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So now that I've had a "big girl" job interview that went well, and it looks like I'll get the job (cross your fingers!), and we also know where we'll be living after the wedding, FI and I finally have an idea of what our household income and expenses will be. For the past couple days, I've been working up a budget and a plan for how we'll contribute to the household.
It is important for us to share finances, while still having separate "fun" money. It was especially important to me for us to contribute proportionately. It wouldn't make sense for us to both contribute half of all the bills when he makes 75% of our household income.
So here's the plan I came up with: I figured out what all our expenses would be, including individual credit cards, student loans, cell phones, etc. Basically ALL our bills, plus money for groceries and gas. I also included the money we contribute to a high yield savings account every month. What's not in accounted for is haircuts, drinks with friends, gifts for each other, that sort of thing.
So after I came up with that number, I figured out what 75% and 25% of the total is. The plan is for FI to contribute 75% to our joint account for our monthly expenses since he makes 75% of our combined income. I'll contribute 25% since I will make 25% of our combined income.
Then, whatever is left over is our personal money. I felt like this was a fair way to do it, although my left over will only be about $200 each month! FI assured me that he will still pay for treats like weekend getaways and date nights out of his personal money because his will be significantly more.
Still, I wonder if this is the best way to to do it? Does anyone else divide their money proportionally like we plan to? How has it worked for you?
Omg that sounds so complicated to me lol! Me and FI agreed to put in 50% of our paychecks in our joint account to pay for all home/bill related stuff and the other 50% for us to do whatever we wanted
I think that is a good idea. I have heard of that way of doing it before and it makes a lot of sense. Are you including retirement savings in those numbers? Since you are both young, you should be trying to contribute as much as you can to a retirement account since time is the greatest way to grow your retirement money.
My husband and I have a joint account and an allowance that we can spend on fun stuff before asking eachother. Right now that is sort of on hold because I'm unemployed though.
Right now my Fiance makes a lot more than I do because he works full-time and I work part-time (I'm in school!). I used to make enough to support myself, but they cut my wages at work and things started getting tight. We decided to just put our money all together and make a budget from that. It was honestly a way easier transition than we thought, and we just look at it now as "our money" rather than my vs. your money. However, we have been talking lately and decided that to avoid the guilt that we both feel when we spend money on stuff, we're going to start giving ourselves each an equal allowance from our money every week to spend on ourselves. So if he wants a video game, he will have to take from his own allowance. If I want to go out for lunch instead of bring one, same deal.
I know that a lot of people keep their money separate to avoid fights etc. but I really feel like this worked best for us. It makes us feel more equal about money. Good luck I know it's stressful to figure it all out!
Yes, I agree with @JennyChicago. My FI and I are planning to combine 50% of our income when we move in together. It just seemed more fair that it's proportional. We also talked about much each of us could contribute for a down payment on a house and our savings plan for the future.
I think that it's great that you are talking about it openly and trying to make it clear - good job!
I think everyone does it differently, as long as you're both happy with your way. Besides, it's not written in stone right? If you decide you feel stretched every month you can always talk to your hubby and make a different arrangement right? These things are fluid, circumstances change! :) Good luck with your financial planning!
Thats way too complicated for me. What happened to a simple joint checking?
that seems sort of complicated to me and somewhat contrived. the way we see it is we're a team 100%. we soar together and sink together. what's his is mine and what's mine is his. So to that end we put all our money in one account. We both recognize that we work hard and should feel comfortable spending money on things that only benefit one person. So if FH wants to go out for drinks, I have no problem with him using OUR money because he deserves it as much as I do and I trust him to spend responsibly. We just agreed to clear large purchases with each other.
Also, purely mathematically speaking this makes the most sense. If we had personal accounts and i ran out of money in mine, he would have to pay more for our fun stuff anyways so why bother putting up the artificial barriers.
I just think that a marriage is about being one and sharing everything....so why draw the line at money?
I am with the joint account. In the end, both of you are contributing (however much it may be) to the household. Use credit cards for gifts and whatnot.. but why not just combine everything? It sounds simpler than 75/25
I think that could work doing exact percentages. Is it Suzy Orman who recommends that?
