To follow up on the 1st year thread

[annadragon]

I didn''t want to threadjack over in supergirls "First year of marriage" thread, but I had some curiosities relating to the topic. Some of the posters mentioned that combining finances was a hurdle for them. Many of us make our own money, some of us are still poor, broke grad students wondering if there''ll be a job, any job for us in this economy after graduation and others are just starting their careers.
How do/did you guys handle combining finances? Especially, those of you who might still be students and your SO already has a career or vice versa. What about when your income equity is way out of balance (i.e. one of you makes a significant amount more than the other)?

 

[Italiahaircolor]

Date: 3/12/2009 1:30:59 PM
Author:annadragon
I didn''t want to threadjack over in supergirls ''First year of marriage'' thread, but I had some curiosities relating to the topic. Some of the posters mentioned that combining finances was a hurdle for them. Many of us make our own money, some of us are still poor, broke grad students wondering if there''ll be a job, any job for us in this economy after graduation and others are just starting their careers.
How do/did you guys handle combining finances? Especially, those of you who might still be students and your SO already has a career or vice versa. What about when your income equity is way out of balance (i.e. one of you makes a significant amount more than the other)?

I feel that I can speak on this...

I make a great living and on my own I always did fine...however, my husband makes a significant amount more than I do. But it''s also put in perspective because we live in a very expensive city.

I think that when you marry someone you become a team...and that everything you share becomes equal and balanced. For lots of families it works out best if one member is the bread winner and the other is homemaker...obviously, there is a huge gap in income...but as a partnership one hand washes the other (so to speak).

If you''re planning on merging your incomes, then you need to stop thinking of it as an "me and he" situation and become an us. That means, for instance, if you''re the bread-winner that you might have to revert back to discussing purchases...even if it''s your earnings paying for them. Setting a budget you both agree on also helps the accounts feel balanced in more than one way--think spender vs. saver.

 

[Elmorton]

When DH and I first got married, he was already in his career and I''d just finished grad school. As strange as it sounds, I was getting my first real paycheck at age 24, I''d been living on my own for awhile, and to maintain my independence, I wanted seperate accounts. DH thought it was a great idea, and that''s what we did.

For the first 6 mos, DH would ask me to transfer whatever money over that we needed for bills - he took care of things like our rent, utilities, medical, etc, and I just paid the costs I''d had when I was on my own (car, school loans). Any excess in my acount was mine. It worked fine until we moved and I had a semester where I only taught 2 classes. Suddenly, we realized that in order to get our bills paid, we needed complete transparency when it came to finances, so we merged accounts. Also, looking over our past banking history, DH realized that I''d been playing with a ridiculous amount of fun money while he was carrying the brunt of our expenses - he''d never really asked what my take-home pay was. So, the seperate accounts thing was really unfair in our situation.

At first, I wasn''t really happy about merging accounts, but actually, I think it''s been a great thing for our marriage. We look at the sum as our money, and even joke sometimes about "who is going to pay?" when we go to dinner. It''s made me a lot more honest and responsible about my personal spending.

DH is still our "household accountant" and he keeps me updated (basically, every weekend, I ask how we''re doing). I also have total access to all of our accounts and can check them at any time - my biggest concern with merging finances is that I never wanted to be out of the loop (but at the same time, I''m horrible with numbers, so that''s not a responsibility that would make sense for me to have). For us, it''s best for one person be sortof the "operator" for bills/savings/etc, because we did get into a few disagreements about who was responsible for what bill etc.

Gifts are sortof a different thing - we now set limits for spending etc. Or we might take out cash for a surprise purchase (letting the other person know that we''re taking out some $ for an upcoming gift) - but we find a way to still give the other surprises.

 

[alli_esq]

thank you, annadragon, for bringing this up...I myself am having mixed feelings about combining finances...

currenly, we have a joint savings and a joint checking account--the joint savings is exclusively for our honeymoon fund that we started before we got engaged...and the joint checking account--well, we don''t actually use it.

part of me really wants to pool all of our money together and combine all of our bills and pay from that pool...but here''s the thing:
right now, I''m barely making enough to make ends meet. FI is making almost $20k/year more than I am...but hopefully in the future I will be outearning him...
I also have 2-3x the amount of educational debt that he does...so, not only do I make less, but I also owe a lot more, which leaves me with little to no money left over each month to save. If we pooled our assets and our liabilities, we would be able to either jointly save the rest, or be able to both have savings accounts with something in them...as it stands, he contributes to his 401k and has a savings account that is growing slowly but I have very little, and whatever I do have will mostly go to pay for my portion of the wedding...

