Books and Advice on combining finances after marriage
May 13, 2009 6:26 PM   Subscribe

Looking for book or website recommendations on combining finances after marriage. Or your thoughts and tips here. I am getting married this summer and have begin to discuss combining accounts with my fiancee. We currently have a shared checking account from which we pay combined monthly bills. We want to know how much more we combine after marriage.

We are open with each other about our current outside expenses: credit cards, mortgage, student loans, etc. Should we have one account from which all our expenses come? Should we keep separate accounts for personal expenses? How much should we put in those separate accounts versus the combined account? I am hoping some book will help, but I'm sure that your experiences will be invaluable too!
posted by pithy comment to Work & Money (20 answers total) 21 users marked this as a favorite
Like you, my fiance and I have a shared checking account in which all bills are paid out of. We both put 100% of our paychecks into this account, then pay our bills. Included in those bills is our monthly "payments" to ourselves. Meaning, we pay ourselves a set amount each month to our own separate accounts. This is our money to do as we wish with; our bills our paid, money is in savings; Blow this money on beer if you want (and I often do!).

Having separate accounts also make it easy when you want to treat your significant other. Sometimes we go out to lunch, and I want to treat her, so I pay for it out of my own personal account.
posted by nitsuj at 6:35 PM on May 13, 2009 [2 favorites]

I should also note: any credit card payments or personal expenses are also paid out of that monthly payment we pay ourselves, not the joint account.
posted by nitsuj at 6:39 PM on May 13, 2009

Best answer: Eh, what the hell. Let me break it down more.

Out of our joint account, we pay any *necessary* or shared bills. This includes, but is not limited to,

-School loan repayments
-rent and associated utilities
-car stuff (we share a single car)
-house stuff, like repairs and things like paper towels, etc.
-Cable/Internet bills
-Medical expenses
-Both cell phones

Everything else -- personal stuff -- is paid out of our separate accounts. This includes,

-credit cards
-non-essential purchases like clothes or beer or other entertainments
posted by nitsuj at 6:48 PM on May 13, 2009 [1 favorite]

Similar to nitsuj's approach--my partner and I got this tip from another couple, and it's worked for them and for us: we each put half our paycheck in a joint account and keep half in our personal accounts. We use the joint account for all shared expenses/responsibilities--rent, utilities, medical bills (including prescriptions), car repairs, date nights, etc. Our personal accounts are "no questions asked" and we use them for personal credit card bills, student loans, and whatever purchases we choose to make.

The line has gotten a little blurry regarding credit cards, as we have occasionally put joint purchases on one of our personal cards in order to get airline miles or some such, but in general this plan has worked for us. It works for us because of our current financial situation, but I can imagine times when it wouldn't work and we'd have to reevaluate (if one of us were unemployed for very long, for instance, or if some joint responsibility became too expensive to support with only half of each paycheck). For now, though, I definitely like having personal accounts for personal expenses because he and I sometimes have very different ideas about what a sensible purchase is, but if it's coming out of a personal account, it doesn't turn into a huge fight. I still sometimes think "Really? You wouldn't rather still have that $50 in your pocket?" but then I think "Eh. His money... whatever."
posted by Meg_Murry at 7:01 PM on May 13, 2009

I should add--when I say "no questions asked" I don't mean we make major purchases without telling each other or incur huge debts secretly. I just mean we have the understanding that, while we'll tell each other about our finances and be totally honest, I'm not going to veto his "fun" purchases, even if I wouldn't choose to buy whatever it is, and he's not going to veto mine, even if it's not something he'd buy--they just come from our personal accounts.
posted by Meg_Murry at 7:03 PM on May 13, 2009

This is a really individual thing and depends a lot on your personalities and how much you are alike with respect to your spending. I suspect that I may be in the minority, but my husband and I have one shared checking account, and no individual accounts. It's simple and works for us because we have very similar habits with our money. For our personalities, it's just too much hassle to maintain separate accounts and worry about it.
posted by gaspode at 7:08 PM on May 13, 2009

My husband and I have maintained separate accounts since we started living together. We've been married for 9 years (living together for 13) and this has served us well. I find it easy to keep track of what I am spending, but hellacious to track the spending of someone else. We divide the bills proportionally based on our income.

