How Do You Handle Your Marital Finances?

[Retired To Win]

For 20 years, my wife and I have chosen to take a "joint but separate" approach to our household finances.

I have detailed how this approach works (and how well) on my blog post
Marital Finances Our Way:

http://retired-to-win.savingadvice.com/2014/04/11/marital-finances-our-way_108269/

How about you? Are you taking the more accepted "one common pot" approach... or are you operating under "from each according to ability, to each according to need" rules... or are you following an approach similar to our "his money, her money, our expenses" way of doing marital finances?

[disneysteve]

We have been married for almost 22 years and everything has been joint since day one. We are a team, not two individuals who happen to be living together. We combine everything and work together toward common goals. Isn't that what marriage is all about?

RTW, it would be nice to read what you have to say without having to go to your blog to do so. If you have something to share, post it here.

[kork13]

My fiancee and I are planning (at least for now) to operate with a "his, hers, ours" strategy. All income will go into our joint account and most everything is paid out of there, but we will both continue to maintain a small, personal account for our personal "fun money"... Basically, our plan is to get a small monthly "allowance" sent to our personal accounts, and that money is ours to use as we like -- save it, spend it, or whatever, with minimal accountability required between each other.

We're getting married in ~3 weeks, so we'll see how it actually goes at that point. We may end up going 100% joint at some point, but for now, we're going to try this and see how we like it. This is approximately what my parents did, although her parents were always 100% joint. So we'll just see what works for us.

[Eagle]

We have been married for almost 22 years and everything has been joint since day one. We are a team, not two individuals who happen to be living together. We combine everything and work together toward common goals. Isn't that what marriage is all about?

Personally, that is how we handle finances as well Disneysteve. I think some of the other approaches make people seem more like roomates than partners...

[Eagle]

My fiancee and I are planning (at least for now) to operate with a "his, hers, ours" strategy. All income will go into our joint account and most everything is paid out of there, but we will both continue to maintain a small, personal account for our personal "fun money"... Basically, our plan is to get a small monthly "allowance" sent to our personal accounts, and that money is ours to use as we like -- save it, spend it, or whatever, with minimal accountability required between each other.

We're getting married in ~3 weeks, so we'll see how it actually goes at that point. We may end up going 100% joint at some point, but for now, we're going to try this and see how we like it. This is approximately what my parents did, although her parents were always 100% joint. So we'll just see what works for us.

Adult "allowances" are a good way to go. We started doing this about 2 years into our marriage. It reduced a lot of stress in our marriage as she was able to go shopping and I was able to go to the movie theater without it causing a huge fight.

Our accounts are 100% joint we just agree on an amount each month or two for an "allowance".

That said, I guess it really depends on the couple.

[scfr]

I'm firmly in the "whatever works for the couple is the best way" camp.

My husband & I are in a very similar situation as Disneysteve & his wife (married almost as long, finances 100% joint). That was a good approach for us because it was a first marriage for both of us, neither had children, both of us had very limited assets, both were debt-free, and neither had received any inheritances. Also both of us were in the early years of educating ourselves about personal finance (I was ahead of DH having been out on my own for many years while he had lived with his family), we both agreed that we had much to learn, and we were both 100% committed to working together to improve our financial situation. If the circumstances had been different, we may have chosen a different route.

But if either of us died and the other re-married, it would likely be a different scenario, since our financial situation is different now than it was way back when. An approach that worked in your 20's may not work in your 50's or later.

[hamchan]

We are pretty much 100% joint. He has a couple of his own credit cards, and I have a couple of my own, but for the most part we use the joint CC that has rewards for day to day expenses. The only time we use our individual cards is when buying gifts for each other, or if for some reason we can't use the joint one.

[Retired To Win]

We have been married for almost 22 years and everything has been joint since day one. We are a team, not two individuals who happen to be living together. We combine everything and work together toward common goals. Isn't that what marriage is all about?...

Hi, Steve...

Those are not the only 2 options to marital finances. You see your marital finances as a team effort. My wife and I see our marital finances as a partnership -- and we do work together towards common goals. Neither you and your spouse, nor I and my spouse, are "two individuals who happen to be living together."

