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How do you two deal with spending?

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akw94

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I''ve been thinking about the spending money/finances issue lately since my FI and I are about to join households. How does everyone deal w/this? I''ve never joined finances before so do you discuss it before you make a purchase? Is there some limit, i.e., we discuss if it''s over $50? What if it''s under your limit but is furniture or some other piece that is a household piece.. do you discuss then too?

What do you do?
 
We have a limit that we can spend without discussion (I think we said $500). We''ve only purchased furniture together (I don''t think either one of us would purchase home decor, with the exception of candles, etc., without discussing it). In fact I know my husband wouldn''t! We''re both pretty conservative financially so we haven''t run into any issues regarding $$$. If I want to spend money on clothes I typically let him know first just so he''s not suprised when he sees the credit card bill. We use credit cards for all purchases over approx. $30 and pay them off at the end of the month so that we earn points/miles/gas. He''s the money manager in our home, because he''s better at it than I am, but we have a "money meeting" once a month to review our finances so that I always know what''s going on.
 
We have our own spending accounts that we put a set amount into each month. This money is ours to spend as we will. We discuss anything that will be spent with joint money that isn''t normal household stuff. I pay the bills except for the credit card that only DH uses (that way if he charges a birthday present for me or something I don''t see how much it costs).

It took us a while to merge our finances as much as we have, and we did have problems with DH spending all of his play money, the bills being too high, and me making up for it with my spending money. Now that we''re making a little more money and we''ve adjusted how much we get, this hasn''t happened recently. We still have questions such as what counts as play spending versus necessary spending. Basically we''ve had to implement these rules so that DH curbs his spending (which is all on incidentals -- golf, CDs, going out, concerts) and so that we stay in the black without me having to go without clothes or books or other things I feel I should be able to spend reasonably on.

I think it definitely makes sense for one person to be in charge of all of the bills. For example, DH was paying the minimum on his student loan. It was originally for $20k or something like that. Well, he''s paid $10k on it, and there''s still $20k left to pay. At the rate we were going, it was going to take us an additional 36 years to pay it off! When I finally took a look at it, I realized the problem. Now we''re paying over double the minimum and will pay it off less than 7 years. (Vent: I can''t believe how ridiculous the interest rate and everything is. We don''t have any credit card debt, and somehow I thought that a student loan wouldn''t have such a vicious interest rate or make it so hard to apply extra payments beyond the minimum, but it''s just like a credit card.)

Having separate spending accounts works for us because we have such different spending habits. This way the spender knows how much can be spent and won''t go over, and the saver can squirrel some extra nuts away for a rainy day (or a diamond pendant -- hee hee, it comes on Tuesday!).
 
I would just start communicating about money in general to get a feel for how the two of you are going to work. Every couple is different with how they decide to deal with money, but it is incredibly important that you agree on a plan.
 
We have a main checking account where my husband''s check is deposited (and some to savings, etc.) and all the bills are paid to that account. If both incomes are needed to pay monthly expenses, then put them both in. Then I suggest each person have an amount per month that they are free to spend or save for whatever (you could have extra checking accounts for this, if you wish). From the initial paychecks, there should be an amount that goes into retirement and a money market savings for emergencies and larger purchases such as furniture, new tires, etc. We also do like Kimberly and use one credit card for all purchases and pay it off at the end of the month. This just takes the discipline of knowing how much you want the maximum to be each month and staying within those parameters. You really need to sit down and make a budget to see how much will be coming in, how much the bills will be, how much you can save, and what will be left for his and hers extra spending.
 
We have a joint savings and checking, then we each have our own checking as well.

We calculated out the amount of $ it would cost us to run the household each month plus put some in savings. Then we calculated the percentage of each of our incomes (his teaching assistant job pays a bit more than my research assistant job-we're graduate students) that it would take to meet those commitments plus have a cushion. The rest of the $ goes into our individual accounts to do with what we please.

We also each have our own CC but don't have a joint one yet.

As for the bills, I pay them all except his CC because he doesn't seem to have an issue with late fees, and I DO!

This works well for us and amusingly enough EVERY financial management person we have read about or chatted with generally recommends this approach. I highly recommend it.