We do it a bit differently in that we each get the same amount each month for "fun" money. Fun money is things that aren't budgeted (lunches out, hair or nails, new clothes, presents for each other). The rest goes into paying all the bills (cell phones, child care, car ins., etc), and into two savings (an "emergency" fund and regular savings). Part of our budget includes a joint "entertainment" fund. This works for us.
As the person who make so much more in teh realtionship, I think I'd feel guilty if I had more "fun" money. I know me, I would shop constantly. I would feel bad coming home and SO not being able to do so. Also, in theory, if we're giving in percentages based on earnings, theoretically we should end up with closely the same "fun" money anyway, right? Or maybe it's just me. Math was never one of my good subjects. lol
@CurlyDreamer: Yes, Suze Orman does recommend percentages based on the amount that you make instead of splitting bills 50/50.
I have heard of a lot of people doing finances this way. Where they do not put all of their money in one account and just pay for everything out of one account. I guess I assumed when I got married that is what we would do. But maybe it's not the "thing" anymore. I dont know. We do not know where we will be job wise after we get married, so we haven't really figured out how we are doing money stuff. But I think your plan sounds like it will work well and your husband doesn't sound upset by having to pay for more. He sounds wonderful!!
There's a bit of a discrepancy in our incomes too. We split any joint expenses (rent, food, entertainment, eating out, travel, car etc) 50:50. But then for our savings accounts (car, house, wedding, and emergency funds), I contribute 65% while FI contributes 35%. Any money we have left over from that we get to keep and spend for ourselves. We still keep our own savings accounts as well (retirement, and tax free savings accounts). It's worked out well so far. We've decided to reassess our conributions yearly (based on raises and bonuses) to see if we need to change any of our numbers.
I guess I just don't get the whole "splitting bills" philosophy for married people. If you are living together but not married it makes sense. But after marriage, it is way easier to put both paychecks into the checking and savings accounts. I know people do what works for them, but I would seriously have a problem with "his" money and "my" money, "his" share of the bills and "my" share, etc. It's OUR money and it makes no difference to us who has the higher paycheck and who contributes the most to the checking account and we wouldn't spend a minute of our time trying to do the math around it!
We have a joint checking account and are very open and communicative about how we're spending our money. We function very strongly as a team, and it never even occurred to us to do separate accounts. That's what works for us. I hope you find what works for you! :)
My FI and I will be combining our finances completely, however... when we were sorting it all out, we originally had planned that each of us would contribute the SAME percentage. This way our family account would grow in savings & all the bills and household related expenses would come out of that account. Originally we were each going to contribute 75% of our income to our family account & retain 25% of our individual income for our "fun" money.
I find your numbers unfair even though he makes more. You get to keep 75% of your income, while he puts his towards your bills & loans? Since he's paying for your debts, I would just get a joint account! This way date nights & getaways would have come out of your combined finances and it would avoid the pressure of "who's paying"! I think contributing equal percentages will avoid future spats about money & this will also help to avoid resentment down the road.
I think its great that you are planning & thinking ahead :) I'll say a prayer that you get this job!! Good luck
Honestly, what counts is that it works for you. My parents had joint accounts in which my father felt free to buy whatever he wanted, while my mother felt like she had to account for every penny. Even though their finances were joint, they were obviously quite far from being a "team." My grandparents had separate accounts but played games like, "I'll drive the car until the gas is almost empty, then leave it to you to refill with your separate money." That's not ideal, either.
Like you, I've always felt like I wanted some money that was exclusively mine, so I could spend it without having to negotiate with my spouse. In my first marriage, we used a system very like the one you are describing, and it worked well. So far, since my second wedding, my wife has not been able to find a job. I've therefore just arranged to transfer money to her when she's low, without any specific sort of arrangement.
I think you do need to be prepared to renegotiate every once in a while. For example, in my first marriage, clothing was purchased from separate rather than joint funds. However, when I got pregnant, we agreed that maternity clothing could be purchased from joint funds, since it really was an expense of both of us.
That being said, if you both have similar attitudes about money and an ability to renegotiate when needed, almost any arrangement can work. And I don't think that any one financial system makes you more or less of a "team."
We do it in the exact same way (as daniellemybelle) .. except I contribute 33% and he contributes 66%.
