Marvelous Money: Managing Joint Finances

24 January 2013

Hi friends! Hooray for Thursdays! And hooray for another Marvelous Money post! I was tempted to launch right into budgeting this week, because it’s so important and so many of you are interested in the subject, but I thought it might be better to talk a little bit about managing joint finances first.

Em for Marvelous

Let’s start with a little timeline of our joint financial history, shall we? Consider it a case study.

Senior year of high school: We begin dating. Our finances are completely separate.

Sometime during college: We both independently open savings and checking accounts at the same bank, ING Direct. We keep our own budgets and have our own savings goals, but talk often and openly about what’s going on with our money. (What can I say, we love personal finance!) When we do something together like go out for dinner, we either take turns paying, or reimburse each other after the fact. (ING has a nifty electronic transfer feature which makes this very easy.) We have the same campus job and earn roughly the same amount, so this system works well for us.

Summer 2009: We graduate – whoo! We move to NC and became a one-income “family.” We consider ourselves a financial unit, even though we are not married. (However, all of our accounts are still separate.)

2010: We begin keeping one joint budget instead of two separate budgets. We both contribute to mutual savings goals like our emergency fund, wedding, and vacation. John becomes the point person for our investment and retirement accounts while I manage the day-to-day duties of making sure every bill gets paid. We agree that neither of us will rack up a large joint expense — or really any unexpected joint expense — without consulting the other.

2011: We co-sign on each others’ cars.

2012: We give each other access to accounts, but maintain individual IRAs, discretionary investment accounts, checking and savings accounts, and credit cards. John begins helping to pay down my student loans. We get married :)

SO that’s us in a nutshell. But, what does this look like on a day to day basis? Currently, we pay our joint bills out of my checking account, and then I bill John for his share. (I just total everything up and email him the amount once a month, and then he transfers it electronically back to me.) Our joint expenses get paid on our joint credit card, which also gets paid twice monthly out of my checking account. We pay expenses proportionately — so, if one of us makes 40% of our joint income, then he or she pays 40% of the joint expenses. Since John pays for some joint expenses I do not, like our health insurance, I compensate for that by contributing a larger amount toward our joint savings goals and debt reduction plan. Any money left over stays in our individual accounts for paying individual expenses or individual savings.

I tell you all that to show you how one couple manages their joint finances, and I hope it was helpful! Our system works for us; it may or may not work for you. Whether you feel good or bad about the current state of your joint finances, I have a few suggested action steps for you this week:

1. START TALKING. If you’ve never done so, or haven’t done so in a while, sit down with your partner and talk about what accounts you have, how much is in them, how much debt you have, how you expect money to be handled, your beliefs about giving, and your hopes for the future. Talk, talk, talk! And, of course, do lots of listening. Many sources say that money problems are the number one cause of relationship problems, so this couldn’t be more important. Get comfortable talking about money!
2. EVALUATE. Pick a time to sit down together and talk about the system you’re currently operating under. Is it working? Could it be improved? Are either of you doing something that stresses out the other?
3. PUT IT ON THE CALENDAR. If you’re not in the habit of talking regularly about money, I’d highly recommend putting a monthly money meeting on your calendars. Saturday mornings work well for us. Plan to talk about what’s working and what’s not, about what’s coming up that month, about progress made toward long term goals, about the state of the budget. I know that might sound a little basic, but it’s amazing what can happen when you’re in step with your partner and focused on the same goal – your whole perspective changes on what’s possible!

Speaking of which… next week: The nitty gritty of how, exactly, we make and stick to a written budget. In the meantime, I would really love to hear what y’all think. Do you use one joint account, all separate accounts, or a combination? We are certainly not perfect, and tips are always welcome!!

P.S. New to this series? Check out this post, where I tell our money story and explain why I think financial literacy is marvelous.

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January 24, 2013 9:49 am

Great post! My husband and I have all joint accounts. We find this works better for us. We pay all of our monthly bills together and sit down every month and write out our monthly budget. We read all of Nancy and Will Ray’s blog posts about finances and have recently started a modified version of their suggestions. It’s been incredible to see what’s happened in such a short amount of time. We just paid off our first debt this week! Feels so great. I’m really loving your Marvelous Money posts and can’t wait to see what next week has in store. Thanks Em! You truly are an admirable and marvelous lady.

January 24, 2013 11:31 am

We’re almost opposite! We keep it pretty simple in our house, which works for us, especially since our life got sort of flipped upside down and I had to quit my “real” job to move to TX for Steven’s new job! We never combined finances until we were married, but leading up to marriage, finances were a hot topic of discussion and we started budgeting seperately and we were writing checks back and forth to each other for expenses and such. I love how yall split dinners/dates, too. That’s when I knew things were serious with us because things were getting REAL! We also did split bills proportionately, but we kept spending/blow money equal-mainly because I do the buying for housewares/decor and that makes our house pretty (and Steven never shops!) Once we got married, we decided to combine our checking and savings, so I transferred both my accounts over to Steven’s accounts. Keeping up with several bank cards and different accounts and writing checks back and forth was a mess for us, so we just streamlined everything and merged our finances (with the acception of IRAs/401Ks/CDs). I have no real idea where this method came from because my parents keep their finances seperate and Steven’s mom never worked, so that’s a little different, too.