Make sense?

[Retired To Win]

...RTW, it would be nice to read what you have to say without having to go to your blog to do so. If you have something to share, post it here.

Hi, Steve...

It would take me a goodly amount of effort to rewrite, cut-and-paste, or excerpt what I already have expressed as well as I can on a blog post. A link reference is a very legitimate alternate way to go.

On the other hand, it takes just a mouse click and about 5 seconds to jump from the forum post to the blog article. And one more mouse click plus another 5 seconds to get back here to the forum post when done with the blog article.

That doesn't seem like a big inconvenience to me. I hope it is not one to you.

Take care.

[disneysteve]

we do work together towards common goals.

That's good to hear.

I read so many stories here and elsewhere of couples who say things like, "I'm saving 15% for retirement but my spouse is saving nothing." Well that's great. What do you plan to do when you both retire? Are you going to let him starve because he didn't save anything?

Or someone says, "I've got $2,000 in my vacation account but my wife doesn't have anything." So are you going to go on vacation and leave her home?

I can't imagine living that way. Maybe it works for some and I guess that's okay. It certainly wouldn't work for me or my wife. We save and plan for vacations together. We decide if we want to spend money to go out to eat together. We do retirement planning together. If one of us wants to make a significant purchase, we discuss it together.

A lot of people say something to the effect of, "I keep my money separate so that my spouse doesn't spend it." Call me strange but if I couldn't trust my partner with my money, they wouldn't be my partner.

[Eagle]

Per Retired To Win's request...

How To View Finances After Being Married?
Here's some recommendations:

1. Typically There are 3 Approaches to Finances in Marriage

A. Joint Finances or Pool Everything Approach
All income is household income (not "my" income or "your" income). All expenses are household expenses (not "my" portion of the expenses or "your" portion of the expense). This team approach means the spouses typically work together towards common goals.

B. Joint with Separate Finances or Middle Ground Approach
This is what some people I know have determined to be best for them. Household expenses are typically split 50/50 or in proportion to each spouses income. Any additional income that each person has after household expenses are accounted for is their own money to spend, save, give, or invest as they please.

C. Separate Finances or Independent Approach
This approach is more like the married couple are roommates. All income or expenses are separate and there is no "sharing" of finances. Personally, Im not a big fan of this approach.

It is up to each couple to determine how they will handle money. That said Im going to assume either option A or B for the rest of the post.

2. Finances need to be talked about.
A big source of stress in marriages often occurs when one spouse (the Planner) handles all the finances and the other (the Spender) has no input. Avoiding the subject is not a good approach. Facing the truth of your familys financial health or lack thereof is a big first step. Doing this on a regular basis is a good habit for any married couple. Remember too that money matters carry emotional weight.

3. Decide what your goals and objectives are together.
Each spouse should have a voice. Deciding the monthly budget should be a process where both spouses are involved. There are long-term, mid-term, and short-term goals that can be discussed. The areas where there is commonality such as purchasing a second vehicle, saving for retirement, paying off debt, buying a house, etc. should be pursued. A good idea might be to allow the original accounts to remain dormant and open an account together in a new financial institution.

4. Create a Budget and Discuss Together.
Put everything down on paper or type up the categories in Excel. Track your expenses using www.mint.com. Determine what the household monthly income is and make sure to allot all of it towards various expense, saving, charity, or investment categories. If one spouse primarily creates the budget the other spouse should review and be encouraged to change at least one thing proposed.

5. Tackle Debt Head on as a Couple.
Whether its student loans, credit card debt, or the mortgage decide together what should be paid off first and in what order. When two people marry that becomes the responsibility, for better or worse, of BOTH spouses. There is no longer my debt and your debt. It is now our debt. Approach this with either the debt snowball (lowest account balance) or avalanche (highest account interest) strategy.

6. Agree Upon Major Purchases.
I read recently where a husband bought a new house for his family without consulting his wife. That is just a recipe for disaster. Consider saving up and paying cash for large purchases instead of taking on a whole lot of debt. Also, agree upon what is a need and what is a want. A new boat will likely be a want. A new family vehicle that ensures the safety of the kids would likely be a need.