the other part of me, however, recognizes that I come from a family that is...well, my parents are far from wealthy, but they have a lot more than FI''s parents do. FI''s parents have never helped him with anything, whereas mine paid for my college (ohhhh I am SO appreciative of that, I can''t even tell you), they helped me during law school however they could, they paid for my bar fees, they are paying for more than 75% of the wedding, they gave us money for our honeymoon---etc., etc., etc. it is understood that (God forbid) if something happened to one or both of our jobs, or if (again, God forbid) FI and I ever split up, my parents would step in and help out as much as they could...whereas, FI would only have whatever savings he would be able to scrounge up. So, we''re not even in the sense that I have a lot more outside assistance (as in--ANY) than he does.

so...I don''t mean to make this about me--I really just wanted to say that I wanted to hear other people''s plans for the future and how they were going to deal with this, because I am still quite torn on the issue, and don''t really know how I feel...

 

[Morgie44]

We are not super out of balance right now, but FI will soon be quitting his second job to go back to school. This will leave me making about 20% more than him. Which still isn''t a huge difference at the incomes we are at...

I want to preface this with noting: we are both big savers with specific mutual goals and I am a bit anal rentetive when it comes to money so I understand that this may not work for many, but the arrangement we have mutually arrived at is each of us will have x amount of spending money (same amount each) that will be deposited into our own individual accounts. The difference over that amount will go into a joint account, where we have budgeted for all our regular expenses: car payment, student loans, mortgage, utilities, food, savings, retirement, and entertainment. I think that this works/will work in the future because we will have our own discretionary income to spend as we wish or save for a larger purchase if we wish, with no questions asked. Then, if there is a larger purchase, it will be discussed first then come out of the shared account.

 

[ImpatientOne]

When we first got married, I was making nearly 6 figures per year while hubby was an enlisted Soldier not making a whole lot of money. We immediately combined everything. Both of our paychecks go into joint accounts (checking and savings) and we both have access to all of the money. All of the bills are set up on bill payer, so we both know where our money is going. We both also have individual accounts for discretionary spending. Neither of us really use those much, just on occassion...

I recetnly was laid off, so in another six months or so when my severence runs out, hubby will be the primary bread winnder while I go back to school. Fortunately he''s been promoted a couple of times since we got married so it shouldn''t be a struggle...

 

[elrohwen]

Morgie, I plan to do as you''re doing. We already have both the joint and the separate accounts, so why not just leave it that way, but put 90% of the money into the joint account and only a little in personal? We could also get rid of the separate accounts, but I think we should hang on to them for a little while at least until we figure out what works. I already manage almost all bills and savings, so I''ll continue to do that (though he''ll probably continue to monitor his own bills).

In my situation, FI and I make almost exactly the same amount. However, I have no debts and he has student loans and a car payment (which are both fairly significant; maybe $800 a month total). So I''ll go out and spend money on clothes and he thinks I''m crazy; but I don''t think he realizes how much fun money I really have. Once we get married I''d like to even it out. Joint money will pay for his debts, because they''ll also be my debts. And we''ll get the same amount of fun money so that it''s more fair.

We''re already putting a certain amount towards our wedding fund, but it''s hard to track because if I have to pay for something (say, a dress deposit) I''ll put it on my credit card and pay it off from my paycheck. So I''ve put very little money in the savings account, but I''ve spent thousands of dollars. Once the wedding is over that account will be a house/emergency account, so hopefully we''ll get the saving down a little more consistently.

I should note that he doesn''t want to have fun money accounts at all and thinks we''ll be fine with just one account. I think that after my first clothing or shoe purchase, he''ll agree that he''d rather not know how I''m spending my money sometimes

Also, I wanted to add that while I do think about this transition and how to handle it, I don''t think it''ll really be a cause of stress in our relationship at all.

 

[Haven]

We combine everything and consider it all "our" money even though DH''s income far outweighs my own. Once we married we stopped looking at things as "yours" and "mine" and started looking at everything as "ours." This may not work for everyone, but it works for us.

In our case, I''m a public high school teacher and DH is a muscle specialist. The most I''ll ever make is $120,000 per year, and that won''t happen until I''ve been teaching for 20 years. Right now, I make a little over half of that, and DH makes much more than that. Do I feel guilty about it? No. We both work hard, we both pursued careers that we love, and now we are partners and it doesn''t matter where each dollar comes from, because it all goes into the same place. We made a conscious choice to create a lifestyle that we could afford on my income alone, and we''re happy living below our means. It works for us, and we have very similar views on things like finances and lifestyle, which probably also makes it easier for us to work out, as well.

