Tips for an engaged couple merging their finances?

February 27, 2006 10:31 AM

Tips for an engaged couple merging their finances? What are some strategies that have been successful in merging your finances? What has not? We're looking to save for common goals and equally contribute towards our household and food expenses, but also have some autonomy with our money so we can buy our own things or treats every so often without feeling accountable to one another.

Here's what we've devised so far:
-A joint checking account for all household expenses, rent, utilities, groceries.
-A joint savings account for common goals (wedding, vacations, etc.)
-An allowance paid into a individual checking account each for our own discretionary expenses.

What's tricky:
-How do you deal with "grey area" expenses such as paying a bar tab, or entertainment related expenses? Do you take turns picking up the tab?
-How do you deal with supplemental income (such as bonuses or income from side jobs?)
-How do you both maintain a sense of "control" over your finances without having to sit down together each time a bill is getting paid?

I know there's so many factors at play here and different things work for different couples, but anything that you've found to be helpful once the wiser would be great!

posted by FearTormento to work & money (31 comments total)

Hmm... Just from my own experience with my wife, we have just two accounts: chequing and savings. We do the bills together at the end of the month (and do them all at that time in a half hour window), and we both know what our accounts look like at any given time.

The final key is a budget you can live with and stick to. This includes budgeting for entertainment and miscellaneous expenses.

We don't separate her expenses and mine. When I want to buy something extraneous I ask. If she agrees it's within reason and the budget is there, I buy it. Anything under, say, $20, is assumed to come from the miscellaneous budget.

Bonuses and the like are treated specially. I get a percentage to spend, as does she, the remainder goes to savings. We do this regardless of whom earns the bonus.
posted by WinnipegDragon at 10:36 AM on February 27, 2006

Here is the strategy that I have worked out with my dear one:

1. We have a joint account that half of all of our income goes into. If I get a check from grandma and it is $50, then I keep it. If it is $200, it goes into the account.

2. This account pays for food, the mortgage, car repairs, home repairs vacations, wedding expenses.

3. We have individual accounts for personal expenses, clothes etc. that is filled by the other half of our paychecks.

4. If we eat or go to a movie together then the money comes out of the joint account. If alone, it is paid individually.

5. So far we have been paying health care bills out of the individual accounts. This may stop soon.

6. He pays for his own beer and I pay for my own candy.
posted by Alison at 10:41 AM on February 27, 2006

We contribute to a home account in proportion to our incomes, then each keep our own accounts for personal bills, clothes, etc. We got married in our 30s, and thus had various old credit cards and students loans and such to pay off, so we've kept them separate.

Bar tabs, etc., we handle informally. Since I make way more than she does, I usually pay, but then she'll pay for the cab ride home.

Sure, all this is artiface, and we should really just merge it all, but we both like feeling we can make a big splurge purchase just on a whim, and not have to check with anyone else first.
posted by MrMoonPie at 10:42 AM on February 27, 2006

Oh, yes, and beer--I pay for my own beer, since she hardly drinks the stuff. She pays for her own candy, too.
posted by MrMoonPie at 10:44 AM on February 27, 2006

My girlfriend and I just use our joint account. We tried having separate and joint accounts but it was too complex for us. We never fight who's money is who's. It's just ours. A check from grandma to me, is ours.

I suspect this solution is not general and requires a rather laid back approach to money. We pay for virtually everything using a credit card and then pay off the card at the end of the month. So we don't even really worry about going negative (which we never do, but the CC means we don't have to coordinate as much).

Obviously this isn't practical for everyone.
posted by mto at 10:51 AM on February 27, 2006

We both have private accounts in addition to the joint ones, and we automatically transfer an allowance from the joint account to our private ones.

It's the money that can be used for anything in the world, without the other person complaining :-)

As for tabs, I just pick them up. This relates to your next point...

As for bonuses and other unbudgeted income, I have far more than Mrs.Tacos. Enough, in fact, that it fully covers our non-travel entertainment budget.

As for the control, we have all of our recurring bills in Quicken, and use credit cards that link into it as well for live updating. As such, there's absolutely no question about how much money is coming in, or going out.