As for what comes out of the joint account, we're pretty trusting of each other because we have similar spending/saving styles in general. We have been living together for a year and there hasn't been a problem about spending out of the joint account yet. If there were a problem in the future, I think we would probably put a limit on it like others have.

I STRONGLY recommend that you guys get on the same page regarding finances before you move in. I have known two couples whose relationships were ruined because they failed to negotiate spending habits with their significant other.
 
Well, it really depends on the couple. Everyone is different in how they manage their money.

Take us, for example, when we first got together, so to speak, we had our individual bank a/cs and handle our own finances. This continued for a while after we got married. We were both quite successful professionals in our own right and didn't want to be dependent on the other person (me especially since I am Asian, well.. brought up in the UK, but am of Asian origin - didn't want to be stereotyped as the typical Asian woman who's subservient and dependent on the man. Silly thoughts on my part, I know). This didn't work so well though since my husband, who although is an excellent excellent lawyer, is not so good at finances! So after a while, we merged all our finances together and I as a finance professional have been managing our finances for the last 10 yrs or so. Our assets have gone up something like 30-40 times in this time, this despite the fact that I now have given up working full time, since two-three yrs ago, and only bring in my salary once in a while.

My best friend and her husband are the exact opposite. He manages all the finances, runs the household and she's given an allowance (a very generous one at that) and he buys her the most expensive designer clothes and shoes all the time. They're also doing quite well financially.

What's my point? My point is that you and yr FI need to sit down together and discuss what's best for yourselves. However, as a basic, as has been suggested before, I'd recommend putting aside a fixed amount each month, into a joint a/c, to pay for yr rent/ mortgage(s), money for emergency purposes (everyone says 6 months, I'd say 12), money towards yr retirement (which you should contribute to the max if there's a one-to-one match by yr employers) and if possible towards some other saving vehicle(s). The rest is for spending. We tend to also disccuss any big ticket item together (limit varies according to yr individual circumstances, whatever you feel most comfortable with). But we also go out and spend money on ourselves, individually, when we feel like, as we don't want to feel that we can't be our own individual selves.

I hope that helps. The most important thing we've found is that: we never ever argue abt money. A lot of people (as statistics show) break up/ divorce over money (in fact, I think that is the number one cause for divorces, I believe ??? Someone will correct me if I am wrong, I'm sure). I think that you've started out on the right footing, already thinking abt this issue. I wish you the best in yr forthcoming union, sincerely. I strongly believe in the institution of marriage.
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I think that everyone has given you pretty good suggestions so far. I would just stress that I don''t think that there is any one "right" way for you two to manage/merge your finances. Each couple will have different feelings on that, so talk with your fi and talk about what seems like a good idea to both of you. And then if that''s not working out, don''t worry, you can change and tweak how you handle the money.

My husband and I share all of our finances. We both make good salaries, and all of our accounts are joint accounts. We budget carefully, and pay for everything that we can on a credit card to earn points. Twice a month the CC gets paid off from our checking account. We automatically send a certain amount of money to our savings account, and we each have an equal set amount of what we call "blow money" -- we can spend it on whatever we like. Also when I need new clothes, I tell him "hey I need new clothes" and that''s fine and I can buy however much I want, although I usually mention what sort of budget I have in my head for it, whether it''s $500 or $1000, because it''s just nice to let him know. We don''t have a set price of an item where we need to get permission from the other person, it just comes naturally. I logically know in my head I should probably mention to him ahead of time if I''m going to buy a $500 vacuum cleaner -- I even discuss much smaller purchases with him. I think it''s a natural effect of discussing what''s going on in each other''s lives.

I think that we''re both very happy with our arrangement. I will say that while we have all joint accounts, some he is the primary on, and on some I am the primary. Some of our credit cards are in his name, and I''m an authorized user, and some are in my name, with him being an authorized user. We like to spread it around!
 
Basically, I spend and he faints when the bills come. But on a serious note, it is good to establish guidelines, a budget, a limit past which you would not buy without consulting the other...just takes some of the strain away, in mho.
 
