Living off of one person''s salary

[zoebartlett]

If this topic is too personal for someone, please don''t post. I''m just curious how this works for you and your family if you''re comfortable sharing. If both of you work outside the home (or from home I guess), do you both contribute to your own savings accounts (if you have them)? If so, then I suppose that the rest of one person''s salary gets put into a joint savings account, not to be touched, while you use the other salary to pay bills, entertainment expenses, etc. Would anyone like to shed some light on this for me?

 

[gailrmv]

The way I could picture it working is for all the $ to go into joint checking, and then the amount equivalent to one person's salary is put into savings or an investment account at the end of the month. I think the couple would need to have joint accounts otherwise I don't know how you would keep track.

 

[Independent Gal]

We don''t do this, but I wish we did! That would be a great way to save. Eager to hear how others make it work.

 

[NewEnglandLady]

You mean living on one salary and saving one salary?

We do this. DH would like for me to just put all of mine into savings and investments, but I'm not okay with this since I still like to pay for my half of things and have a personal checking account for gifts, etc. I generally put about 33% of my take-home pay into our joint savngs accounts and he puts about 70 - 75% of his take home pay into our joint savings accounts (he makes more). This allows for us to both pay half, each have our own checking accounts AND still put over 50% of our combined salaries take into a savings account.

ETA: We have multiple joint accounts and one is strictly for bills. I'm in charge of all checking accounts (he's in charge of investments), so put a certain amount into the "bill paying" joint account every month for rent, gas, groceries, dog expenses, etc. That is what we pay equally and it's separate from any of our savings accounts or investments. This all sounds more complicated than it actually is....

 

[erica k]

i thought you meant two people living on an inadequately small single salary! that would be me

i think that''s a terrific idea and will have to do this once we''re actually a two-income household. i''ve heard from friends who have real jobs (i.e. not in grad school) that spending seems to inch up incrementally with income increases, which means that they never feel like they make enough money. so far i''ve managed to live on very little money, but i''m pretty sure that if my income doubled, i would be sorely tempted to spend more!

i''m not sure how it work in reality, and of course every couple is different, but i think we would first determine average household expenses, including paying off student loans asap, and then put the leftover amount in a joint savings account. for instance, (i made up these numbers, obviously) if we need $2,500 a month and person A is making $2,700 and person B is making $2,300, then person B would put $2,100 in savings, and both would keep $200 for personal spending each month. whatever they don''t spend of the $200 remains in their separate checking/savings accounts, thus enabling them to save up for larger personal purchases. i like the idea of a joint savings account, but it''s also important for me to have my own account. of course, person A might decide that s/he should have more personal spending money each month because s/he makes more. i think in my relationship i would end up with the larger or equal allowance because i''m the shopper in the family (including his wardrobe, etc) and i know he wouldn''t care either way.

this is all hypothetical, of course, since we have a few years to go before either of us are on the job market. but i think it''s good to plan ahead and remind myself that my quality of life is perfectly fine on very little money. choosing to live on a single salary is a really good idea!

 

[zoebartlett]

I''m not sure we could swing this but we''re thinking of trying it and see what happens.

I haven''t read all the replies yet but the one thing we keep getting hung up on is our individual savings accounts. If we use my FI''s checks to pay all of our bills (mine, his, and ours), how do we handle savings? I''d like to treat that separately -- I use my paycheck to put in some amount of money into my acct. and my FI does the same with his money and his acct. Then the rest of my salary goes into a joint savings acct. and the rest of his salary is used for bills, etc., as I mentioned.

My FI doesn''t like this part of our plan. He thinks it''s a good idea for me to put part of paycheck in his personal savings acct. He sees my paycheck as savings, regardless of whose savings acct. is used. His would be for living expenses, regardless of whose living expenses. Why should I put money in his savings acct?

Maybe I''m making this more confusing.

 

[zoebartlett]

Date: 5/14/2008 5:14:35 PM
Author: NewEnglandLady
You mean living on one salary and saving one salary?