If you want to alternate on bar/restaurant tabs, I suggest playing rock paper scissors, instead of trying to remember who went last. That's how we split checks with friends who we go out with regularly. It's just easier that way, and it ends up the same in the long run.
posted by I Love Tacos at 10:57 AM on February 27, 2006

The private accounts, btw, are mostly used so one of us can surprise the other, without mucking with the general budget.
posted by I Love Tacos at 10:59 AM on February 27, 2006

Our system is similar to yours, with the four accounts. It works really well and takes care of most of the gray area problems. To answer your questions:

1. For things like bar tabs or dinners out, we have that amount built into our spending accounts, and then if one of us picks dinner, the other gets the movie tickets, or whatever. We figure it evens out, and if one person has done a lot of the tab-picking-up lately, the other will just transfer some money to their account to make it up.

2. Our (all too infrequent) bonuses are mostly dedicated to the next big financial goal, be it paying off a debt, a major home purchase, whatever, but with a portion set aside for whoever earned it to have some fun with it. The other person also has a standing offer to use some of the bonus money for a treat, which they sometimes do and sometimes not; it depends on the amount and the situation. We don't have side income, but it would either be treated as regular income, or used the same way as bonuses. Gift money is the recipient's alone to use as they see fit.

3. We pay all of our bills out of our joint account, so whoever has a minute will sit down at the computer, see what needs to be paid when, and take care of it. Paying bills on line and checking our bank account for recorded payments eliminates the need to have a consultation every time a bill is paid. Why do you need to sit down together every time a bill is paid? Figure out what information is missing that allows one of you to handle it, and find a way to make that information available to both of you.
posted by boomchicka at 11:07 AM on February 27, 2006

We pool our salaries together, and each get an equal allowance, automatically transfered at the start of the month. A check from grandma to me is mine in our setup, as is any outside consulting jobs I do. They're mostly the "I'm scared of hooking up a router, help me" type, so they're small.

Restraunt/bar tabs depend on who's there. If we go out together, we pay from our account. If only one of us is there, then that's a private entertainment expense, paid individually.

As for bonuses... Last one we agreed that I could keep enough for the new iMac I've been thinking about, and the rest goes to "us", where a good chunk will go to redoing the kitchen floor. This weekend I some used items for $150 on Craigslist. I'd obtained them, advertised, interacted with the buyer, arranged, ect. This time we split that profit equally between my and our piles, as our money level is pretty comfortable right now. If it was lower, I probably would have put most of it in our account.

Just be flexible and discuss the unscheduled income.
posted by Steve3 at 11:14 AM on February 27, 2006

We have joint checking and savings accounts, plus individual checking and savings. We contribute a certain amount into the joint accounts each payday (using a formula I can no longer remember, but it takes into consideration how much of the total household income you bring in and on what schedule). We pay for some entertainment out of joint, but just as often we treat each other.

We have automatic billing or payment set up on pretty much every bill we have. It comes out of the joint checking account, and all the emails associated with those accounts and activities is pointed to a gmail account that we share for that purpose. So someone is checking in every couple of days, at least, to make sure everything is happening the way it should.

Extra money is dealt with on a case-by-case basis, which isn't always a great idea. We should establish a better policy for that.
posted by Lyn Never at 11:22 AM on February 27, 2006

Agree with most of the above. One joint account to pay for living expenses and one indivual account each to retain some autonomy. The latter is important because having to ask your spouse for money or if you want to surprise him/her, doing so with only a joint account is pretty difficult.

Also, I like to gamble but she does not so I only use money in my individual account for that kind of thing. I would never gamble money that I personally did not earn.

Similarly, she pays for her haircuts and clothes from her individual account. And my World of Warcraft subscription comes from my account. Etc., etc.
posted by camworld at 11:23 AM on February 27, 2006

One factor that my husband and I have discussed before that is worth your consideration is who is the spender and who is the saver. I'm definitely more of a saver, and if I had to see all the money he spends on gadgets and junk food, well, it wouldn't be as good for our long-term happiness. I know he does it and I know we can afford it, but it bugs me when I have to see it.

So far, keeping separate accounts has made it kind of fun when we go out - I treat him to a date, or he treats me to a date, depending on the occasion. We may not have access to each other's accounts, but we still consider them joint.

As far as paying bills from a joint account, when we do get around to it, we plan to use a bank with a good online interface, so everything is paid with on-line checks, etc. That way we can both check the account whenever we want, without having to find the checkbook. Also, there will be a strict no-debit-card rule about this account - that seems like a great way to overdraw.
posted by Sprout the Vulgarian at 11:51 AM on February 27, 2006

We each have a personal savings and a personal checking account - we share one joint checking account. We don't have much for savings but will be getting a joint savings account in the future.

