Marital Finance Idea

[Relmiw]

I have been thinking of a way for two people who plan on sharing their life to manage their financial situation. I have it pretty well worked out in my head and would like some feedback on the idea, or perhaps someone else could share what works between them and their significant other. Maybe i can make some small changes or realize there is a much better system i could use.

It breaks down into two essential ideas.

One is that half of all income is grouped together, greater percentage if needed. Paychecks, gifts, small job payments and a $1,000,000 lottery ticket would all be taken in half with half allotted to a joint set of finances. Between the two there would be three sets of money. One belonging to each individual and the third being the property of the couple.

The second essential idea is that the shared amount would be what is used to pay for all common things. Household supplies, pets, children, joint vehicles and vacations would all fall under this category, whereas some new cleats or one of the couple going out with friends would be paid for by the individual sources of money.


Details:

-School expenses would be split in half, with half being a personal expense and half being a joint expense. This is because while both benefit from one member's schooling, the one taking classes would benefit more so.

-There are two exceptions to splitting income. One is the interest earned off of personal accounts simply because of the extra complication. The second is any income received from gambling with personal funds. These would remain the sole property of the individual, with the exception of winning at least $5,000 within a couple days. Half of any amount equal to or over that would be shared.


Also i have been thinking of a different system where all money is given to the joint account, with the same two exceptions listed above. Money would then go to personal accounts once a set amount, such as $6000, is reached in the joint account in a ratio equal to one person's income vs. the other.

What do you guys think?

[disneysteve]

What do you guys think?

I think you are still single.

Between the two there would be three sets of money. One belonging to each individual and the third being the property of the couple.

I've been married for over 16 years. We have ONE set of money. We call it OURS. All income goes into the same pot and gets divided up from there as needed. The only individual accounts we have are our retirement accounts but they are funded as a joint effort. For example, even when my wife wasn't working, we maxed out her Roth each year with some of my income.

We don't do allowances. We each spend what we need to spend when we need to spend it. If any significant expense crops up, we discuss it and don't commit the money until we've agreed. For example, my wife recently spent a significant amount for a formal dress for our daughter's Bat Mitzvah and she and I discussed it beforehand and agreed that although it was a large amount for a dress, it was important for this event.

As for your exceptions, they don't apply since everything (but retirement) is joint. As for gambling, we have yet to be that lucky, but if either of us hits it big on our next casino trip, that money will be joint, also.

[seattlemanicurist]

I have been with my SO for 3.5 years and we live together. We keep our finances completely separate and we will continue to do so regardless of whether we get married in the future. It has worked out very well and I have no desire to change things for any reason. I was married before and shared an account with my ex and it was the biggest mistake I ever made.

SO and I split the rent, internet, phone and utilities 50/50. We take turns buying toilet paper, sandwich bags, fish food, toothpaste and a few other things. We buy food separately and share some of it. We occasionally make joint purchases on things we both really want, like the fish tank and a crock pot and a zip car membership. If we want to eat out or go to a movie then whoever it is that wants to go pays and picks the place/movie. All other bills and retirement is separate and I only have to worry about my own finances, not his. We never ever argue about money. We occasionally disagree about who bought toilet paper last, but it pretty much all comes out in the wash.

[kork13]

first thoughts: "wow.... that's..... complicated." have you discussed this with your SO? Somehow I kinda expect this is the first time you've done more than thought about it. Clearly you've put alot of thought into it, but maybe too much....

In any case, while I'm not married myself, I can tell you that my parents did something sort of similar.... They have a joint account that most everything goes to, but then a small-ish portion from each of their paychecks that goes to a personal account... and "allowance" as DisneySteve called it. I don't know what exactly it was, but I don't think it was anything more than ~10% of their pay, a couple hundred dollars a month. However, the case with my parents is that my parents frequently disagree about what is and isn't worth buying. So to compromise, they simply have a small pot of money that is "their own", and those purchases are mostly free of judgement from the other. Maybe not the best way to do things (as probably many here will say), but it works for them.

I think that's really the biggest thing.... you need to figure out what works for the two of you. It doesn't matter how you do it, but rather just working out something that both of you can accept, support, and live by. As has been said many times here, if one spouse doesn't buy in, all the planning and good intentions in the world are worthless.

[maat55]

Being I'm old fashion, I vote for Steves plan.

[cooliemae]

While my fiance and I currently have our finances separated, that will change after the wedding. We will be going to single account with, as steve said, "our" money. Everything save the retirement accounts, which are funded through our individual paychecks.

[cptacek]

I think it depends on if you get married or not. If you do not get married, it is probably the best thing to keep assets, accounts, etc separate. There is no legal protections for non-married people...they are "legally" strangers.

If you are getting married, I agree with Steve too! The overriding thing you need to remember is, you are PARTNERS. I think people forget (or never learned) that if you do what is best for the both of you it will be the best thing for you as well.