We do this. DH would like for me to just put all of mine into savings and investments, but I''m not okay with this since I still like to pay for my half of things and have a personal checking account for gifts, etc. I generally put about 33% of my take-home pay into our joint savngs accounts and he puts about 70 - 75% of his take home pay into our joint savings accounts (he makes more). This allows for us to both pay half, each have our own checking accounts AND still put over 50% of our combined salaries take into a savings account.

ETA: We have multiple joint accounts and one is strictly for bills. I''m in charge of all checking accounts (he''s in charge of investments), so put a certain amount into the ''bill paying'' joint account every month for rent, gas, groceries, dog expenses, etc. That is what we pay equally and it''s separate from any of our savings accounts or investments. This all sounds more complicated than it actually is....

I think I follow you. As of now, we''ve both been putting a certain amount into a joint checking acct. for the mortgage and condo fee. We also joint savings accts. that we contribute to (based on what we individually make) when needed. For instance, we''ll plow money into our wedding acct. now but afterwards we might focus on plowing money into a furniture acct. if we want to buy a new living room set. Something like that. We each also have individual checking accts. that we use for our own personal bills.

I''m not sure what the best way to handle it is.

 

[cara]

Date: 5/14/2008 6:36:26 PM
Author: ZoeBartlett
I'm not sure we could swing this but we're thinking of trying it and see what happens.

I'd like to treat that separately -- I use my paycheck to put in some amount of money into my acct. and my FI does the same with his money and his acct. Then the rest of my salary goes into a joint savings acct. and the rest of his salary is used for bills, etc., as I mentioned.


My FI doesn't like this part of our plan. He thinks it's a good idea for me to put part of paycheck in his personal savings acct. He sees my paycheck as savings, regardless of whose savings acct. is used. His would be for living expenses, regardless of whose living expenses. Why should I put money in his savings acct?

Uh, cause he's going to pay all your living expenses.

Its just a shell game at this point, and you need to transition from his money/my money to our money. Its about trusting your guy even if you are keeping your savings accounts in two accounts with two names.

Took me a really long time to feel enough trust for my FI (when we were sharing money but not yet married) to be cool with say, letting him pay all the rent for a while cause I was going to pay for all the XYZ instead of splitting each expense evenly.

Whether or not you keep your savings in joint or separate accounts is really a personal choice, but it might make it easier mentally for you to create a joint savings account. Then it will really feel like "our" money. We still keep separate accounts for things like retirement (which need to be single name for tax reasons), but have been slowly merging the rest of our hidey holes of money. Not for everyone but there it is.

 

[zoebartlett]

Date: 5/14/2008 7:10:39 PM
Author: cara

Date: 5/14/2008 6:36:26 PM
Author: ZoeBartlett
I''m not sure we could swing this but we''re thinking of trying it and see what happens.

I''d like to treat that separately -- I use my paycheck to put in some amount of money into my acct. and my FI does the same with his money and his acct. Then the rest of my salary goes into a joint savings acct. and the rest of his salary is used for bills, etc., as I mentioned.


My FI doesn''t like this part of our plan. He thinks it''s a good idea for me to put part of paycheck in his personal savings acct. He sees my paycheck as savings, regardless of whose savings acct. is used. His would be for living expenses, regardless of whose living expenses. Why should I put money in his savings acct?

Uh, cause he''s going to pay all your living expenses.

Its just a shell game at this point, and you need to transition from his money/my money to our money. Its about trusting your guy even if you are keeping your savings accounts in two accounts with two names.

Took me a really long time to feel enough trust for my FI (when we were sharing money but not yet married) to be cool with say, letting him pay all the rent for a while cause I was going to pay for all the XYZ instead of splitting each expense evenly.

Whether or not you keep your savings in joint or separate accounts is really a personal choice, but it might make it easier mentally for you to create a joint savings account. Then it will really feel like ''our'' money. We still keep separate accounts for things like retirement (which need to be single name for tax reasons), but have been slowly merging the rest of our hidey holes of money. Not for everyone but there it is.

I know. I didn''t mean that to sound harsh. I guess I''m just not used to the idea of him paying all of my bills and me putting money into his savings account. I want it to be fair and I also don''t know if I think it''s fair for my FI to pay my student loans.

I was typing too quickly before and forgot to put that in there. Maybe I just need to think of it as our money more and not his and mine, as you suggested.