It probably helps that my lifestyle hasn''t changed at all since I married DH, so it''s not like I went from living frugally to regular mani/pedis at the Red Door. But if I did, I wouldn''t see anything wrong with that, either.

 

[NewEnglandLady]

My situation is similar to Haven''s--happy with my salary and we can live on my salary, but DH makes significantly more and continues to increase the delta every year.

That being said, I still pay for half of everything...it is a personal preference of mine (don''t feel that he is entitled to pay for more than half simply because he makes more). This is easy for us now because we live so far beneath our means that my paying half is not a big deal, but I take it pretty seriously. When we recently bought a vehicle, he wrote a check and I wrote him a check for half that day. Also, I didn''t allow him to pay a dime of my student loan debt.

We have a joint checking account for all bills that we split down the middle and we also have a joint savings account...needless to say, about 80% of that savings is his and is going towards a house, so in the end his savings will go towards a joint purchase (I feel guilty about this). We have separate 401ks and individual checking accounts. We recently got rid of our individual savings and joined them (after being married a year).

I will have to let go of my preference to pay half soon because I do plan to be a stay at home mom for at least five years when we have kids. I''m struggling with it, but I think it''s time I put my "living together" vs. "marriage" issues behind me, haha.

 

[Guilty Pleasure]

We''re not married yet, but we''re slowly coming up an idea of how we will handle finances. Our first step in combining is the cell phone bill. I neededa new phone, so I signed up for another two year with my provider (he also has this provider). Next week, we will call and combine our cell phones into one family plan, saving about 50 dollars a month. It''s a little thing, but I did pick the company based on his contract and what''s best for "us" instead of which phone I wanted the most.


We''ve decided to keep joint accounts, and he asked if I would handle bills because he thinks I''m better at it. That''s good because I want to do it! I also suggested a budget spreadsheet for us to look over together and get a solid idea of what we spend and where we can save. He has agreed with all my suggestions so far and has been open to being open and giving up personal control.


So far, we have butt heads on picking out furniture - it''s hard to find something we both like and feel is worth the money. I''m not really looking forward to having to discuss day to day spending or agree on major purchases (like furniture) with another person, but as long as we''re both kind and open-minded, I think we''ll eventually work it out fairly smoothly.

 

[Sabine]

I was making more than dh when we got married (he''s a med student and in the Navy, so he was getting a slight Navy stipend). We kept separate checking accounts and got a joint savings. We basically sat down and made a spreadsheet of what we each made and what we each spent each month and decided who would pay what and how much we would each put in savings. It was important to dh to still be able to make his own car payments, and he was able to pay the Comcast bill will his money, as well as pay for some fun stuff. I paid all other bills and groceries.

I''m going to be a SAHM starting in June, so I will have zero income. We will have to combine our savings accounts, and i have to admit that it''s going to be a little weird to pay my own student loans/car payment, etc. from money I didn''t make, but I''m glad we didn''t have to do that right away. At first we were really careful to each pay our own things, but over this past year we''ve gotten to the point where we really don''t care who pays for what since it''s all just "our" money anyway.

 

[tlh]

well said italia

 

[teapot]

DH and I both have our own accounts and a joint account. We have complete transparency also. He knows how much i have, I know how much he has we combined our money in the joint account. We also have access to all of passwords and accounts but choose not to interfere with each others finances. It will be a lot easier once I get a real job instead of my part-time one so our cash-flow situation improves. Before i lost my job, this worked out very well for us.

 

[noelwr]

we''ve been financial partners ever since we bought a house together so we will carry on the same way when we''re married.

we both have our own accounts. we also have a joint account which we use to pay the mortgage. I earn a bit more so we split the mortgage payment pro-rata, 1 because it''s only fair and 2 in order to be entitled to the other''s pension should something happen we have to show that we help each other out financially. this won''t be necessary anymore once we''re married as we will be entitled to each other''s pension either way, but we''ll continue. he has his pride and always wants to pay half (and not that he can''t live without the money), but I won''t agree to that.

our bills we split in half. he pays most of the bills and tells me how much it is and then I transfer half to his account. I would never ask to have rights to his account nor for a joint account. his money is his and it''s not for me to spend. however, we do buy each other lavish gifts. also, if we get furniture and it''s something the one person wants, then that person pays for it (unless it''s a gift from the other). (by the way, he is a really good saver so overall he is way richer than me - incase you think I''m being mean by making him buy his own things.) likewise, I would never expect him to pay off my car or any of my personal debts.

the real problem I believe we''ll face is who is the final decision maker. as I earn the larger salary and we could not live the same quality of life on just his (we could live, don''t get me wrong, but there would be no vacations and fun stuff anymore), I foresee that if my company offers me a job abroad and there isn''t one for me at home anymore, that I will have to make the decision to move so that we can continue to have the same quality of life. he doesn''t want to move and I don''t want him to be unhappy. I keep hoping that it will all work itself out, but I think that will be the first big test in our marriage.