We don't work it out in percentages as we don't see our finances as a business transaction.
I earn a bit less, and have more outgoings on other things, so DF puts more into our joint account and savings. We haven't worked it out as percentages and don't intend to. We have our pay checks go into our own accounts and put a lump of that into a joint account for mortgage, bills, food etc. Some also goes into savings and the rest is ours to play around with.
We were thinking about doing the "what's mine is yours". When I finally finish school, FH and I will use my check for fun/luxury for the both of us, and his for the primary bills (house, utilities, etc.). But in the end, it is all still "ours".
Your idea sounds great to me. I think that my FH would do something like that, but he is kinda old school.
Since you asked for honest opinions I'll tell you that you having less "fun money" than him because you make less sounds, and that he'll pay for "treats" sounds like a slippery slope. I say that because that's the arrangement we have now, except I make more money. I have tons of extra fun money lying around and in terms of going out our conversations go like this, "Honey, wanna go to Disneyland with Friend A and Friend B on Sunday?" to which he replies "Sorry babe I don't have any money for that." I feel bad and offer to treat which probably hurts his manhood a little bit and he declines. So we basically only have fun time right after he gets paid. I am working on a combined account so that his and my (significantly more) expendable income is combined so more of it is accessible to him. I feel bad about our current way of handling things.
As everyone is saying, though, each couple has to find what works for them. It's not working for us right now.
If it works for you, it works but honestly in a marriage I never understood the seperate finances. We work as team and everything is joint. I work the budget up every mth, pay the bills and we always talk about where we stand etc. The thing with your budget I don't agree with is you should be budgeting everything even fun money. If you have any debt, this will help you see where your money is going etc. In the beginning our goal was to pay off student loans and debt fast and fun money took a lesser amt. Now we are debt free and whatever fun moneys not used goes to next mth or in savings. But like I said everyone has different views.
I think whatever you're happy with is fine..... but I can tell you its going to be a pain in the ass!
FI and I make basically the exact same amount so this year before the wedding when we live together we decided to try out this whole separate/joint account thing. We have a joint checking for the house stuff/joint stuff and joint savings for wedding stuff. We each put the same amount into the accounts and then we pay our personal bills out of our money (health insurance, car, cell, etc). Whatever is left over is play money.
We've been at this for just 3 months and we're already kind of sick of it. Trying to keep track of separate cards and determine what should "count" as joint and what shouldn't... plus we both keep forgetting to use the right card then we're "paying ourselves back" all the time.
I think after the wedding we'll probably go all-joint. We talked about going all-joint but each taking out a certain amount for "fun money" every month, but once again we're going to have to decide what is "fun money" and whats not. If I NEED a suit for work is that a necessity or is it fun shopping? If he wants something cool for his man cave, is it home decor? Or discretionary spending?
I felt the same way you felt about wanting to maintain some autonomy with my money and not have to answer to him for every little thing I spend... but what living with him the past few months is teaching me is... we REALLY trust each other. I can't see him scolding me for going out with friends or going shopping. I don't mind when he buys things he wants. I don't think it needs to be so "even stevens" all the time... I think we can go all-joint and we'll be just fine.
I think that there should be some "fun money" but I think it should be very limited. I think we will be contributing about 95% of both of our paychecks (mine is more so the actual dollar amount I contribute will be higher) and that last "little" bit will be our own fun money. We may even do it as a set amount (aka, all of our money goes into joint except for $500 that we each get to keep for ourselves).
After we are married we will be having a joint chequing account for bills and separate savings accounts. We have an unusal reason for this.
He has a few family members that are not good with money (they constantly mismanagement it by doing things like going out partying on vacation and then asking other family for help with rent). There is a family history of people being very aggressive about it and even sued over money. I make significantly more money than he does so he actually wanted me to keep a separate savings account so that he could deflect any pressure and drama by saying that it's not his money. We are hoping that we will never have a problem with this, but he grew up seeing it and even had to loan money to one of them when he was a student struggling to pay his own bills so he is a bit paranoid now.
We don't have very rigid rules about who pays for what since although we have separate accounts we still view it as 'our' money. The separate accounts are more of a money management tool. I get the feeling that this is the way the OP views their accounts too.Since we started this, he has said that he actually finds it easier to keep track of where his is spending money. If there is something he wants that he can't afford, like we want to go on vacation, then if 'WE' can afford it, it will come out of my account.
