Life Together: Combining Finances

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Back for more Money Smart Week–catch up on Managing Money too!

Shortly after getting engaged, we moved in together–to my condo.

Now what?

Sharing space comes with some variation on sharing money too–the most common options seem to be:

One for All: All income goes in to one account, all expenses come out. All accounts are joint.

Totally Separate: Each person handles all of their own money; bills are split according to some formula (usually either 50/50 or proportionate to income). Either each partner handles different bills or one partner handles them all and the other partner pays them.

Mixed Bag: Anywhere between the two above–some accounts are together, others are separate. Some expenses are joint, others are individual.

The Mixed Bag seemed like the best choice for us–this ranges from combining only expenses like rent/mortgage & utilities (our living together plan) to combining almost everything with small individual accounts. Different methods will be a good fit for different couples, and everyone’s financial situation is different. We spend (or don’t) similarly, are both pretty established in our careers and have no debt beyond my mortgage at this point. I know our plan won’t necessarily work for you, but hopefully explaining how we handled it will give you some ideas. We decided to combine almost everything, and include small individual accounts.

I use Mint and Shamrock uses Quicken, so I just started by listing each of my categories and finding my average monthly spending in each one over the last year, and then he gave me those amounts plus any categories I hadn’t included already. Then I summed each category, and we adjusted those numbers. The biggest change was in housing expenses–most of those evaporate (although that big tv + way  more ac are going to double my electric bill). Groceries will probably decrease a little, but clothing won’t change at all.

This isn’t the most usable spreadsheet, but you can see what our categories are, and some made up numbers.

Then we got engaged–now what? Our moving-in plan was that Mike would write me a check for his “rent” each month (since I already pay the mortgage and the utilities) and I would pay for groceries and he would pay for restaurants. (The rest we would handle individually.) But once we were engaged, it seemed strange that he would write me a check to deposit into my account. The alternative–I just pay for everything–didn’t sit right either. So we were kinda back to the drawing board.

We planned on combining most expenses, treating all the money as “ours” and having some small amount of individual spending money. The whole individual thing is pretty common, and I was deadset on it. So we did it, except that most things we would spend “individual” money on are line items in our joint budget, within reason. I’ve used none of my individual money in the past ten months, and I’m not a spender anyhow, so I’m not entirely sure why I was so insistent. I’m sure its much more important for people with different spending habits?

Now we knew what our budget would be, but what would it look like? We each have our own checking account and credit cards, the bills are mostly in my name–now what?

I listed each of our credit cards, bank accounts and any other accounts as a start. We had 12 credit cards. Seriously?! At this point, we were using the same budget and considering most of the money as “ours” but it was still totally separate. The mortgage is our largest bill, and was already coming out of my account, so I kept paying that and Shamrock took over the rest. We also each put each other on one credit card to be used for all expenses (more on that next). So we were spending together, but still paying everything separate and saving into our own accounts (although we were also counting that money as joint.)

We reviewed our budget every month or so at the beginning so we could make adjustments, and Shamrock started switching over some things to his name (utilities, our monthly condo assessment). Having separate accounts was fine, but not a very good long term plan–and it made it hard for one person to take care of things. Shamrock really enjoys managing the finances (he also manages his mother’s finances since his father passed away), and as long as I’m able to see what’s happening that’s totally fine with me. (He even did my taxes this year!) So I paid the mortgage and saved the rest, and Shamrock paid everything else.

How & when did you combine finances? Who handles the bills?

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