We have "weekend money" and "grocery money" that's allotted every weekend and taken from our joint checking account as it's needed. We each deposit a percentage of our pay every month into the joint checking account - this takes care of all bills, all joint leisure stuff and all groceries.

Sometimes we treat each other and sometimes we go dutch on stuff that, for whatever reason, we don't want to charge to the joint account.

I love having a personal checking account so I can surprise my SO with gifts and things.

We haven't had to deal with bonuses too much - mostly we've just let the bonus-winner keep the money and do whatever they like - sometimes it goes to joint things and other times it doesn't.

Also, only one person controls the budget for the joint account - for a while it was her, now it's me - I love databases and budget stuff, so it works out well this way.
posted by soplerfo at 11:54 AM on February 27, 2006

We do the bills together at the end of the month (and do them all at that time in a half hour window),

How is this possible? All of our bills are due at wildly random times during the month.
posted by agregoli at 1:02 PM on February 27, 2006

Much to the consernation of many of our friends, my wife and I have kept separate accounts for eighteen years. We've never had a fight about money. Sometimes she frowns at my comic book expenses, and sometimes I frown when she buys yet-another-pair-of-shoes, but really we just don't care. It's her money, or my money, and that's that.

We each have certain bills we're responsible for. I take care of phone, cable, internet, etc. She takes care of gas and electricity.

We finally opened a joint savings account two years ago when we bought our new house. It's old and requires lots of work, so we contribute equal amouonts to this savings account just so that we know the money is there and available as an emergency fund.
posted by jdroth at 1:03 PM on February 27, 2006

I did it with only two accounts: one for me and one for her. Each of us kept our own pay, but divided the common expenses on a percentage basis according to salary.
Add up all monthly 'automatic' expenses (rent, utilities, vehicle payments, insurance, etc) and divide them among the two accounts so you get the (approximately) correct ratio. Take turns paying for groceries, and whatever is left, is yours to do with what you please.
posted by rocket88 at 1:05 PM on February 27, 2006

agregoli: All our bills come due at the end of the month, with certain exceptions. Those exceptions are our mortgage and car loan. Those are auto-debited bi-weekly.

We really only have 5 other bills: cable (and internet), electrical, natural gas, phone and credit card. That's it.
posted by WinnipegDragon at 1:08 PM on February 27, 2006

I should clarify that a big part of 'paying the bills' is seeing what is left over, and transfering it to savings, or from savings recently since my wife is on Mat leave.
posted by WinnipegDragon at 1:10 PM on February 27, 2006

My husband and I use the jdroth/rocket88 model. Works perfectly for us. We've split up the expenses - roughly - and when ever we have extra - it goes in the joint savings. Joint activities like dinner out just seems to work itself out. I pay sometimes - he pays others - its never once been an issue. We think of all of the money as our money - but he's super crazy about recording and balancing and I'm more laissez-faire. Joint spending accounts would have driven both of us up a wall.
posted by Wolfie at 1:15 PM on February 27, 2006

We have one account. We both have the same credit cards and store cards (same account, different names on the card). Everything goes into, and out of, that account or those cards. Therefore, it doesn't matter who pays. We each feel free to spend whatever we like without having to justify it to the other.

Our respective earning capacities don't come into it, and we don't have to worry about dividing bills. Having an account with a larger balance means we can just have all our bills paid electronically anyway, so they're never late and we don't have to worry about an overdraft fee.

If you want to set limits on discretionary spending, take it out of an ATM at the start of the week and say "Here's mine, and there's yours. See you in a week." Nothing to balance that way.
posted by obiwanwasabi at 1:32 PM on February 27, 2006

Yet another joint credit card and bank account for joint expenses, and each of us having individual credit cards and bank accounts here. My wife manages the joint accounts, and once a month tells me how big a check to write.

It helps that we have very similar attitudes toward money and spending.
posted by Zed_Lopez at 1:38 PM on February 27, 2006

earlier related question
posted by Sharcho at 1:46 PM on February 27, 2006

i think the important thing is to consider your mutual financial goals. We have an excessive number of accounts (but only because our bank gives us free ones and plenty of internet access).

We have the everyday account that we use for groceries and day to day expensives (wages go in here); savings for preplanned goals; individual pocket money accounts; Christmas and gifts; and a bills account, so that enough money for every bill including the rates (i think you call it property taxes) goes in and we're never caught short - oh and as many automatic bills payments as possible are arranged so we don't have to think about it. All the money going into the other accounts is set up to automatically come out payday.