My new husband and I just opened joint checking/savings and we're merging everything Too complicated for us to do percentages, etc. and more paperwork than either of us wants to deal with! Whatever works for you is what's important and as long as you and your FI are on the same page and moving in the same direction, that's all that really matters. :)
That definitely sounds complicated! I'll probably do something like "hmmm. I want $500 a month in my personal account. The rest will go to our joint account". If you don't think $200 a month is enough personal money--think about what you spend your money on. $200 may be too low, $200 may be just enough. I have one friend who gets $100 a month for personal expenses. I added up stuff like "ok i go out to lunch every other week, get my nails done every 3 weeks, get a bikini wax every 5 weeks" and approximated what I want in my account. Oh, plus I'm taking classes, so I add that in.
Right now I drop a few grand into our joint account every month. It's enough to cover all the bills (since i'm the only one working) right down from the mortgage to the electric, plus a little extra. Anything else, like gas, going out to lunch with coworkers, etc, comes from my personal account.
Personally I wouldn't be comfortable with that. My FI & I have combined finances and we don't look at our separate income as separate at all. We have both decided on an amount that we need set aside from each paycheck that we can spend on whatever we need or want and the rest goes to bills & savings. It's the same amount for each of us. He makes a lot more than I do, but that doesn't matter to us because we're getting married we see his money as my money & my money as his money. I wouldn't feel right if my FI could go spending a ton of money on things when I was scraping by and it wouldn't feel right the other way around either. I would be concerned that I would have no real say in our lives if he had all the real spending power. I would also be concerned if he were the one paying for all the things like dinner out & vacations because I would feel like I would have to go begging to him every time I want to do something fun and I don't believe that's anyway to live as husband & wife.
I agree completely with Ducks.
Him having more spending money is absolutely not fair! In my opinion it is only going to fuel resentment and you don't want that in your marriage.
FI and I are of the opinion that all our seperate money is now collective money. We have 100% joint financing (although I realize that's not right for everyone), and we really find this works for us, because we trust eachother. Neither of us is going to go out and be unreasonable about money. If it's a large purchase we always discuss it!
One other idea is if you are set up joint and separate is that ALL things you do as a couple should be out of joint - so things like vacations, nice dinners, etc. The separate money is then strictly things just for you - clothes, nights out with the girls, etc. If you want your own money it makes sense to each have an allocated $ per month amount for purely frivilous things and the rest be combined.
I think what you are proposing might be too complex - and in the end not really solve what you are trying to achieve....
I think I'm confused on what you're saying. Are you saying that's he's contributing 75% of his income and you're contributing 25% of yorus? Or are you saying that when all is said and done, he'll be paying for 75% of joint bills and you'll be paying for 25% of joint bills?
My husband and I have a joint checking account, and then personal accounts. We each contribute 70% of our income to the joint account and 30% to our individual accounts. We each contribute the same PERCENTAGE of our personal incomes, but since one of us makes more, they end up putting more into the joint account. They also end up with more of their own personal money, since they make more.
For example, let's say that I make $1000 a month, and my husband makes $2000 (these numbers are just completely made up). I would contribute $700 to our joint account, and keep $300. The husband would contribute $1400 to the joint account, and keep $600. Since he makes twice as much as me, he contributes twice as much to our joint account, but also gets to have twice as much playing money. I think percentages of your own accounts is the fairest way to do it, in my opinion.
I totally understand why people combine finances 100%, but my husband and I just couldn't do that. My husband likes to hang out at home and relax and he basically only spends money on his student loans, his computer, and lunch at work. I, on the other hand, like to spend my money shopping, doing craft projects, going out for drinks with the girls, and doing other expensive stuff with friends. Since my husband isn't into that kind of stuff, it's only fair that I spend my own money on that kind of stuff and he can save his money if he wants. We'd argue sooooooo much if we combined all our money because he would NOT be okay with my spending habits. This way we make sure all the bills get paid together and I can be as frivilous (sp?) as I want with the rest of my money, and he can be a stingy as he wants with his!