We worked from one budget from our checking and our savings when we first got married. And we focused on the envelopes and cash system. Bills were automatically drafted and the husband took care of writing checks for the ones that weren’t. The cash system didn’t last for us when we moved because there were too many expenses & reimbursements (after the fact) so we researched credit cards. We had never used a credit card for our expenses until we moved, but we got one because it allowed us to get a couple of free flights (obviously, a situational benefit)! All of our expenses/bills/mortgage/shopping goes on the CC and we pay it twice/month.

Sharing finances in the way that we do became very easy for us when we moved and I had to quit my job, no longer bringing in a decent income. Household roles sort of switched up a bit, and I’m in charge of most of the household responsibilities that we used to share. Now that I make much less working in a part time retail job, we still divide our monthly budget equally when it comes to blow money, but we live off 1 income, and we actaully live on less than that. We decided this may good practice for the future b/c I may not want to work when babies eventually come into the picture! When I do start working again, we may reevaluate a few things, but I think we may decide to have the extra income go towards savings/the house. When it comes to gifts, we discuss our budgets and we get cash out so we can keep at least something secret!

We are much different I think that most couples because we have a ‘what’s mine is yours’ mentality with our money. We have no secrets. Dave Ramsey inspired us to not hide skeletons in the closet, but I can see where our method may not work with everyone! Steven can see exactly when/if I go to TJ Maxx and if I feel like he may not be so happy about it, then I just won’t go! Likewise, I can say NO to going out to dinner some nights because that’s what he enjoys! We trust each other and we both respect the budget fully. If we slip up, we talk about it and we get back on track! We also discuss any purchase over $200 and we save up for big things. Does anyone else have this mentalitiy?! Why/why not!? I’d be curious to know!

January 24, 2013 11:51 am

Hey Em!

We just got married (12.12.12) and were asking all of our friends, relatives, strangers on the street (jk) how they handle their bank accounts now that they’re married, and we took a few tips here and there from everyone we talked to and came up with this:

JOINT CHECKING – 60% of our paychecks go into this account to cover bills, food, living expenses, etc. We started at 60% but we want to reevaluate after a few months to see if we need to raise this percentage.

JOINT SAVINGS (EMERGENCY) – we each contribute $100/month into this account automatically

HIS/HERS PERSONAL CHECKING – we each have our own personal checking accounts (that the other doesn’t have access to) which is our “fun” money. That way we don’t have to ask the other person if we can buy something every time we go shopping. And we can hide presents from each other without them showing up on our statements.This is the other 40% of our paycheck.

HIS/HERS CREDIT CARDS -these are both cards we brought into the marriage that we each pay down separately, and only use for emergencies or dire circumstances, just to keep the credit rolling. Everything else is paid for with our checking accounts, and if we can’t afford it with the money we have we won’t buy it until we can.

That’s what has been working for us for oh say a little over a month now. :) I’m excited to read your post on budgeting because it kind of stresses me out having all of his bills now too and he’s in graduate school so he’s only working part time. Gah!

Love your blog btw :)

January 24, 2013 12:29 pm

Hi Emily! I just love this series. I think money articles fascinate me because I just don’t have that much of it! haha My fiance and I have talked a lot about this issue. Things could change in the next month or two (as I get closer to my surgery) but for now we have a joint savings account that we each contribute to. Everything else is separate sort of. I say sort of because we each have individual credit/savings/checking accounts and all of our insurance policies through the same bank, USAA. And like ING, transfers and adds to other accounts are super easy. I pay for rent (1/2), utilities and groceries. Ben pays the other portion of rent, plus cable, internet and phone. For everything else we buy, we have the attitude of “it all comes out in the wash.” :)

January 24, 2013 1:38 pm

Hey Emily!

I am not currently married but my long time boyfriend and I do live together. Like you and John before you got married we are very open about our finances but they are still seperate. We are also very open about our debt (my PA school student loans and his mortgage). As of right now he is paying his mortgage and all of the household bills (basically the same as what he was doing before I moved in). I am paying my student loans back, the majority of our food budget, and all of my personal bills. I know once we do get married this will need to change a little to become more fair.

We have been having discussions here lately about how to make the finances fair and what we should do once we do get married. I have suggested that we set up a system like Catherine has described above. However as of now he is all for combining everything. We haven’t really weighed out all of our options but for now we are trying to brain storm what system will work best for us.

Also like Haley, I have been reading Nancy Ray’s blog post about finances. I took her advice and I got the book “The Total Money Makeover” by Dave Ramsey. So far I am finding it to be very helpful and inspiring. I would also suggest the book for anyone who is wanting to become financially stable.

Thank you so much for the Marvelous Money post! I cannot wait to hear what you have to say about budgeting!

January 25, 2013 2:07 pm

Thank you so much for this series, Em! I am a (somewhat) recent college grad who will be engaged in the near future- working on our finances as a couple has been such a big part of moving forward with our relationship and careers. I am grateful to have advice from someone who understands! I’m really excited to see what you have to say about budgets, keep up the good work!

January 27, 2013 12:30 am

I haven’t been commenting much lately but I’m loving these money posts!! I learned so many things by being a business student in college but one of the main ones was communicating about finances is key to success! Thank you for enforcing this philosophy!