Q: My husband and I were recently married and had previously shared expenses by putting half of our incomes into a joint account to cover joint expenses (house, car, pets, etc.) This system seems to fail quite regularly. How do you suggest we go about joining our incomes and covering our costs while still have some of our own money to be used guilt/question free? Looking forward to your response. — Lindsay
GB: First, congratulations on your marriage! I'm a newlywed, too, so I understand how challenging it can be to combine personal and financial lives together in a healthy, harmonious way. Unfortunately, you didn't explain in your question why your current system fails regularly. Is it because after half of each partner's income is contributed to the household joint account there's not enough money left for personal guilt-and-question-free spending? Are your incomes significantly different?
I recommend having three accounts—a "yours," "mine," and "ours"—even if you are a stay-at-home mom who relies solely on her husband for income. The "ours" account can be the one that covers all the household bills. The "yours" and "mine" accounts are for each person to maintain some degree of autonomy and to manage on their own without needing to report how every cent is spent to the other. If you have to have your hair done at least once a week, and your partner insists on watching football in a bar with friends on Sundays over a few beers, you can each agree to cover those costs out of your own accounts so there's no argument. Contributions to these accounts can be determined from the individual needs detailed in the overall spending plan, by a specific amount of allowance agreed upon by each partner or by splitting 50/50 whatever amount is left over after paying bills and funding saving and retirement plans.
Options for contributing to the "ours" account include: depositing all monies into one pot; having a 50/50 split where each person adds half of his or her paycheck to the account; or each person contributes a percentage of their salary based on the salary amount. The split could be 60/40 or 70/30 depending how each person's salary compares to the other. If he earns $75K and she earns $50K, she shouldn't have to cover 50 percent of the living expenses if she's only making two-thirds his salary. For example, let's say the shared overhead equals $3,500. This includes mortgage, utilities, groceries, insurance, entertainment, etc. And let's say his take-home pay is $3,800 a month and hers is $2,300. You can see what would happen if they each contributed half of the total $3,500 overhead—or $1,750—to the pot. Because she earns less than what he earns, to make this fair they would determine what percentage of their combined household income is his and what percentage is hers. Then, they'd each apply those respective percentages to their total living expenses.
- Determine total, combined household income (His + Hers):
His ($3,800) + Hers ($2,300) = $6,100
- Determine each partner's percentage of contribution to total income:
His ($3,800 / $6,100) = 63%
Hers ($2,300 / $6,100) = 37%
- Determine total living (overhead) expenses: $3,500
- Apply the percentage of contribution for each individual (His 63% and Hers 37%) to the total expenses in order to determine each partner's share of the expenses:
His = $3,500 x 63% = $2,205
Hers = $3,500 x 37% = $1,295
This method works well and is more equitable for couples that have very different incomes. Good luck in your marriage and remember to keep communication open about finances!
|
previous