Money management for newlyweds?

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engin33r
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Money management for newlyweds?

Post by engin33r »

My longtime partner and I were just married this past week. While we have discussed co-mingling assets in the past, it's finally time for implementation. I'm wondering if anyone can recommend any links, articles, or books on how to manage finances for newlyweds.

For what it's worth, my tentative plan is as follows: we will have one joint bank account where both of our paychecks are deposited. We will set up automatic transfers for various bills and retirement savings. Additionally, each of us will receive an equal amount of discretionary spending money deposited to a personal, non-shared account. My intent is that giving us each some no-questions-asked spending money will help us avoid arguing over who bought whatever unnecessary junk :-).

Any thoughts or suggestions?
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prudent
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Re: Money management for newlyweds?

Post by prudent »

If that's the plan you both agree to and both are comfortable with, then that's the right system for you. I do not believe there is "one right way" to manage finances for a couple, because I think it needs to reflect what both parties want and need. We put everything in joint accounts and I handle the finances because that's best for both of us. My wife spends next to nothing so there's never been a problem with her wanting to buy the occasional thing. Because we pay everything from one primary joint account, we always talk over anything over $100, but there aren't very many of those. I am the first to admit our system is not right for everyone, but it's right for us.

I would add one point: someone needs to be responsible for the shared account. Transactions need to be reviewed, statements checked, and someone should be responsible for that.

OK, one more point: if one of you spends far less from the individual account for whatever reason, are those funds available for any joint purpose like household goods, vacation, etc.? Or can one person keep amassing a lot of money that is always hands-off to the other? We used to have separate allowances but after a while realized that only nudged us to spend on stuff we didn't need because that was our "personal" money and felt it needed to be spent. We spent less overall after we gave that up.
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momar
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Re: Money management for newlyweds?

Post by momar »

If one person is a bigger spender than the other and this causes friction (either because they are spending too much or not getting to spend enough), having separate accounts to spend out of will create the same friction. After all, how do you decide how much goes in to each of these accounts each month? Surely you will have different ideas.
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Grt2bOutdoors
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Re: Money management for newlyweds?

Post by Grt2bOutdoors »

Congratulations! :happy

You don't need a book on managing finances. Your plan sounds fine, as long as both of you are comfortable with the arrangement, you are good to go. A joint bank account funded with both paychecks works in paying all the bills, funding your retirement accounts and/or taxable accounts and dividing discretionary spending (ah hem!) :wink:

Enjoy your life together!
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
vested1
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Re: Money management for newlyweds?

Post by vested1 »

engin33r wrote:My longtime partner and I were just married this past week. While we have discussed co-mingling assets in the past, it's finally time for implementation. I'm wondering if anyone can recommend any links, articles, or books on how to manage finances for newlyweds.

For what it's worth, my tentative plan is as follows: we will have one joint bank account where both of our paychecks are deposited. We will set up automatic transfers for various bills and retirement savings. Additionally, each of us will receive an equal amount of discretionary spending money deposited to a personal, non-shared account. My intent is that giving us each some no-questions-asked spending money will help us avoid arguing over who bought whatever unnecessary junk :-).

Any thoughts or suggestions?
My wife and I have joint accounts and there is no pressure from either of us since we are both frugal. I learned from an early age that keeping separate accounts and making each partner responsible for certain bills with the rest relegated as "her money" or "his money" does not work. It leads to secrecy and mistrust. My parents did that through 71 years of marriage and it was a disaster.
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HiLIfe
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Re: Money management for newlyweds?

Post by HiLIfe »

Do what works for you, try out your plan and evaluate if it works or if changes need to be made. Everybody's situation is different, ie. income differences, spending habits, personalities, etc..

FWIW, my wife and I still utilize our own personal accounts and have nothing joint. We both earn roughly equal income and are both pretty frugal. Since we live well below our means, there have been no squabbles about money. Certain bills are paid from my account, others from hers. We view both of our money as a whole, even though they are in physically separate accounts. When it comes to large purchases, the money comes out of whatever account we feel like paying out of. When we went through our home renovation, large purchases were made from both accounts with nobody keeping track of who paid for what or how much each side paid. One of us just paid it, and we moved on with our life. Our situation may change in the future and our arrangement may need to be re-evaluated, but it works now for us.
Professor Emeritus
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Re: Money management for newlyweds?

Post by Professor Emeritus »

DW is normally cheap enough to win a boglehead prize. However for 38 years she has always approved my having first class cooking utensils, kitchen appliances, laundry and ironing tools.
I also have top flight hearing aids. It works for us
Cash
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Re: Money management for newlyweds?

Post by Cash »

engin33r wrote: For what it's worth, my tentative plan is as follows: we will have one joint bank account where both of our paychecks are deposited. We will set up automatic transfers for various bills and retirement savings. Additionally, each of us will receive an equal amount of discretionary spending money deposited to a personal, non-shared account. My intent is that giving us each some no-questions-asked spending money will help us avoid arguing over who bought whatever unnecessary junk :-).

