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Over the years, I've come to believe that everyone needs some financial independence, and often, that comes in the form of your own bank account. I'm a huge fan of what's often referred to as the three-pot system: Yours, Mine and Ours.
Step 1: Set Up Your Accounts
The best way to set up your system is to set up three checking accounts in advance—yours, his and a joint checking account. Have your paychecks deposited into your individual checking accounts. Look at what you both make and agree to put a certain percentage of each check into the joint account each month—then set it up to be automatically transferred!
Step 2: Calculate Your Monthly Expenses
Sit down together and calculate how much you need in your joint account each month to stay afloat by adding up your monthly expenses (mortgage, car, daycare, entertainment, groceries, etc.). Once you have a goal amount—allowing for wiggle room, of course—figure out how much from each of your paychecks will need to be deposited to meet it.
If your incomes are drastically different, transferring the same dollar amount from each private account into the joint account isn't always the best solution—or even possible. You should each contribute the same percentage of your earnings.
If only one spouse works, you'll need to work backward. Deposit the entire paycheck into the joint account first, then transfer money into each individual account.
Step 3: Don't Forget About Saving
Keep in mind that while I'm talking about spending money, when it comes to savings, you can do the same thing.
Your contributions to 401(k)s and IRAs, of course, will be kept separate, but to save for let's say next summer's vacation, figure out how much you need to save each month collectively. Then, automatically contribute a set amount from each of your individual accounts each month. This money will come out of your paycheck after taxes and retirement contributions, and after your monthly expenses are covered.
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Published on February 12, 2009