I second what Lindsey said. We don''t have a limit per se. We just know when it is something we like to discuss abt, we don''t have to, but it''s nice to let the other person know. But if it makes YOU feel comfortable, by all means, set a monetary limit. Also as Lindsey said, you can tweak and change how you manage yr finances and see what works best for both of you. Key is communication and honesty.
 
He earns it. I spend it. Hahaha...There is a bit more to it than that. I''d agree what everyone else has said. Communication is key. And do the bills together. If you manage accounts online this is easier. It is plain to see what is spent and where it has gone. We''ve really only had one issue that I can think of. I took the kids out of town for a few days last summer. When I got home, on my desk, were invoices for a plasma tv and a Bose surround system. Since we were tv-less in a new home I knew we would be purchasing one. The house was prewired for surround sound as well. While it wasn''t a HUGE shock. I didn''t appreciate him spending $6000 on electronic equipment without my go ahead. He offered to return it and apologized - after I went through the roof. I explained that the issue was not that he bought it. It was the lack of communication. Especially since I only wanted a 42 inch. The cost to return the 50 inch, pay shipping charges, then buy a 42 inch, pay shipping charges = the cost of the 50 inch. I don''t want to think he was being manipulative, but, if it walks like a duck...And quacks like a duck.................

Another tip is to set financial goals together. It''s easier to control frivolous spending with a goal in mind.
 
All our money is in joint accounts and I deal with the actual bill paying. We find it easier that way. If it is something essential, such as medical expenses, paying utilities, educational/work expenses, we just do it, and not discuss it first, no matter the amount. If it''s something non essential, we discuss it first if it will be over $100 or so. Usually we are on the same page. I like to treat myself a little more on a regular basis, so sometimes I feel guilty, but every now and then he''ll have some big expenses for hobbies or whatnot. We tend to be on the same page in terms of big picture stuff, like homeownership, spending vs savings. I think it helped that we;ve been together since we were young and broke!
 
Also.... while we treat all our money as joint property, I highly recommend having a separate credit card in your own name in addition to a joint card for a few reasons:

1) when you buy eachother''s b-day gifts, you won''t see the bill before you get the gift
2) When my wallet was stolen and we cancelled all my cards, at least my DH had his card to use until our cards were replaced and
3) helps you build/maintain your own good credit rating which will help if you need a mortgage or car loan
 
Well, we tried joint finances (we earn similar amounts) but it just didn''t work (for me, anyway). I felt like I had to justify how I spent my money - once it hit the joint account, I felt like it wasn''t mine anymore and I know that was my problem, and mostly in my head, but I just couldn''t stand it. When the account statements came in, DH would check them. Not to see what I spent, but to check they were correct, but it drove me into furious rages and we fell out. Every time. Sometimes we threw furniture.

Now, when we get paid, we each pay enough to cover half the bills into our joint account and they are all paid by direct debit from there. The rest is private to each of us and we never have to think about household finances.

Joint purchases for the house we either split 50 / 50 or if one of us has more spare cash, that person just buys it. Works out about equal in the end. Since we stareted that, we haven''t had any issues about money at all. It''s gone from hellish to pretty cool. DH inherited a lump sum last year and he has paid off our mortgage, but I evened it up a bit by using some of my capital to pay for building work to the house. Neither of us are great money managers, so the one joint agreement that we do have is no debt, ever. If we can''t afford something, we can''t have it. (It took me years to pay off my student loans and credit cards - never again.)

I''m planning on going back to school next year though, so this is all going to change. I won''t have a salary for at least 10 months. No idea if we will fight again, or if I will just have to learn to be a bit more of a grown up!

Good luck

Jen
 
Everyone here has great advice.

DH and I joined accounts when we got married and the checks started bouncing like crazy. Oh man....300 in overdraft fees each month. What would happen was, neither one of us would pull out our receipts and deduct them from the checkbook. I never thought of using our credit card to make purchases & then paying it off...but DH is probably too conservative to do that. I''m such a "spender" that would be dangerous for me. LOL.

It took a few months but we finally realized we needed one person to manage the checkbook/bills and since I''m home & he travels, its me. I pay our bills, put $ in savings and then tell him what our projected funds are for the next few weeks. He''s AWESOME about it.