We do have joint savings accounts also.

 

[sumbride]

If it''s an interest-bearing savings account, it makes sense that you put ALL your savings in it because you''ll earn more on a larger amount, rather than splitting it up among yours, his and "ours". It will compound faster in just one account. And you totally have to get past the "separateness" of it. You will! It''s a mental adjustment to make. DH and I haven''t combined savings accounts yet just because we haven''t really had a lot in there in the first place... spent most of it on the honeymoon... but we do plan to do so. We have joint checking and though we each also have our own checking accounts, both of our names are on them as well, just for ease.

 

[Dancing Fire]

wife and i always had separate accounts.that way i don''t have to beg for money if i wanted to buy something.

i don''t know how much she have in her accounts and she don''t know how much i have in mine. we never talk about money.

 

[Dancing Fire]

this reminds me of the "SECRET STASH" thread from few yrs ago.

 

[mimzy]

i''m not married yet so i still have my innocence about me and that very well may change, but FI and i are planning on combining our money from the get go and living off of one salary once we both get jobs (currently i''m in grad school and we''ll be moving when i graduate, so we''ll both be looking for new jobs).

we''ll likely live off of the lower salary and use the higher one to pay off our student loans and save for a house. but we have no qualms about extending our college lifestyle a bit longer and living as cheaply as possible in order to do that, so it won''t be all that hard i don''t think.

it might just be me being naive, but so far sharing money hasn''t really caused any big problems for us. it is very much "our" money and we respect and trust each other enough to not hesitate to put ourselves at each others mercy when it comes to finances (not that a lack of this action implies a lack of trust or anything!). we always run purchases by each other anyhow (even though it is all his money right now) and I imagine that if one of us wanted to make a purchase the other didn''t approve of it would probably be worked out that that person just had to stow away the money they would normally spend until they had enough to pay for it. we have pretty similar styles when it comes to finances though, so that is probably why it works for us.

i think to make it work you have to get over any mental blocks that you have about "yours vs. mine". put both of your names on all the accounts, even if you each have one maybe? i imagine it would be pretty hard if you''ve had your own finances for years and years, and there''s no rule that says you HAVE to combine them if you just can''t get comfortable with it.

my mom and stepdad have been together since i was 9 or so and have been married for 4 years, and they have COMPLETELY separate finances, to the point that one person will go on vacation without the other because the other (usually my mom!) can''t afford it. and it totally works for them. i''d be bothered by it, but i know that they (especially she) is happy that they have that independence. they even borrow money from each other if need be, but it is always paid back.

 

[NewEnglandLady]

Zoe, we''ve gone over the best way to save for many months now and we just had to figure out something that worked for us. My parents put everything into their joint, neither has a personal account. D and I lived together splitting everything equally for 7 years, so the idea of not having my own personal account after marriage freaked me out. I cringe when I hear my dad asking my mom for a check so he can buy something, it just doesn''t sit well with me. He literally has to tell her how much he spent on her own birthday gifts! I don''t think I''ll ever make the transition to completely joint. I love Dan and would trust him with my last dime, but I just need some financial wiggle room.

So the way we do it now works for us: We both put the same amount into joint checking every month for all bills. Then we put some in our personal accounts and finally we invest about 50 - 60% of our combined take home salaries into a joint savings account. Then we decide together how much to keep in that savings account and how much to invest. Once money is in our joint savings, it does not come out without a discussion first.

When you say that your FI thinks you should stick a portion of your check into his savings account, do you mean his personal savings account? Why not just create a joint account where you can both deposit money? Once you start to see how much you need vs. how much you can save per month, it becomes a pretty simple process. The only time I feel it''s necessary to put joint money into an account where only one person has access to the account is when one person can''t control his/her spending and I don''t think either of you have that issue.

 

[cnspotts]

I breezed through the other posts so I'll tell you what we do and how it works.

I'm in charge of spending the money (household bills, savings, etc.) mostly. I keep a monthly record that DH can review at anytime naturally.