My FI and I are both very traditional in a lot of ways so we will have a joint checking account and we will have 100% "our" money. I don't work (it was a desicion we made together) and he is still very adament about getting me on his account the second we get married. He wants me on his account right now but I keep dragging my feet. He even made it very clear to me that any debt (school loans, credit card, car loan) that I had before we got married is our debt now and he is just as responsible for paying it as I am. I am glad he has the same traditional views of a joint account that I do because we both want us to be "one" in every way. I can't imagine not sharing everything even if the situation was turned around and he stayed at home and I was the one working.
we did that when we were still engaged and i first moved in with him. he figured everything out and because we weren't joint yet i just paid him for the bills. it worked out fine for us, once you have it figured out it's simple because it's the same amount of money every month.
i would just question your "fun money" since even though he makes more, you're in a marriage together so it seems to me that you shouldn't have to think about having enough money to do something when he has all of that money. that made sense for us when we were engaged... but now that we're married we have everything together. but different things work for different people.
Thanks for all the feedback everyone! Some great points were definitely brought up.
I'd like to clarify a couple things that I think I did a bad job of making clear in my original post:
- FI would contribute 75% of what is needed in our joint account, and I would contribute 25%, NOT 75% of his income and 25% of my income. I agree it wouldn't make sense for me to keep way more of what I make just because I make less! This way, we are depositing in our joint account proportionally to our incomes.
- We DO believe in "our money". Its just that we want to have money we don't have to be accountable to each other for. It was also important to me to feel like I am "pulling my weight". The proportional contribution thing made me feel like it was all fair.
Having said that, I see the point that a lot of people brought up, that if my personal account is much less than his, he will end up spending "his" money on me/us anyway.
So after some thinking, I came up with a Plan B that is a little less complex and gives us more equal allowance:
- Deposit all of our income into the joint checking account. So basically, it starts there rather than ending up there.
- Transfer money to our savings from this joint account.
- Transfer an equal amount of allowance from our joint checking to our personal accounts. Like I said before, we aren't paying any bills or anything out of our personal accounts - just things like lunches out, manicures, etc.
Thoughts?
@daniellemybelle - I think your new option sounds great. This is the way we're thinking of going when we make up our new budget! Right now we have 2 chequing accounts (1 for fixed expenses like bills, 1 for variable like groceries & gas) and 1 savings account, but we're planning on setting up something for our "allowances". Like you said, equal allowances just make more sense because otherwise he'll end up compensating.
Man I love when people are smart and think about their money! :-)
@danielle - Your new plan is exactly how we operate :) It works really well for us!
I think that would be a simpler solution even though it gets the same end result. That is kind of like we do except we don't actually have accounts where the money goes, just a set amount we can spend without question.
My opinion is that if it works for you then go for it! But I would be wary of being very set on exactly 25/75%. If you start to nit-pick down to the very last penny, you might start resenting each other.
My FI live together and we just approximate what's fair and even. For example, he takes 1 big bill, I'll pay two smaller bills (that add up to about the big one) etc. But switch back and forth who pays for date nights...that way we still "treat" each other but if one month, one of us has more or less than the other, we plan accordingly but that's all part of being young and not quite rich enough yet :)
Props to you for thinking ahead!
@CorgiTales, you're on the right track. We've been 100% joint since like the first year we have been dating. It is just easier for us, and like you said, we totally trust each other. I ask him about everything I buy because we look at this as a joint effort to get to our goals of a house and eventually retirement, regardless of what each of us makes.
@Kingcake, I am with you that everything you spend, whether together or separate, has some sort of effect on your joint financial goals, so its important to be on the same page! I also thinking knowing we have a set amount that is "our own" will be good for our relationship.
I am interested in how you all handle your savings? FI has a high yield savings account right now with a good amount of money in it that we plan to continue to contribute to. Sometime soon, we'll put some of our savings into investments, but I'm not sure if I feel comfortable going "all in". Is it typical to have separate retirement funds and that sort of thing? I have just heard stories of women who married young and did not have their own finances, and when their husband passed away unexpectedly, it was hard to establish themselves financially. We are keeping our own credit cards for this reason, as well, but I wasn't sure about savings. For example, should I have FI put my name on our savings account? Right now it is just in his name.
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