[GoodBuyGirl]

Your idea is good in theory ,but one persons half will sooner or later end up being more than the other persons half. And that will end up causing friction.
Once you are married you become one. It won't matter how may baskets you put your eggs in you will still be responsible for each others debt and spending. If one of you is a spender and one is a saver sooner or later the saver will have to use their savings to pay for the spenders mistakes.
If you are not financially compatable having seperate bank accounts will not solve that problem for you.

[mrpaseo]

When my wife and I married over 13 years ago we became one in the eyes of the law, and in our hearts. Everything was combined. Consider this, when we moved in together we both had a couch, there was no need for two couches so we got rid of one. When we both moved in together we each had clothes, but we did not get rid of one of our clothes. We handled our finances the same way, all income goes into one pot. We then jointly build the budget down to as Dave calls it a zero balance. Each one of us received the allowance noted above. At this point, I receive about $200 dollars, the wife receives $175. These amounts were jointly agreed upon by our monthly needs. Add to that we budget $100 dollars entertainment money per week that the family can enjoy.

We do not consider ANY of our finances as his and hers, as stated above we have flexibility built into the budget and anything over $100 dollars we talk about before we make the purchase.

I could not see doing it any other way, to (And this is just my feelings I am not judging anyone else) when you marry and you keep your finances separate you’re not married, you just found a roommate.

To the original post I applaud the fact that you are trying to figure out the best way to handle your finances; I do think you are trying to figure out a way to keep your money though. Marriage is a commitment, to me, it means all or nothing. I guess I am old fashion.

Ray

PS. For the record, I take in five times more than my spouse, I have been away from home for about 18 months now (Save for 18 days leave I took), in this time, I have received 200 dollars per month, the remaining balance of my income has gone to my wife and daughter, be it the house, the SUV, gas to get them around, investments…whatever, it’s all our money going into the same pot to accomplish our family goals (I do not understand being married and having different goals than your spouse, especially financial goals).

[seattlemanicurist]

Financial arrangements do not define a relationship. Money is one of the biggest issues that couples fight about and divorce over, so I say you should find what works best and stick with it. For some people that means combining all finances, for some that means keeping it separate, and for some it's something in between. Different personality types have different needs when it comes to independence and control, and it has no bearing on your level of commitment in a relationship.

[Almond73]

I have to agree that there is no catch all that will work for everyone. The best case scenario is where a couple can work together. But when that is not the case, one has to make the best decisions possible. That sometimes means a secret savings account and keeping things separate until you can get on the same page.

Financial decisions do affect the entire family, but individually, we have choice over how bad that issue becomes.

[moneybags]

Here's my opinion:

Marriage = all money is "ours"

Not married - I would split all the community bills 50/50 and keep "my" money and he would keep "his"

[disneysteve]

If you do not get married, it is probably the best thing to keep assets, accounts, etc separate. There is no legal protections for non-married people...they are "legally" strangers.

Agreed.

if you do what is best for the both of you it will be the best thing for you as well.

Great statement.

Once you are married you become one. It won't matter how may baskets you put your eggs in you will still be responsible for each others debt and spending. If one of you is a spender and one is a saver sooner or later the saver will have to use their savings to pay for the spenders mistakes.
If you are not financially compatable having seperate bank accounts will not solve that problem for you.

So true, and something people so often try to overlook. Keeping separate accounts will not solve incompatibility problems. What happens when the saver wants to go on vacation and the spender doesn't have enough in "his" account to pay his share? What happens if the saver doesn't want to lay out money for some home renovation or repair and would rather just deal with it the way it is and save the money? What happens when the spender has overdrawn her account and has no cash to pay her share of the utility bills?

Joint accounts work if you are compatible. Separate accounts work if you are compatible. Nothing works if you are incompatible.

My sister-in-law and her ex-husband love each other and would do anything for each other, but when they were married, they constantly had money problems because of spending habits. They finally separated and eventually divorced (when they could afford to do so) and now share a duplex, one living on the first floor and one on the second floor. They do everything together but are no longer legally responsible for any financial mess the other gets into. They each pay their own bills. They each handle their own debt. They each control their own spending and saving (or lack thereof). They simply were not financially compatible to live as husband and wife, or even to live together where there were shared bills or responsibilities.

[PrincessPerky]

Ditto Steves comments (all of em)

I would have to add finances are not one size fits all, and planning while single is...not likely to work.

for example I do not get paid, which makes my husbands family tradition of his bills and her bills quite useless.

[Broken Arrow]

From what I've observed so far, I think the biggest problem with money in any kind of relationships isn't so much how the money is being mechanically separated, joined, or spent. Fact is, this part doesn't matter so long as it works for the couple.

Rather, it's from both parties not having a full understanding of the cash flow. So, one person may get upset with the other for spending too much or being too uptight because they don't really understand how their money works. So, I recommend full and equal communication and transparency when it comes to designing the budget. Yes... even if the other person has no interest in money whatsoever, they need to get involved somehow. You'll avoid a lot of ugly problems later this way.

I know this isn't new from what's already being said, but this part is important enough to me to throw my 2 cents worth in there.