We both work and both of our checks are direct deposited into one account for which we both use Debit cards. We're both "cashless" but at time DH does ATM cash if needed. I never do. We both max out our retirement plans before either check gets DD. Then we have another amount DD into our "emergency" savings fund (no ATM card on this one) it's strictly for transfers, renovations, vacation,other investing etc. All paper checks (odd reasons here and there) go to emergency fund. I save up "cash tips" for the house or a personal super splurge. I got all our SS kitchen applicances this way.

Everything comes out of our single joint account, and generally we'll talk about anything over a couple hundred $$$ before making a purchase. We each keep a CC which is paid off monthly (usually), or 2 months max.

We meet our monthly goals but reevaluate every few months due to renovations on the home. Neither of us is sacrificing, we live pretty comfortably but we do pay attention to the important needs vs. wants. Hubbs loves instant gratification, I don't mind saving up for something. This works pretty well for us and my need to be in control, I've learned to let go of the little amounts that add up and not nit pick. We both work hard and have common goals to keep us on track. I let him know if we have any big bills due (insurance; he keeps me posted on auto stuff) so there are no surprises.

Once in awhile I'll leave a note on the computer that says "DON'T BUY ANYTHING" ....

 

[cara]

Date: 5/14/2008 7:41:30 PM
Author: sumbride
If it's an interest-bearing savings account, it makes sense that you put ALL your savings in it because you'll earn more on a larger amount, rather than splitting it up among yours, his and 'ours'. It will compound faster in just one account.

Sorry to burst the bubble, but it doesn't matter if you put your savings in one account or ten... If the interest rate and compounding schedule are the same on all accounts, the net proceeds will be the same. (Assuming you avoid account fees or transaction costs.)

Here is an example b/c I am procrastinating:

Say you put $100 in an account at 6% interest, compounded monthly. The balance in the account after 1 year is:
Balance = $100 * (1 + 0.06/12mo)^12mo = 106.17

If you split the $100 in two accounts with $50 each and the same terms:
Balance = $50 * (1 + 0.06/12mo)^12mo + $50 * (1 + 0.06/12mo)^12 = $106.17

 

[zoebartlett]

Thank you, everyone, for your replies. We''ve been trying to hammer out details and determine if this is what we want to do. I think it would be the best way for us to save the largest amount of money jointly. If I ever decide to stay home with our future kids, reworking our finances now will help us determine if we can really live off of just one salary when/if the time comes. There are so many ways to do a budget and it seems like you just have to find the way that works well for both of you.

 

[Dancing Fire]

Date: 5/15/2008 4:36:52 PM
Author: cara

Date: 5/14/2008 7:41:30 PM
Author: sumbride
If it''s an interest-bearing savings account, it makes sense that you put ALL your savings in it because you''ll earn more on a larger amount, rather than splitting it up among yours, his and ''ours''. It will compound faster in just one account.

Sorry to burst the bubble, but it doesn''t matter if you put your savings in one account or ten... If the interest rate and compounding schedule are the same on all accounts, the net proceeds will be the same. (Assuming you avoid account fees or transaction costs.)

Here is an example b/c I am procrastinating:

Say you put $100 in an account at 6% interest, compounded monthly. The balance in the account after 1 year is:
Balance = $100 * (1 + 0.06/12mo)^12mo = 106.17

If you split the $100 in two accounts with $50 each and the same terms:
Balance = $50 * (1 + 0.06/12mo)^12mo + $50 * (1 + 0.06/12mo)^12 = $106.17

maybe sumbride was thinking more like $25,000 + $25,000 or more.

in these

amounts banks will probably offer you a higher interest rate.

 

[cara]

Date: 5/15/2008 6:39:23 PM
Author: Dancing Fire

Date: 5/15/2008 4:36:52 PM

Author: cara

Date: 5/14/2008 7:41:30 PM

Author: sumbride

If it''s an interest-bearing savings account, it makes sense that you put ALL your savings in it because you''ll earn more on a larger amount, rather than splitting it up among yours, his and ''ours''. It will compound faster in just one account.

Sorry to burst the bubble, but it doesn''t matter if you put your savings in one account or ten... If the interest rate and compounding schedule are the same on all accounts, the net proceeds will be the same. (Assuming you avoid account fees or transaction costs.)