As for large purchases, there''s nothing we buy over a $50 that we don''t talk about, not that we set a limit, but that''s just how we are. He knows I like nice clothes/shoes & doesn''t care if I treat myself every now & then as long as "the bills are paid"--I generally let him know that I''m going to Nordstrom to "buy new jeans" so I don''t come home with a new pair of Citizens & surprise him. I try to be responsible though, since I''m a stay at home mommy, and I do that about once a year. But he''s so cute, he says he understands that I like things like that & it makes him happy to provide it.

But we are having another baby this year, so I''ve had to stop him from doing some home remodeling projects because I need that money for what our insurance doesn''t cover & he needs a new tooth implant. I feel health costs trump home improvments. Sometimes I have to remind him, but he''s such a good guy about it.

You really have to communicate & find your own groove. As long as you stay open & try not to be defensive (and that can take time) you''ll be ok. Like last month, I forgot to pay ALL our utilities/bills that get paid via our online banking. It coincided with a stressful event & I must have pregnant-brain farted it. So my utility bills came in this month twice as high and I was like, WTF? So I had to double pay them & wound up a little skinny this month. I told my DH, half expecting him to get mad at me, and he just laughed & said, "oh well, bills are paid & we''ve got a ton of groceries, we''ll be fine". I felt sooo stupid, but after 5 years of marriage & communicating about money, I guess it pays off when mistakes do happen.

My best piece of advice when combining finances is: watch your account balance online for awhile so you don''t make a mistake. Ugh. I hate OD fees. I haven''t had one in years, but I hear they are pretty high now. What''s really maddening is when you buy a $2.30 latte at starbucks and get an overdraft fee on it......that''s one helluva expensive latte. Oh yea, we did that...not proud to admit...but it was hard at first until we got used to each other in our account "space".

Diver
 
Thanks everyone! This has been very helpful. I know we plan to have joint accounts but we also have somewhat similar/somewhat different views on spending. He wants all debt gone before spending and I think it''s good to work on debt but also allow for some spending, depending on the item, etc... So I think it will be give and take for us. We''ll have to talk about this at some point, figure out what works for us. I know that he''ll likely be the one that manages the $, which is perfectly fine w/me b/c I tend to forget too often and w/2 of us, that could end up causing a lot of stress. Luckily, neither of us are big spenders so I think it will be ok.
It seems like communication is the key. But I''m sure after we''re married and dealing w/all of this, I''ll be re-visiting this thread for some real-time tips!

One thing I wondered, for those who have joint accounts, how do you buy presents for your spouse? It seems weird that they always know how much something costs. Also, I could see my FI feeling like I''m spending too much for his gifts but I''d hate to discuss that beforehand or set gift limits.
 
dixie...we are kind of like you guys. i am more of a spender and he is a saver. we have not joined accounts after 3 years and i don''t know when we will. we each have set things we pay for but we don''t pool money..though we did to pay for the wedding, and we have a joint savings account we do use. we talk about joining stuff but it''s too much of a hassle right now. this is working for us for now so maybe we will in the future but it''s not a priority. and we don''t really argue about money so we kind of figure if it ain''t broke... ? hehehe. the last time we even talked about joining...he said something like ''is your waxing appt really necessary'' and i was like ''okay NOPE we are so not joining!'' hehee. for now it''s just easier this way. i think you guys will find your harmony point too. good luck!!
 
We have seperate accounts, always have. We take turns as to who pays for what. But he does pay most of the minor bills. The bigger ones, we haggle over who''s going to pay, hehe. But seriously it works for us, so that''s cool.
 
Dixie,

To answer your question about purchasing gifts, I simply wait until I know he won''t recieve the CC bill before the occasion to shop or he helps me choose his gift (he''s a tough guy to shop for!).

~K
 
We just moved in together, and we have a joint chequing account for all the apartment-related spendings. We also have our own chequing and savings accounts. I''ll still be paying myself for my school-related stuff and he''s handling his car, insurance, etc. We decided that he would pay the groceries by himself for now since I have no steady income to speak of, just summer jobs. If we want a guizmos or a treat, we pay it with our own money. We also decided that we would discuss any spending over 100$.
 