My husband makes more money than I do, so he pays out more in bills. For us this means he pays some of the "big" bills (rent/mortgage, car payment, etc.), and I pay the "small" bills (cable, electricity, water, gas, child care, etc.).

We each pay our own credit cards and student loans. I pay for (and shop for) groceries and household items, and he pays for (and does) any household or auto maintenance items.

Ultimately, this is a personal thing - do what works for you and your partner. Everyone is a little different, and what works for one couple could be disaster for another.
posted by jeoc at 7:11 PM on May 13, 2009

Best answer: Not to be all self-promotional or anything, but allow me to be self-promotional. One of my readers asked that once at Get Rich Slowly, and received some good replies: How do you combine finances? I hope it helps!
posted by jdroth at 7:12 PM on May 13, 2009 [2 favorites]

When we first started living together, we figured out a budget for our shared bills and a little bit of savings. We then split this based on our incomes. At the time, one of us made twice what the other did and paid in twice as much into that joint account. The rest was left in our own accounts to do with as we pleased. I entered the relationship with some debt and repaid it through my personal account. The personal accounts let us feel like we had the freedom to buy things on our own now and then. It also allowed me to feel like I was repaying my previous debts on my own. A couple times a year, we'd take the time to review the budget and how we were doing financially and adjust to whatever was going on in our lives at the time, from getting married, to buying a house, and most recently Mrs. Advicepig's return to school. So now a days, we don't particularly split contributions to the joint account as mathematically as we used to. Mrs. Advicepig pays enough to feel like she's contributing and I pay a lot more than I used to.

What I'd really add is this, things change and sometimes you both have to make some sacrifices in order to pursue your dreams. Congrats and good luck.
posted by advicepig at 7:29 PM on May 13, 2009

Just as a counter-example: My husband and I have fairly similar spending styles but he really hates dealing with bills so we have everything in joint accounts (except for my inheritance from my mother). I have been in and out of the workforce and he has always made more money so his paycheck got deposited in the checking account and mine into the money market fund, at which point it is no longer mine or his but just ours. I manage all of the bills and investments (except for his stock options where he tells me when to exercise or sell). There is an informal limit that we spend without consulting each other but any medium or large expense we will touch base. Every once every few years my husband will say "I AM buying this piece of equipment" at which point I know that it matters enough to him that I shouldn't object.

I'm not particularly recommending this - we fell into it because we married young and he was the sole wage earner while I was in grad school but it still works for us many years later.
posted by metahawk at 8:04 PM on May 13, 2009

One point of advice: make everything at the end equal out. Even if you're making a lot more than your partner, you don't want to leave him or her with little or no money at the end. Therefore, paying percentages, I've found, is the wrong idea. Pool all your money together, pay the bills, and then give each other equal amounts of the left remaining money.
posted by nitsuj at 8:06 PM on May 13, 2009 [1 favorite]

My husband and I had a joint account for wedding-related costs, but we ended up closing it because we stopped using it. Basically, all the household bills are in my name so I pay them, and he writes me a check every month for his share. Everything else is in our personal accounts. We do have a joint credit card that we use for household expenses, but I just pay that off in full every month and we split the cost.

What I've heard from most of my other married friends is that they have a joint account for household expenses and they put a set amount there and put the rest into their individual accounts. We were going to do that, but it just works better for us to have me handle all the bills.
posted by bedhead at 11:20 PM on May 13, 2009

We sat down and agreed exactly on what comes under the heading of "shared" expenses that come out of the joint account.

This can get tricky so talk about what you spend money on. For example, rather than paying for our own haircuts we've just budgeted out haircut money into our shared account. The rationale being that my haircuts cost more but he gets them more often, so it works out ok. We've even put light entertainment in our shared budget, like for books, music, etc since with those items there's very much an attitude of "what's mine is yours."

Make a list!! If you spend money on something that's not on the list it's either gotta come out of your personal account or you agree to put it on the list.