7. Agree Upon an Allowance for Each Spouse.
Each spouse can do as he or she pleases with this money no questions asked. This is particularly beneficial so that she can go on her shopping sprees and he can pursue his hunting hobby. Remember too that enjoying money is okay.

8. Schedule Follow-ups.
A good time to do this is at the end of the month to discuss next months budget. Even if its 5-10 minutes its time well spent.

9. Save 10 to 15% of Your Household Income Each Month.
People often rationalize they dont have enough money to save every month. Prioritizing saving should a habit every married could ideally adopts. Start an emergency fund with at least $1000. After this is accomplished start saving for retirement through 401k, 403b, IRA, Roth IRA, and low cost index funds. At the same time build that emergency fund up to 3-6 months worth of expenses. This will give you a safety net for the present when emergencies do happen and the future for retirement.

10. Be Honest About Finances.
Keeping large purchases or debts hidden can seriously cripple if not cause a rift in a marriage.Losing a job can also be a serious challenge. The best policy is honesty when it comes to financial or other situations.

What has worked for you in your marriage? How do you view finances after being married?

[ourfirsthome]

Everything together since day 1. I don't believe there should be separation of accounts etc. In a marriage. You married for a reason, you are one.

[Retired To Win]

...I read so many stories here and elsewhere of couples who say things like, "I'm saving 15% for retirement but my spouse is saving nothing." Well that's great. What do you plan to do when you both retire? Are you going to let him starve because he didn't save anything?

NO. THAT BEING SAID, BOTH I AND MY WIFE SAVE FOR RETIREMENT. IRA REGS MEAN THE ACCOUNTS ARE SEPARATE. I WOULD BE REALLY P... OFF, HOWEVER, IF MY WIFE WERE SPENDING LIKE A DRUNKEN SAILOR AND SAVING NOTHING WHILE I WAS BEING RESPONSIBLE. SOMETHING WOULD HAVE TO GIVE.

...Or someone says, "I've got $2,000 in my vacation account but my wife doesn't have anything." So are you going to go on vacation and leave her home?

MY WIFE AND I DO TAKE TRIPS AND VACATIONS TOGETHER (WHICH WE FUND 50/50). BUT WE ALSO TAKE INDIVIDUAL TRIPS TO SEE OUR RESPECTIVE FAMILIES OR TO DO SOMETHING THE OTHER ONE IS UTTERLY NOT INTERESTED IN. AGAIN, FOR ME IT WOULD BE UNTENABLE TO HAVE A SPOUSE THAT CAVALIERLY DUMPED THE FUNDING OF VACATIONS ON ME.

... We decide if we want to spend money to go out to eat together.

SO DO WE.

If one of us wants to make a significant purchase, we discuss it together.

SO DO WE IF IT IS FOR A JOINT HOUSEHOLD PURPOSE. BUT NO, MY WIFE DOES NOT NEED TO DISCUSS WITH ME HER DECISION TO PURCHASE 3 RABBIT HUTCHES AND A CHICKEN COOP. I DON'T NEED TO DISCUSS WITH HER MY DECISION TO BUY AN EXPENSIVE ASTRONOMICAL TELESCOPE. THAT IS WHAT WE HAVE OUR OWN MONEY FOR.

...A lot of people say something to the effect of, "I keep my money separate so that my spouse doesn't spend it." Call me strange but if I couldn't trust my partner with my money, they wouldn't be my partner.

AT LEAST FOR US, IT IS NOT ABOUT TRUST. OTHERWISE, WE WOULD NOT HAVE POWERS OF ATTORNEY AND SIGNATURE OVER EACH OTHER'S ACCOUNTS.

[Retired To Win]

Per Retired To Win's request...

Thank you, Eagle!!

[Retired To Win]

I am wondering why no one has yet challenged how our marital finances approach could work if/when one spouse has no income.

I'll wait a day or so to see if anyone weighs in. Then I will put in my two cents' worth.