Here is an example b/c I am procrastinating:


Say you put $100 in an account at 6% interest, compounded monthly. The balance in the account after 1 year is:

Balance = $100 * (1 + 0.06/12mo)^12mo = 106.17


If you split the $100 in two accounts with $50 each and the same terms:

Balance = $50 * (1 + 0.06/12mo)^12mo + $50 * (1 + 0.06/12mo)^12 = $106.17

maybe sumbride was thinking more like $25,000 + $25,000 or more.

in these

amounts banks will probably offer you a higher interest rate.

That would do it!

Plus you need a certain amount in to get fees waived at most banks.

 

[Rhea]

I was thinking that we don''t live off one person''s salary but then going through our finances today and we almost do. So I can post!!!

Our paychecks go into a joint account that all the bills are paid from. The direct debit is set up that on payday we each get a bit of money automatically transferred to our individual bank accounts. In the future we''ll probably have more separate money but right now our goals mean that we need joint savings.

What is left over after bills and a bit of individual money goes into our joint savings. It sounds a bit backward to save separate money before joint money but the separate money is a much smaller amount and doesn''t change from month to month so having it automatically taken out means that neither of us forgets about it. The joint savings fluctuates each month.

I wanted separate accounts when we married, he wanted joint. We tried separate accounts for a bit but it wasn''t working for us. It was hard to save toward joint goals such as a house or vacation. It was also really hard for me to think that my income was going to bills and his was being saved even though if you were to break down now that''s about how it works out!

 

[Blenheim]

We don''t quite live off of one person''s salary, but it might be close enough that sharing how it works could help you.

We have one joint checking and one joint savings account. His paycheck is direct deposited into checking. $200 of mine is direct deposited into checking and the remainder is direct deposited into savings. We don''t really keep track of who earned what money, just what it''s for -- what''s in checking is what we live off of on a regular basis and what''s in savings is for emergencies and long term expenses (like a car).

I think that we''re about to change this up some, so that the remainder of my paycheck is going to a combination of savings and paying extra on the mortgage instead of just going to savings. Logistically, when we start doing that, we''re going to have the extra for the mortgage direct deposited into checking and we''ll immediately pay it from there.

Because of the joint accounts, we do need to communicate more about who''s spending how much. We track all expenditures and bank balances in Quicken so that both of us are in tune with how much money''s going where and how much is left in checking. We also communicate about who''s paying what bill so that everything gets paid once (and only once). We have monthly budget meetings to readjust things as necessary.

 

[UCLABelle]

We both work, have separate checking accounts with a joint savings....we split the bills to a good degree---and he spoils me with the leftover money he has I think it fair

In all seriousness though, we make almost the same amount, and if one made significantly more, it would alter this plan I think---

 

[Kay]

I guess we do live off of one salary, although I had never thought of it that way before. We only have separate accounts, but that is mostly because it was easier for each of us to stick with our own system, rather than having to merge everything. It''s not a trust issue because we live in a community property state with no pre-nup, so it is legally all "our" money no matter whose name is on the account. We each have our own credit cards (which are paid in full each month), and our own checking and money market accounts. We divided up the bills years ago before we got married: I pay the mortgage, property taxes and home insurance (the house is in my name), my credit cards and my student loans. He pays for all utilities, groceries, and his credit cards and student loans. We loosely take turns paying other bills, like car insurance. Neither of us wants the hassle of trying to keep track of the other person''s checks like we would have to if we had a joint checking account. We are discussing opening a joint investment account once we find a broker we like. We do discuss major purchases in advance regardless of who pays. I do like having separate credit cards, though -- he does not comment on my clothing purchases and I do not comment on his video game purchases.

 

[pennquaker09]

Pretty much everything that we have is in joint accounts. I have a couple of accounts that I gained access to when I turned 21 that my grandfather left me, but those are in Alabama banks, so I suppose they don''t really count.

When we both worked, both of our checks were directly deposited into our checking account and then the bank would transfer specified amounts in our savings accounts. For the first year and a half, my salary was going directly towards the mortgage and then his salary paid all of our bills. It worked because we really don''t have anything other than necessary bills. We don''t have any loans or car payments, and we charge a few things to our Delta card to get the skymiles, but we pay it off at the end of the month. He doesn''t like credit cards . . .