 

[musey]

Date: 3/12/2009 1:30:59 PM
Author:annadragon
How do/did you guys handle combining finances? Especially, those of you who might still be students and your SO already has a career or vice versa. What about when your income equity is way out of balance (i.e. one of you makes a significant amount more than the other)?

Everyone has to find their own balance, but we completely combined everything. I had some reservations about it, but in the end, we just decided to jump in feet first!

We've had 100% combined finances from that point. All income and expenditures are 'joint.' My money is our money, his money is our money. Currently, he makes significantly more than I... and more reliably than I (I may have very low or no income some months, but a comparatively large lump of income other months). Other than bouts of guilt I have over him being somewhat the 'breadwinner,' we've done very well.

I think it also helped that this is what both our sets of parents did, so that's what we 'knew.' There is no 'he makes more so he should pay more' or anything like that... it's all one big pot so there is no division of claim to money.


ETA: Before we got married, we lived together for 2.5 years and had a joint account that we contributed to equally. Basically, everything was split 50/50. That worked just fine too, but we found it was not logical given our current situation.

 

[anchor31]

DH has been working for 4 years and I recently graduated (with little prospect for a steady job in my field), so he''s making about 3 times my salary (well, was, since he was lais off on Monday). What we did is open a joint chequing account, where we both put 50% of our respective paychecks to pay the bills. We still have our own checking and savings accounts for our personal spendings. That really helped me adapt, I think, since I''m used to paying for my own stuff and I can keep doing that.

 

[Clairitek]

Date: 3/12/2009 2:13:32 PM
Author: Italiahaircolor

Date: 3/12/2009 1:30:59 PM
Author:annadragon
I didn''t want to threadjack over in supergirls ''First year of marriage'' thread, but I had some curiosities relating to the topic. Some of the posters mentioned that combining finances was a hurdle for them. Many of us make our own money, some of us are still poor, broke grad students wondering if there''ll be a job, any job for us in this economy after graduation and others are just starting their careers.
How do/did you guys handle combining finances? Especially, those of you who might still be students and your SO already has a career or vice versa. What about when your income equity is way out of balance (i.e. one of you makes a significant amount more than the other)?

I feel that I can speak on this...

I make a great living and on my own I always did fine...however, my husband makes a significant amount more than I do. But it''s also put in perspective because we live in a very expensive city.

I think that when you marry someone you become a team...and that everything you share becomes equal and balanced. For lots of families it works out best if one member is the bread winner and the other is homemaker...obviously, there is a huge gap in income...but as a partnership one hand washes the other (so to speak).

If you''re planning on merging your incomes, then you need to stop thinking of it as an ''me and he'' situation and become an us. That means, for instance, if you''re the bread-winner that you might have to revert back to discussing purchases...even if it''s your earnings paying for them. Setting a budget you both agree on also helps the accounts feel balanced in more than one way--think spender vs. saver.

ITA with Italia on the team comment. This is how my parents have done their finances, as well as FI''s parents so I suppose neither of us have seen any other example.

I can relate to the scenario you pointed out about where one person is a poor student (me) and the other has a good income (FI). Like Musey and her DH, when we moved in together we kinda merged some of our finances. We both contribute to a mutual account, in tune with our income levels. For example, I pay 1/3 of the mortgage for our house and he pays 2/3. This is also the ratio that we contribute to our mutual account (the reason we did this was in case we split up it would be easier to track who paid for what with the house, etc.).

We''ve talked about how when we get married we will fully combine our money with the exception of an equal amount of "fun money" to each person... say a few hundred dollars a month. This money will be used for no questions asked purchases. For example, his paintball gear or my sewing related stuff.

Currently, even though we aren''t married, we definitely discuss purchases, large and small, when it comes to the house and stuff taken out of our mutual account.

 

[ash313]

Date: 3/12/2009 1:30:59 PM
Author:annadragon
I didn''t want to threadjack over in supergirls ''First year of marriage'' thread, but I had some curiosities relating to the topic. Some of the posters mentioned that combining finances was a hurdle for them. Many of us make our own money, some of us are still poor, broke grad students wondering if there''ll be a job, any job for us in this economy after graduation and others are just starting their careers.

