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]

Originally Posted by cptacek

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.

Originally Posted by GoodBuyGirl

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.

[Well Spent]

Do you want to be partners or roomates?

[Ima saver]

I have been married the longest. First time was 12 years, 2nd time is now over 31 years. All money has always been jointly held. We never fight about money. I pay all the bills and always save a certain percent. Anything extra gets saved also.
We both get an allowance. His allowance is for his gas and anything else he wants to buy, like snacks!
My allowance is for my gas, liquor and eating out for both of us!

Fortunately for my dh, I have never been a high maintenance person and hate to go shopping. I only buy something when I really need it. I find it a lot more fun to save money than to spend it.
Dh lets me know when he needs a tool (he is a builder) and he can always charge it cause I pay off the charge card every month.
His only money weakness is cars and since he works 7 days a week including holidays, I do indulge him in his love of cars! You need to enjoy your money too!!

[disneysteve]

Originally Posted by PrincessPerky

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

Even when both partners work, it is highly unlikely that they will have similar incomes. When my wife worked full time, I earned about 7 times what she earned. Splitting expenses made no sense. Then she was a SAHM for 10 years and earned nothing. Now, she works part-time and after putting 50% in her 401k, takes home next to nothing. Whatever she does bring home, though, just gets added to the pot.

[seattlemanicurist]

Originally Posted by disneysteve

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

This I can agree with.

[Seeker]

Since you asked what I think.... here goes:

Originally Posted by Relmiw

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.

So essentially, lottery= 50% to joint... 25% to each of the married people? Seems fair to me.

Originally Posted by Relmiw

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.

So what happens if he wants a Hummer and she doesn't really care what she drives? Is this still a "shared" expense? What happens if she wants to go out with her friends, but cannot afford it this time because she's already spent her remaining half of her income? Does she have to wait until next month? What happens if the cleats you mentioned broke and you absolutely needed to get some new ones for an upcoming game, yet you had no money for this this time? And what is the plan for retirement? What happens if one of you loses their job? Or becomes disabled and unable to work? Does that person forego all spending from that point forward?

Originally Posted by Relmiw

-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.

So 75/25? What happens if the person graduates and does not use their degree? What happens if a person decides that they "like" school and decides that they want to stay there as long as possible? People don't always use their degrees and some degrees are more prolific than others.

Originally Posted by Relmiw

-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.

Interest income????? Huh. So if one chooses better investments and gets more interest, it's theirs? How are taxes done?

Gambling???? Ummmmm. If either party "gambles", then I would suggest that winnings as well as losings are a partnership. I'm sorry, but the stress level and the conflict level of the party not gambling (the one relying on the other to do "right" with money is in conflict with "gambling"). The stress level of the person not-gambling is great enough to warrant a sharing of the winnings. The person not-gambling has also lost time that would have probably been spent in "sharing." There is already a sharing of the losings there should be a sharing of the winnings as well. There are also tax considerations here.

Personally, I'd recommend absolutely EVERYTHING being separate if there's a "gambler" in this relationship; and frankly, I'd not live or be married to someone who thought of "gambling" as a way of life. Once-in-a-while, with money that you AND your SO don't mind if lost entirely, is fine. But gambling winnings separate? Why? Isn't this for fun and sharing? Doesn't the SO lose time with you when you're out doing this?

Originally Posted by Relmiw

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?

If you're striving for fairness and equality, 1/2 of all income means that the person earning more, contributes more. So the second person may or may not desire to "grow." It is extremely rare for both persons of a couple to earn a similar income.

Splitting 50/50 is not usually fair or equivalent even if incomes are the same, because it's very rare for the other aspects of living to be shared 50/50.

Chores both indside and outside the home will also need to be split. If there are children, how do you split their care or put a monetary value on that? Or adult parents who might need to be cared for as well. Sometimes the SO does not work outside the home at all; does that mean that they have no monetary say to what their partner earns?

Ultimately, if the marriage fails, then usual fact of the matter is that a court will split everything 50/50 unless there's some other factor impinging on the marriage -- a third party. In that case, the person who involved with that 3rd party will get the lower ratio since it's usually looked upon as that's the person who cause the marriage problem.

Ultimately, if the couple cannot agree on how things should be split, than a 50/50 is normal in a court of law. If children are involved, then it becomes way more complicated.

I agree with Steve and the others that have posted where the gist is that it's ultimately all shared. For protectional purposes, if one of the two married people do not have control nor desire control of the money (because of a lack of interest or a feeling that they just don't want to be responsible for everything), then it's up to the other person to be fair are share regardless of the "split." And if each keeps everything separate 100% and does their own thing, that's fine too if both parties agree that that is how'd it'd work for them.

You and your SO needs to decide what is viable for the two of you. Nobody else here knows either of your personalities & temprament with regard to $s. Nobody else, except the two of you, should decide.

If your SO is uncontrolled with money and desires to let you manage, then do so. But COMMUNICATE about what is being done and why; give them a say in what happens with all the money, explain and list things so that if anything happens to you as the money manager, your partner will know what to do. Same thing if the reverse, if your SO is the better at numbers and managing these things, then listen and ask questions when s/he is explaining.

The key to marriage is collaboration and discussion. Contention over money can be an issue with two strong personality types, but it can also be a non-issue if the two of you know each other and trust each other. That's really what marriage is about -- that partnership -- however it works in each family.

I'm not sure what you mean by gambling, but if this were an uncontrolled habit that you intend to keep separate, please realize that it's almost impossible for the other party not to feel the stresses that occur in this type of living on the edge. If it's a once-in-a-while thing with money that can be lost and neither of you care about that loss, then whatever works between the two of you. But the winnings should be shared in my opinion because your SO has lost time with you while you were playing.... the partnership has a sharing price.

But ultimately, you and your SO need to discuss what is "right" for the both of you.... nobody else really can determine what will work for you and your SO. Nobody knows your financial contraints, habits, needs & wants, NOR that of your SO. That's why there's collaboration and compromise. There's no one-size fits all... the BEST way, is the way that works for both of you without either of you feeling that it's not fair.