One caveat we just made for the "social activities" is that it needs to be a joint event (i.e. both of us go for drinks with friends). If I'm going out with the girls for dinner, it comes out of my discretionary funds. That way, one person doesn't use up the money on his/her activity and the other person has to eat at home all month because there isn't any fun money left for going out.
For the discretionary funds, we did put a rule in place that if it costs over $250, it still comes out of your discretionary fund, but you need to clear it with the other person first.
Every month, we print off the spreadsheet and put it on the kitchen counter so it's easier for us to write down expenses as we go, then every week we tally it up to see if we're on track.
@oracle: Woops, sorry I wasn't clear. Yes, we each have an individual"Fun Fund," as we call it. :) To be honest, we're still working out exactly what comes out of the Fun Fund, but here are a few examples:
As I said, we don't have it completely nailed down yet, but our thinking is that the Fun Funds are intended to allow us each a little spending money that won't stress us out about our finances. So I don't need to get in a tizzy every time Husband wants to play golf ("One round of golf costs HOW MUCH?") and he doesn't need to be annoyed when I indulge in a Starbucks latte from time to time ("Coffee should never cost $5 a cup.").
Things that involve the two of us come from our monthly budget. HOWEVER, we can't overindulge just because it's joint spending. If it's something big/special that doesn't fit into the monthly budget (concert tickets, a night away in a hotel), we'll split the cost from our respective Fun Funds.
Does that help at all? We're still getting used to it, so if you have thoughts on the process, I'm all ears. :)
@oracle: May I ask why each of you is so attached to your own bank accounts? Because it seems like this might be a debate that could be very easily resolved simply by comparing interest rates, fees, etc.
When DH and I combined our finances, we looked around to see what bank would have the best rates for our situation. It turned out to be our employee credit union. (We were both with banks previously.) We went in, opened up a joint checking/savings/money market account, with a joint credit card, and closed our other bank accounts.
We're both still keeping our own credit card. We use the joint credit card for things like groceries, purchases for our apartment, and anything we do together. Then we each have $200/month that we can spend on whatever we want. I understand not wanting "allowances," but otherwise it seems like you might just build up resentment that you're scrimping and saving while he's buying toys.
I jsut started using mint.com to track my spending, and it's been EXTREMELY helpful in seeing where my money is going.
We work out of 1 account bc that is a lot easier imo. And we're pretty specific with our budget because things pop up reuglarly that you might not otherwise think about and would end up on a credit card... like car insurance for example (only paid twice/year) or christmas gifts. So we figure out what we spend on those and budget for it every month so it kind of rolls over and we have enough in our checking to pay for those things when they pop up. As for personal spending, we also break that down somewhat too. Like we have a separate line item for me going to the salon. I guess that's "fun" money but its expected and a somewhat known quanitity. Also I'd argue, somewhat necessary. Then we have a budget item for each of us eating out without the other (my husbands is a little higher than mine because he works in an office where they do lunch out every friday and its somewhat important for team-building he goes), and we also have an item for just "other" money for each of us which is equal (Only $100 right now because we budget for pretty much all the necessary stuff other places and we like to put quite a bit away in savings).
We do the same as Goldilocks and Gemstone. It's a pain sometimes to keep track of everything, but worth it in the end. We are also agressively paying off our car loan and credit cards and will be done in February...just in time for our 2 week vacation to Europe. Which we're also saving agressively for. But we came up with these goals together so that come March/April, we'll have a lot more "fun money" and not have to be on such a strict budget.
I think the key component is that BOTH people have to be sticking to the budget. Making a budget and having one person blow all their money away helps no one.
DH and I both had banks we liked, but we decided to make his our joint checking account when we got married. I do think its easier that way. I still technically have my credit union account, since they may have a better rate or service in the future, but I don't keep any money in it.
We are going to set up a family budgeting program this month, since its been a hectic few months since the wedding (moving, finals, graduating law school, the Bar exam), but since I start work in September and we'll have a more steady income, we'll be budgeting on paper.
For the last few months, our budgeting has been more along the lines of talking through what we expected our costs would be that month. We know what our basic costs are (tithe, rent, gas, utilities, cable, phone, etc), so we usually just assume a lump sum for those expenses. But there will always be some single transaction above $200 that we should budget for - such as our hotel for the week of the Bar Exam, movers, a weekend trip somewhere, teeth whitening, etc.
Once we start the month knowing roughly how much money we have left, its easier to know what we can and can't do. Generally if I need to do a big shop (i.e. a Costco trip), I will just text my husband and check in to make sure we're good on funds. He may want to use the money for a car repair or something like that, and if we don't check in, he could accidentally spend the same $200 without thinking.
