Marriage Finances: Til Death Do Us Part?
by Deborah
This is a guest post by Deborag at Pennies to Nickels. Deborah and her hubby keep their finances separate, which is opposite to what Clever Dudette and I do, so it should make for an interesting read!
When The Professor and I got married 3 ½ years ago, we came from very different financial backgrounds. One of the reasons was simple: He’s 18 years older than I am, so he’s had a lot more time be involved with money.
When we got engaged, one of the first things we wanted to do was decide how to keep both our sanity and our finances. Maintain separate accounts? Open a brand new one just for the two of us? Keep everything in baby food jars wrapped in duct tape buried under the house?
Some of the factors we had to consider:
- I was in graduate school. I had taken out student loans to finance almost all of my undergraduate education, and went on to get more for all of my grad school expenses. Total bill when all was said and done: $80,000+.
- He has a (Wonderful! Magnificent! Future President!) Teenage son, meaning we were looking at several years of child support payments.
- I had credit card debt (about $3,000); he didn’t.
- He was divorced, and had a couple of years left on some financial arrangements that came from that situation (Oh, I could write a BOOK on this one).
- I had just signed a five year car loan. His truck had been paid off for about 6.
- Some psychological baggage from a previous marriage’s financial situation.
About two days after I got my shiny piece of engagement jewelry, we had a sit-down-no-really-be-serious conversation about our respective financial situations. After we got the basics out of the way (“How much do you think we’ll be spending on toilet paper?â€), we put all our cards on the table – which for me wasn’t easy, because I had made some mistakes; even though he knew the basics, I hated talking about it.
I was still two years from graduating and dealing with the real world; he had put in 15 years at his job. I knew when the happy day came and I got my Master’s Degree that my starting salary would be anywhere from $20,000 to $40,000 a year. He had W-2s showing exactly what we could expect in the future. We knew we weren’t going to have children together, but still had a teenager to plan for.
One thing became very clear in that conversation: Only one of us likes the planning process, and that is definitely me. I had a lot more uncertainty in my immediate future, and he had a lot more income in his. But I’m the one that can get so wrapped up in a spreadsheet that I forget it’s my mother’s birthday.
That conversation was one of the best things we have ever done together as a couple. I think we learned as much about each other in that conversation as we had in all the months leading up to our engagement.
In the end, we decided it would be better to keep our financial accounts separate (except for our taxes, which we file jointly). I know that some people argue there’s no reason to be married if you’re not going to be completely committed, including finances. But for us, that just wasn’t going to work. Our current arrangement does work, and these are the big reasons why:
- We have clearly divided which bills belong to each person. We went down each and every bill deciding who is responsible for what.
- We do not pay the same exact dollar amount for our respective bills – we don’t make the same amount of money, so that wouldn’t make sense.
- We are completely open with each other about money. If I come home and say “I bought two new pairs of shoes todayâ€, he trusts and respects me enough to know that I would only do that if I could afford to, and that I don’t need to be treated like a 15 year old that just got a boost in her allowance. If he comes home and says “I bought five new books on Queen Elizabethâ€, I trust and respect him enough to know his account balance and can afford it – even if I privately wonder what in the world anyone could have to say about her that hasn’t already been said.
- We make any big money decisions together (for us, that’s over about $100). Usually with a bottle of wine and at least one of my spreadsheets open.
As I’ve said, we’ve been married for 3 ½ years. We’ve tweaked our system and our arrangement when it’s needed. And over that time, it’s become even clearer that I’m the financial planner and that he loves the fact that he’s not.
I know that it’s been said so many times that it might sound trite, but communication – as with So. Many. Other. Things – really is the key. I cannot stress enough how important it is to our relationship that we trust each other when it comes to financial decisions.
As for toilet paper expenses – well, life goes on. And so, thankfully, does the toilet paper.
I really enjoy reading the post. Thank you Deborah for sharing about your “financial issues and strategy” with your husband. Yes, communication is the key to every relationships.
When I moved in with my divorced (and older) boyfriend, we also did a bill split. He pays for more of the house then I do, because 1) it’s his house and 2) he makes way more money then I do. There seems to be this whole 50/50 idea out there but if it doesn’t make sense for your situation, why?
I enjoyed reading your post. I’m also glad to see someone else who does a bill split with their husband! My soon-to-be fiancee and I have now lived together one year and we have a slightly convoluted method of calculating expenses which we expect to continue after marriage – but it works for us!
I have a larger salary, but also $40k in student and car loans and no savings, while he has a smaller salary but no debt and a large savings account for a future home. The rationale for our current split is that it makes budgeting easier for his smaller income yet we feel that everything is fair and my larger percentages help offset the fact that I won’t really be able to contribute to a down payment, although the mortgage will be split. We expect to continue this after marriage, the only difference will be that instead of him writing me checks for his share, we’ll just have a joint account where the percentages will be deposited for each of us. I keep track of everything in excel (love it!) and we review bills and percentages every quarter to make sure things are working for both of us. Right now it is set as follows:
Rent – 55% / 45%
Utilities – 60% / 40%
Entertainment / Food/ Household Expenses / Groceries – 50% / 50%
Yeah, the split works if you have two incomes but I still don’t think it’s the best option. I think once you’re married that all the money should go into the same account and bills just get paid from there. Maybe each person can keep a portion out for their own use, so, save 10% together, leave 10% in a personal account and the other 80% goes into the family coffers for bill payments. I just think that splitting the money makes it easier to split the marriage if something goes wrong. The sheer complication of divorce is enough to make some people try and make it work and in a lot of cases people end up divorcing for stupid reasons like lack of communication or “because we’re not in love anymore”. It’s like the guy getting divorced and he keeps his apartment “just in case things don’t work out”, know what I mean?
No disrespect to ANYONE that uses the split method of paying bills, just my 2 cents.
I honestly think that there’s no one “best way” to do everything. Especially in situations where one partner has an ex and a child from a previous relationship, it can make a lot of sense to keep things separate. If anything were to happen to my husband and our finances were together, it would be a lot easier for my stepson’s mother to take me to court. Wills can play a huge roll in keeping things easier to deal with, but still, it’s better in some situations to keep everything separate.
My husband and I have a hybrid method that works for us because we’ve lived apart for almost half of our marriage (thanks military). Depending on the current living situation we total up our shared expenses and divide by two – then we each contribute our share to a joint account to pay bills out of. When we lived together the account included rent, utilities, food, etc. When we live apart we only contribute enough to cover shared saving goals and our cell phone plan. Its a flexible system that lets us cover our shared expenses without tying up more of our money in a joint account than necessary.