Agree on a personal allowance based on whatever the two of you think is fair. For us, we keep 10% of our individual incomes so if someone get a raise we both benefit (increased shared account and personal allowance goes up). So far, this is plenty enough for me. We make similar incomes though so maybe that's why it works for us. Or maybe it's because we've agreed on so much to come from the shared account so personal purchases are treats or gifts to the SO. Maybe a flat rate works better for you guys.

We still use credit cards but they are paid off every month out of the shared account and anything we agree were personal expenses is withheld from our allowance and put into the shared account.

This requires an incredible amount of trust and self-confidence in the relationship and of course it's not going to work for everyone, but it works for us and I'm really happy about it. We try to be really open and impersonal about our finances.
posted by like_neon at 3:02 AM on May 14, 2009

Advicepig's comment reminded me something about how we handled credit card debt.

Now, this isn't going to work for everyone for obvious reasons, but what DID work for us is that I made the choice to pay for my SOs credit card debt. He was steadily paying it off, but with the interest building up he was going to take like 3 years to do it and basically lose loads of money to interest.

So, I paid it off and we agreed on a payment schedule that he would pay to ME. He actually paid about the same as he was already and was so motivated he ended up using his bonus money to pay back the rest, something he would never have done if he was still paying to the credit card company. The way I see it, he still got to "pay his own way" for his debt but we BOTH saved a lot of money as we are now in a better position for our future together.
posted by like_neon at 3:12 AM on May 14, 2009

One account. OPEN communication. Common goals.
posted by JohnnyGunn at 4:08 AM on May 14, 2009 [1 favorite]

Ha! I came to recommend JD's article on Get Rich Slowly but I see he's beat me to it.
posted by peanut_mcgillicuty at 7:10 AM on May 14, 2009

My wife and I have done it this way: we have a joint account for bills or any other mutually agreed expenses. Each of us pay a percentage of the total amount for bills into the joint account based upon our income. We each maintain separate individual accounts for our personal expenses.

This has been a great system because the amount paid into the joint account is fair, since it is based on income, and we each have our own money to purchase what we please. It's worked smoothly for six years of marriage, and my wife is a person who really likes her independence.
posted by elder18 at 7:52 AM on May 14, 2009

hey like_neon - were you married? when you did this or just longterm partners?

Once you get to longterm stuff luike buying a house etc.. I doln't see how it makes much sense to keep things very seperate. - If you are buyign a house together then its goign to be split down the middle anyway.

If your spouse has a Credit card debt incurring Interest then they are basicially wastign your money as well. (they could be using that to pay off your house / go to your house fund etc..)

I think i'd be more of a 1 account in which most of it goes + small personal accounts for day to day and online + travelling etc.. I don't like to take my cards for my main accounts when travelling.
posted by mary8nne at 8:51 AM on May 14, 2009

When my fiance and I first got together, our incomes were similar. We basically split the expenses, and that worked out.

Then he got a job in a different state which included a very significant raise. For a while it looked like we were going to maintain two households in our two states. I was concerned about the psychological effects this would have on our relationship: he'd be getting a new apartment, he could afford a nice one. I, on the other hand, would either be relegated to having roommates (and seeing a decrease in my standard of living) or would need him to pay a lot of my living expenses, which didn't really seem fair. Either option seemed a recipe for jealousy or resentment.

When I brought this up, he suggested something very smart: he said we should spend enough money that we each maintained about the same standard of living as we'd been having. That would include him supporting me somewhat, and mean that he wouldn't go all-out on his new place. Then any money that was left would go into savings for a house.

(This didn't end up happening -- I found a way to move with him, so we only have one place. But I think it could have worked for us.)

One other thing you may want to consider: money becomes much more stressful when it is in short supply. It may be wiser to focus on the strategies that couples have used which have seen them through hard times; most anything should work when there's plenty of money to go around!
posted by wyzewoman at 3:08 PM on May 14, 2009

mary8nne - We were quite committed to one another but not yet engaged. If you are referring to the paying off his credit card debt, I can totally see red flags popping up everywhere if someone else told me they did that but it worked for us. I'm a lucky gal :)
posted by like_neon at 4:55 AM on May 15, 2009

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