Whatever is in the grocery or everyday account at the end of the pay period is free game for family entertainment etc but we each fund our hobbies from our personal accounts.
posted by b33j at 1:54 PM on February 27, 2006

Wow. We have two accounts - a checking and a savings. All the money is directly deposited into the checking account. Each pay period, certain amounts are automatically transfered into retirement accounts and the savings account. We pay for everything out of the account. I pay all the bills online. Any purchase over $50ish for personal use requires a "hey honey, I want to buy new [insert item here], okay." Any major purchase, for example the new computer or furniture or a really super nice dinner or a vacation, requires more discussion and planning, and sometimes a separate savings plan. At birthdays, holidays, whatever, we discuss how much should be spent, take the money out in cash and there's the suprise.

This "my account, his account" stuff seems complicated to me.
posted by dpx.mfx at 2:25 PM on February 27, 2006

Eighteen years of marriage has produced a take off on the jdroth/rocket88 model. We each have assigned bills and our own checking account to which the spouse is a cosigner and can access the account in emergencies. We each have separate savings that are also joint tenanted.
posted by Xurando at 3:27 PM on February 27, 2006

We're on the exact same plan as dpx.mfx. We're super compatible when it comes to this stuff though.
posted by rschroed at 3:53 PM on February 27, 2006

We have completely separate finances and bills. At the end of the month we total major expenses and recurring bills and even things out by Paypal-ing the difference to whoever paid out more.

Whatever we want to do with the money left over is totally our own business.
posted by nev at 6:15 PM on February 27, 2006

My wife and I, since we got a mortgage, pre-marriage, been 100% joint shared finances. Both wages and anything else goes into the account, all expenses come out of it. We discuss any major purchases and treat each other like responsible adults for everything we might want to buy for ourselves.

This is very easy and low stress. I guess it helps that we're saving lots, a long way from hand to mouth, and neither of us is particularly frivolous. We sued to talk about it, goals etc, how we were going. These days we just let it go. Need to talk to a professional about an investment plan one day, but we're already agreed on levels of risk etc.

This would only work with similar spending styles, good communication and trust.

Still, legally it's 50.000% hers and mine.
posted by wilful at 6:20 PM on February 27, 2006

Two things:

First, realize that if you are not legally listed on your spouse's account, you may not be able to access those funds in an emergency. The bank I work at will not even give you the balance in the account if you are not a signer, so you may want to consider making all of your accounts technically joint, even if only one of you has the ATM card/checkbook regularly.

Second, our system involves two checking accounts: Bills and Expenses. All bill paying is done from the Bills account, and groceries/entertainment/clothes/etc comes out of Expenses. Bills is funded with just enough to cover the monthly bills (basically my paycheck) and whatever is left in Expenses at the end of the month goes into Savings. A key to this system is overdraft protection (we have it from a credit card) so that if you both spend the last $100 in Expenses at the same time you aren't screwed.
posted by Rock Steady at 7:25 PM on February 27, 2006

We're similar to the joint & individual accounts you've described.

Both salaries go into the joint account, I work out all of our regular joint bills (no, not joint bills; you know what I mean!) - which come out of the joint account, including regular savings, etc.
We then split the difference and have an automatic transfer into our own accounts which we run as we see fit.

The joint account used to be run close to zero each month, although I've recently changed this to leave between £50-100 in there each month to cover unusual joint purchases (sigh - is there any way to write this without sounding like a total stoner?).

Gift money usually goes into our individual accounts, unless it's money for both of us - when it will usually end up in the savings.

This all works pretty well, although it takes a while to get used to not having money in your own spending account on payday, as the transfer doesn't occur for a day or so (to ensure that the salary is actually there before it is transferred out - don't want to go overdrawn!)
posted by Chunder at 4:27 AM on February 28, 2006

One Checking Account
One Savings Account
One Shared Credit Card

Both her and my paychecks go into the Checking. Transfer the excess into the Savings. Leave money for monthly bills and debt payments in the checking. Take our excess spending cash out at an ATM. Can't overdraw when you're spending cash. Being an accountant, I have a large spreadsheet that calculates all this for me which I can send a copy of to you, if you would like...

When we married almost 2 years ago she came to the union with more debt than I; but I married all of her so now its our debt, just like its our income and our house that we bought together. No need for separate accounts, if she wants to surprise me, she takes more from the withdrawn cash we take out every two weeks. Our goal is to keep it simple.
posted by iurodivii at 6:51 AM on February 28, 2006