Date: 5/14/2007 3:36:55 PM
Author: Mara

hehehe. the last time we even talked about joining...he said something like ''is your waxing appt really necessary'' and i was like ''okay NOPE we are so not joining!''
Click to expand...
HAHAHHAHAH - EXACTLY!

Rich felt very strongly about having separate accounts for the same reason; when he had been married before, the same type of thing happened with him. He felt like he had to justify a $30 game purchase, and it just got crazy.

We each maintain our own checking/savings accounts we had prior to marrying. We set up a joint checking that we could each contribute to for household day-to-day purchases (i.e. groceries, etc). We are both savers, so that''s not a problem, and we have a joint account we both contribute to for that, too.

All the accounts are linked so we can transfer money around, and we each added the other''s name to our individual accounts after the wedding. Then, if something happens, each of us can access the money. That said, though, I use my checking and he uses his.

I don''t have to justify why I''ve just bought ANOTHER pair of shoes, and he doesn''t have to justify why he just bought another game. Works perfectly for us.
 
Thanks for all the responses! It seems a lot of people have separate accounts these days. Maybe I''m just lazy and hate to have to transfer money each month or write him a check for this bill or that bill so I know it''ll be easier to have one account. So I suppose we''ll have to figure out the inns and outs sooner or later.

Mara, thanks! I hope we don''t argue about spending on little stuff. I don''t see myself doing that and I sure hope he wouldn''t get on me for buying something, especially when it''s certainly rare that I do any shopping. It will be an adjustment, that''s for sure!

Kaleigh, I know that I would go a little crazy talking about who pays the bills or having to continue to split costs, as we do now. I am so ready to be done w/that! I''m glad that you have found a way that works for you though. I think that really is the key!

Kimberly, thanks for the suggestion! My FI is also a tough person to shop for but I do really enjoy buying gifts to surprise him.. when I can actually think of a gift to buy him!

Anchor, we were planning to do things the way you''re doing them until we married. We decided not to only b/c there''s so few months before we get married, that we''ll just keep them separate until the wedding, then join. I hope it works out easily.

Aljdewey, I like the idea of having all the accounts linked. I''m sure it makes it easier to transfer money, etc.. One thing I don''t like now is having to write him a check if he pays something joint or vice versa. It''s been a hassle.

Is anyone out there not working right now while your husband/wife is? Does that make a difference on whether you have joint or separate accounts?
 
What seems to work for us is that I spend, and he gets angry.
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Kidding (kind of)...
We have sep accounts. I put a cetain amount in savings each pay check and after I pay my studen loan and car payment for the month, I spend what I want....Doesn''t ALWAYS work
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....I am spoiled to a certain extent bc my husband pays most of the bills...The benefits of being married to a control freak
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dixie, last summer before I started my job, my husband and I still used our joint account, even though I had no income come in. For us, we treat our monthly take-home as ONE source of income. So with me not working, everything worked exactly as it does now. There is no transferring, paying the other person, splitting things etc. As a married couple we have one income, and we have the same expenses. Even when I was not working, I still allocated myself the same percentage of spending money. It would certainly be tricky if a couple split all costs, kept totally separate accounts, and then one couldn''t work for a while? Would the other person "loan" them spending money, or would that person have to ask for spending money? I am not sure how that works.

I would suggest that you set up your accounts exactly how you would like them to work -- as in once you get married, you want one joint account, or you want to pay things out of separate accounts. Set things up how you''d LIKE for them to work out. And then if a joint account causes too many problems for you, or separate accounts starts to become too much of a hassle, it''s easy to change accounts around! Just set everything up how you''d like, and you have forever to adjust things!
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Dixie,

Just a note on the transferring money around. I also suggest the linking idea. It''s great because we can transfer $ around with the click of a mouse AND we set up reoccuring transfers every month so I don''t even need to think about what $ is mine to spend and what is for the house. When FI and I get paid on the first of the month, immediately a certain amount goes into our joint.

You can do this with your bank online or sometimes even your direct deposit at work can be set up to do this.
 
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