However, one of the reasons why everything we have is joint is because I get health insurance through him. We had to be registered as domestic partners and all of this kind of coincides.

 

[ljmorgan]

Zoe,

That can definitely be done without a problem, and I think what you suggested is definitely a way to do it. Right now my husband and I each contribute to our 401k''s and Roth IRA''s, and then the rest is direct deposited in our joint bill checking. Every two weeks money is transferred to our joint spending account (groceries, gas, fun money) and our joint savings account. Very simple! We plan on having children in the next couple of years and if I decide to stay home for a while, everything would work the same, except I wouldn''t be contributing to a 401k, just my Roth IRA. We''ve always treated our income as one pot, there''s no my paycheck vs. his paycheck. We budget our money, and each have X amount to spend each week on what we want, so there are never any fights over spending because we can buy whatever we want. Good luck!

 

[icekid]

My hubby and I have been living off his salary while I've been in med school. And we're about to continue to live off one salary even now that I am beginning my residency and will actually make some money. And we'll actually probably try to live off MY salary rather than his, because his has been increasing and I'd rather bank that money for the future.

Since I'm now 27 and JUST getting out of school, I feel soooo behind on retirement savings. 5 years behind, compounded, 30 years from now is a lot of money. But there's nothing to be done about that now, except save save save and max both 401k and Roth IRA. So that's what we plan to do, with the rest going to house downpayment savings. Of course, we do plan to have a little more fun too.. a yearly vacation, and the occasional movie and dinner! I'm going to need SOMETHING to look forward to during those loooong hours of work.

Anyway, we share our bank and savings accounts. It's not been an issue for us, and um, I'd have no money if not for him seeing as I've not had a job. So I like it this way

 

[Lynnie]

FI and I have a system - one joint checking and one joint savings. My checks are direct deposited into the checking and his go to the savings. All of the bills are paid from the checking acct, and the savings is the wedding/house/emergency fund. I make about twice what he makes, and once a month I transfer whatever''s left in the checking into savings. We are living very cheaply now - all in all I think the monthly bills (rent, utilities, car ins, phones) come to about $1000 a month. Plus I have school loans that I put an additional $300/month on. We have no car payment - we share the same car I drove in high school (10 years ago). So yes, we live on one salary. I find it easy - there are no trust issues. It''s getting harder for me now that we have a lot saved up to not totally splurge on a vacation/down payment for a new car (our car is seriously kind of embarrassing). ARG. Our plan for the savings: 1) pay for the wedding (we are paying ourselves - the whole thing) 2) post-wedding, use most of remainder of savings + wedding gift $$ for house down payment 3) By that time, the student loans will be paid off, thus freeing up $300/month for a car payment. God, it will be nice to have a car with AC and waterproof window seams. It''ll all be worth it in the end, right? I hope to continue this system once we get a house, as well. It''s easy - especially since the savings $ is kinda like outta sight, outta mind. No debit card temptation, ya know?

 

[eleguin]

We may be in the minority here, but DH and I combine everything. Even before we got married, we viewed all the money that came in as "ours." Everything goes into the joint account and we pay all of our bills, loans and expenses from it. I am actually surprised that more people don''t do it this way. Growing up, that''s how my parents did things. They never had separate accounts. Everything they made was for one unit for our family. I guess being raised that way, I automatically believed that''s how things should be when I got married. This is the case even though I make significantly more than DH and he actually has significantly more loans (student and car) than I do. I just don''t like the idea of "yours" and "mine". If we are sharing and joining every other aspect of our lives, why be different with finances?

 

[zoebartlett]

Thanks for all the replies! Here''s an update:

My FI is the database and spreadsheet king, so he set up a spreadsheet that included all of our monthy earnings and expenses. He''s going to take over the finances (paying all the bills) soon. I''m going to put half of my paychecks in a joint acct. and the other half in savings. We''re going to look at it as our money (with some individual money for savings and our own random expenses/fun money). That''s a huge thing for me to do -- give up that thought of his money and my money. We''re going to help each other pay off credit cards and student loans, instead of doing it on our own. So we''ve decided not to live solely off one salary but we are helping each other more, which is good.