Our biggest fluctuation in a given month will be food. If we have more money that month, my husband knows I'll probably spend it on better groceries (I like eating local, organic produce and meat whenever possible). If we're a bit tighter, then I'll scale back to conventional produce and change our menus accordingly. And if we're busier, we will obviously eat out more. So we also always give our spending some breathing room to accomodate for a high food bill, and adjust our other spending accordingly.
We tend not to need TOO much discretionary spending money because we do almost everything together, so it hasn't really been a budgeting problem for us. More often than not its a food-related expense from going out with friends for dinner or something. We don't spend a lot of money on clothes or maintenance either, so generally it will be a $30-40 expenditure here and there.
One thing that gives us a lot of peace of mind is to keep a small emergency fund on hand. We try to always keep $2,000 on hand for emergencies. When I asked DH why $2,000, he said its because usually the biggest emergency someone deals with is car-related and unless its catastrophic, its rare for a car repair to go over $2,000. (Obviously if you have a house or kids, this figure probably needs to be be bumped up. But for 2 newlyweds living in an apartment, $2,000 is pretty good.) By having this fund, we dip into our cash before we hit up a credit card, which saves us a lot of money and headache in the end.
We actually ended up having to use our fund this summer for various reasons, but we'll be replenishing it this month, which will be great.
Once I start work in September, our budgeting will stay largely the same, except we will be formalizing it by putting it into a computer program.
We currently have things mostly separate except for a shared savings account and a shared credit card. Our direct deposits go into our individual accounts. Shared expenses are charged to the credit card as much as possible. We do a monthly tally. I pay the bills, he pays me back for half, and we both contribute savings to our shared account. Since I pay the bills, usually the math works out such that he deposits into our shared account, and I withdraw the netted amount of his half of the bills minus the savings I owe.
We set up this system when we moved in together. After we're married, I would eventually like to change things so that our direct deposits are split between our individual and shared accounts. Then I will just pay the bills out of our shared account, and we'll have less monthly accounting to do.
thanks for all this advice & the thread!! really great info!!! I def like the spreadsheet idea.. but do you guys realisticlly keep track of every penny or just major purchases?? I think I want to start doing this when we get married. We both have seperate accounts right now.
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Whenever DH and I talk about how to work out finances, we always come to a 'blank stare' point in the conversation where no decisions are made.
I need help and advice!
Here's how we currently do it. We both kept our invidivual accounts and added each other on as signers.
He likes his bank and I like my credit union. Neither of us are willing to move over accounts to the other branch and close their own.
As I type, I'm realizing the perfect compromise may be opening up a completely neutral account and closing the existing two - but, I don't really like that idea, since I'm the one who primarily manages everything and I really like the services my credit union has to offer.
Some background: DH had a lot of credit card debt coming into the marriage. I knew that and we've been aggressively trying to pay down the debt. We are within two months or so of doing this. So, home stretch, for sure.
MY BIGGEST FRUSTRATION: discretionary spending. It drives me crazy that I feel like I am saving every single penny, not going shoe or clothes shopping, and then see some random $100 purchase for DH's hobby (like today!!)
So - my solution is that we accrue discretionary spending amounts every month. If we spend it - then great. If we don't - it's ours to roll over.
My problem is I don't know how to start this up or how much to put in that fund or how to divvy it up.
Here's how we handle things right now.
My pay checks go into my checking account. His pay checks go into his.
I pay for everything on a credit card and pay that credit card off every month. DH uses cash or his debit card. I pay most of the house expenses through my checking account (he pays for his cell phone, the cable bill, dry cleaning, car expenses). He will usually write me a check out of his account and deposit it in mine. This amount varies - and there could be a month where he doesn't do it (like this month!). We both do grocery shopping and he usually pays when we go out.
In an ideal world - I'd like all paychecks to go into one account.
Just writing this out is making me want to propose that we do this (deposit all into one account) and then we both take 'x money out as 'fun money'. However, I know DH will want to use his bank card to do grocery shopping or do any other type shopping. Ideally, I don't want DH using a debit card for things, because I don't think it's a very secure way of paying for things.
Can I add DH to my credit card, now that we are married? I guess that would help join the expense part of the finances. But, that would also mean, I'd have to start using cash for my discretionary stuff - and I hate using cash.
See why we always end in a no-decision place? Neither of us is willing to compromise. But, I'm over it and we need a plan.
So - hive, ANY ideas on how to approach this?