The office is a bit slow today, so my coworkers got into a big conversation about marriage (I think it may have started with Tiger Woods). That morphed into a conversation about family finances, and it was very eye opening.
One coworker thinks that when a couple gets married, each person should put a percentage of their income into the family accounts and then keep the rest for their own use. (He did admit that if one person is a high paid exec and the other person is a teacher or in some other profession where they’re making less, then that situation changes.) I’m a fan of that idea.
One coworker said that everything should be combined, no exceptions. I see the value in this, but I do think that in a relationship, couples need their own money. A few years back, my dad started getting an “allowance.” He knew that he was allowed to spend from the family fund, but felt guilty taking money from the family to buy something for himself. Now he has his own money, which makes him happy.
One coworker was raised that the husband pays for everything. That makes sense – if the wife is a stay-at-home mother. But this coworker (a female) thinks that the husband should always be the breadwinner for the family, no matter how much the wife makes. I thought that was fairly ridiculous and unfair.
Two coworkers then started debating the percentage idea as if they were married to each other (with no kids). What then qualifies as a family expense and what is a personal expense. If the husband wants a new tv that the whole family will use, is that out of his money or the family money? His reaction was that if it was out of his money then she wasn’t allowed to use it and he was taking the power cord with him when he left. I’m pretty sure he was joking, but it did open up some of the conflicts that could come up with separating finances. What about vacations? She said that if it was his idea to go on vacation, he should pay and he laughed. Clearly these two people should never get married.
It was interesting to hear these coworkers debate about finances and to see just how different everyone’s views are.
Megan is a 30-something government employee in the Washington, DC area. She got interested in Personal Finance when she got out of college and realized that her paycheck wasn’t going to go as far as she had hoped. Since starting this blog, she has managed to buy a house and make a solid start on her retirement goals, and hopes to help others do the same. Here is her story:
In 2007, I was a gainfully employed 20-something with no debt but not a lot of knowledge about personal finance. It was a co-worker’s comment about Roth IRAs that sent me to the internet, searching for information. It was then that I realized that I really didn’t know a whole lot about personal finance and that my current financial situation was due a lot to inherent frugal tendencies, generous family members, a fear of debt, and good luck. While that was working for me, clearly I needed a better plan.
While I had no debt, I was also pretty much living paycheck to paycheck and not worrying about going over budget (I say this as if I had a real budget) because I had an emergency fund set aside to cover any overages.
Except that’s not what an emergency fund is for.
So I did a lot of research, read a lot of blogs, and decided that I needed a plan. I needed to budget. I needed to know what I was spending my money on. I needed to prepare for the future.
I decided to create a blog not only to make myself accountable to others but also to share the knowledge that I gained along the way. I’ve learned so much from my fellow bloggers, and I hope that my readers can find something useful in what I have to share as well.
When my husband and I first got married, we tried to do the first option. We were moving equal percentages of our incomes into a joint account to cover joint expenses, and keeping the rest separate. Honestly, though, it became too confusing to sustain. We found ourselves discussing every purchase anyway — even the ones that were supposed to come out of our “individual” money. In the end, we combined everything into one account to keep it simple.
From this experience, I definitely learned the value of an open team mentality toward finances in a marriage. Before we got married, I thought I would miss financial “independence,” but I really don’t. Even purchases made out of an “individual” account affect both of us, so I’d rather make every decision together and combine our finances completely. And it’s nice to have a teammate to discuss big decisions with so I’m not doing it alone.
I like joint accounts. My boyfriend and I have one, and when we’re married we’ll both put our income into that account and keep our separate accounts as “allowance,” blow money. We get the same amount though, regardless of how much we make. In my state, if it’s earned during the marriage, it’s marital, so there’s no reason for us to treat it differently. I’ll be making significantly more for a long time while he’s in residency, then he’ll drastically outearn me.
The key is being able to talk and discuss finances in marriage, and hopefully before. My boyfriend and I are on the same page now, and know that we have to continually discuss our goals and plans to get where we want in order to stay there. We’re not always going to agree, but we’ll both always be involved.
We do the first option. We’ve clearly outlined what’s household (mortgage, cars, maintenance/bills related to both, vacation) and what’s personal (hobbies, eating out, etc). The key is we discuss anything that’s in a gray area and big purchases. We also discuss our spending priorities/goals for the household money. Honestly, I’d probably be upset if I knew how much he spent on comics and video games. He’d be astonished on what I spend on yarn, but we both spend within our personal means.
The other reason we like percentages (vs a set amount) is he’s on commission and I’m salaried but do other things to earn extra income. We each see some benefit from extra effort in our personal funds.