How do/did you guys handle combining finances? Especially, those of you who might still be students and your SO already has a career or vice versa. What about when your income equity is way out of balance (i.e. one of you makes a significant amount more than the other)?

We moved in together just over three years ago, and combined checking accounts two years ago. Before we combined it, we split everything according to percent of earned income, as opposed to half and half. So we both paid the same percentage out of our paychecks for shared expenses (rent, utilities, etc.) Then the rest was ours to play with, even though it was uneven.

Then we quit our jobs and both went to grad school, and lived off of student loans. We combined everything, and absolutely everything has been a joint expense from that point on.

Now, I am graduating in six weeks (woohoo!) and have secured a job that pays pretty well, I guess. Comfortable enough to support us both, while he finishes his last year or so of law school. At some point, I will almost be completely supporting both of us (although he does have a clerk job, but only works 15 or so hours a week, and isn''t very well-paid). Then, hopefully he''ll find a job and we''ll continue to share everything.

It works for us. When we made the decision to go to grad school, our "percentage" plan didn''t work too much anymore (I mean it was all loans anyway!) so we just went for it and became a true team. I actually love it, I think it''s a very difficult thing to do, and the fact that we share our funds helps us to learn and grow as a couple.

 

[Pandora II]

DH and I have been married for 7 months, but lived together for 4 years before that. We own two properties together, no debts other than our mortgage and we have completely separate finances.

I have a direct debit that pays my half of the mortgage and bills and he actually pays the bank, utility companies etc

Everything else just seems to work out about 50/50. Maybe it''s because we''re both in our 30''s, but we''re just too used to having our own finances to want to merge them. I think it''s a case of what works for each couple. We like the system we have and it works for us...

 

[Shoopy]

Date: 3/12/2009 1:30:59 PM
Author:annadragon
I didn't want to threadjack over in supergirls 'First year of marriage' thread, but I had some curiosities relating to the topic. Some of the posters mentioned that combining finances was a hurdle for them. Many of us make our own money, some of us are still poor, broke grad students wondering if there'll be a job, any job for us in this economy after graduation and others are just starting their careers.
How do/did you guys handle combining finances? Especially, those of you who might still be students and your SO already has a career or vice versa. What about when your income equity is way out of balance (i.e. one of you makes a significant amount more than the other)?

We combined finances about a year ago. It was the *best* thing we have ever done as a couple. We are out of balance. I bring in 70% of the income but I also have all of the debt. With the exception of the car he purchased just two months ago, he had absolutely zero debt. I, on the other hand, had all types of credit cards, student loans, and a car payment.

When we combined we agreed on two things: all money now belongs to the both of us regardless of who makes more BUT the debt is now ours as well. It was a major compromise. It was extremely hard for me to process the fact that someone else would be paying for my debt but at the same time it was really hard for him to process that the majority of the money he now has is really as a result of my paychecks.

Combining allowed me to get out of debt and he has saved so much more than he was saving when it was separate. It has really worked well for us.

Key things that helped us:
~It's no longer your money. It's our money. There is no longer how much he brings in and how much you bring. The line is completely vanished.
~Do yourself a favor and set up a threshold. Our is $200. That means any purchase over $200 has to be discussed before it is made. This helps alleviate stress later on the road (where did the money go?!?) and it keeps communication lines open when it comes to finances without making you feel like you have to discuss buying a pack of gum with the other person
~Assign one person as the one that handles the bills. This person is me. It makes it more effecient and prevents things like duplicate payments or moving money around (from checking to savings) when not needed

If I can think of anything else I'll share

 

[AmberGretchen]

Date: 3/12/2009 1:30:59 PM
Author:annadragon
What about when your income equity is way out of balance (i.e. one of you makes a significant amount more than the other)?

DH and I were in this situation when we first moved in together (about 6 months before we got engaged). We had a meeting with a financial planner who had lots of experience working with couples, and she told us that more often than not, when there was a lot of inequity, especially if it was so one partner could go to school and contribute more later, then dividing up discretionary spending based on that usually led to issue such as resentment.

Thus, DH and I basically have an "everything is communal" approach. This obviously wouldn''t work for everyone, but has worked well for us - everything goes into the household fund, and we pay all expenses out of that. Once those are all paid, discretionary spending is mutually agreed on above and beyond that.

Next year, I''ll be the one making the money while DH (probably) goes back to school, and we''ll plan to basically do the same thing.