Any thoughts or suggestions?
This is what my wife and I have done for the past 4+ years. In general, it works fine, but she sometimes goes over her allowance amount by using credit cards, which requires me to deduct the excess from the next month's allowance for her. This can lead to a vicious cycle, so it requires commitment from both parties to keep things in check.
prudent wrote: OK, one more point: if one of you spends far less from the individual account for whatever reason, are those funds available for any joint purpose like household goods, vacation, etc.? Or can one person keep amassing a lot of money that is always hands-off to the other? We used to have separate allowances but after a while realized that only nudged us to spend on stuff we didn't need because that was our "personal" money and felt it needed to be spent. We spent less overall after we gave that up.
I've thought about going to one account, but my wife is not a naturally frugal person, so individual accounts help keep things in check. I have a natural inclination to spend much less than I take in, so my account generally grows over time. When we first started, I forced myself to spend most of it (like some people recommended in the "Self-Indulgence" thread), but eventually concluded that I simply don't want that much and that I get more happiness from saving rather than spending. So while I do buy things that I want (most recently, for instance, a Nexus 7 tablet), I don't feel the need to spend it all. So now from the excess cash, I will occasionally make "donations" to joint expenses...or even to my wife! I think this helps keep expenses lower overall than if we were to eliminate the individual accounts.
sscritic
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Re: Money management for newlyweds?

Post by sscritic »

she sometimes goes over her allowance amount by using credit cards, which requires me to deduct the excess from the next month's allowance for her.
So you are in charge of her allowance. Nice. That must make her feel like she is eleven years old again. How old does it make you feel?
Grt2bOutdoors
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Re: Money management for newlyweds?

Post by Grt2bOutdoors »

Cash wrote:
This is what my wife and I have done for the past 4+ years. In general, it works fine, but she sometimes goes over her allowance amount by using credit cards, which requires me to deduct the excess from the next month's allowance for her. This can lead to a vicious cycle, so it requires commitment from both parties to keep things in check.
:shock: I'll bet, must make for some interesting conversations at the end of the month true-up talk. Vicious? :o - don't be so subtle, tell us how they really go down.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
Cash
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Re: Money management for newlyweds?

Post by Cash »

sscritic wrote:
she sometimes goes over her allowance amount by using credit cards, which requires me to deduct the excess from the next month's allowance for her.
So you are in charge of her allowance. Nice. That must make her feel like she is eleven years old again. How old does it make you feel?
If both paychecks go into one account, then someone has to handle the transfers to the individual accounts, right? I'd be fine with her doing it, but she doesn't want to. I don't think it makes either of us feel younger or older than we are...
Grt2bOutdoors wrote:
Cash wrote:
This is what my wife and I have done for the past 4+ years. In general, it works fine, but she sometimes goes over her allowance amount by using credit cards, which requires me to deduct the excess from the next month's allowance for her. This can lead to a vicious cycle, so it requires commitment from both parties to keep things in check.
:shock: I'll bet, must make for some interesting conversations at the end of the month true-up talk. Vicious? :o - don't be so subtle, tell us how they really go down.
Lol like I said, it requires commitment from both sides. I cannot recall it ever being contentious. I usually send her an e-mail along the lines of, "Hey, you went over by X this month, so we'll take that out of next month's." She responds with, "OK." If something big is coming up, she'll say something along the lines of, "Hey, I want to take a girls trip next month and am putting my flight and hotel on the Fidelity card. Just take that out of the next few months, OK?" Me: "OK sure." So while it certainly has the potential for contention, it need not go there. Just thought I'd provide fair warning of the pitfalls.

Edited to add: We have made most things joint expenses. It would be unfair in my view to make her take things like hair appointments, manicures, makeup, etc. from her individual allowance when we both benefit. We previously treated clothing as individual expenses, but we are building in a clothing allowance into the joint expenses next year (excess will come from individual). Vacations are a joint expense as long as we are both going. In my view, fairness and being on the same page are key to making the budget work. Of course, that also applies to the relationship generally.
Last edited by Cash on Sun Nov 17, 2013 10:33 am, edited 1 time in total.
sscritic
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Re: Money management for newlyweds?

Post by sscritic »

Cash wrote: I usually send her an e-mail along the lines of, "Hey, you went over by X this month, so we'll take that out of next month's." She responds with, "OK."
That's good for another laugh. After our divorce, my ex-wife complained that I never talked to her, but just sent her emails. It's tough to be in a marriage; you never know what your next misstep will be: first it's the allowance, and then it's the emails. :)
Cash
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Re: Money management for newlyweds?

Post by Cash »

sscritic wrote:
Cash wrote: I usually send her an e-mail along the lines of, "Hey, you went over by X this month, so we'll take that out of next month's." She responds with, "OK."
That's good for another laugh. After our divorce, my ex-wife complained that I never talked to her, but just sent her emails. It's tough to be in a marriage; you never know what your next misstep will be: first it's the allowance, and then it's the emails. :)
Fair enough :)
Calm Man
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Re: Money management for newlyweds?

Post by Calm Man »

I tried two different arrangements with two different wives. Frankly, it makes no difference what you do if the marriage is good. When the marriage goes bad whatever you are doing doesn't work. I used everything combined in #1 and the proposal of OP in #2.
ddunca1944
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Re: Money management for newlyweds?

Post by ddunca1944 »

engin33r wrote:My longtime partner and I were just married this past week. While we have discussed co-mingling assets in the past, it's finally time for implementation. I'm wondering if anyone can recommend any links, articles, or books on how to manage finances for newlyweds.

For what it's worth, my tentative plan is as follows: we will have one joint bank account where both of our paychecks are deposited. We will set up automatic transfers for various bills and retirement savings. Additionally, each of us will receive an equal amount of discretionary spending money deposited to a personal, non-shared account. My intent is that giving us each some no-questions-asked spending money will help us avoid arguing over who bought whatever unnecessary junk :-).

Any thoughts or suggestions?
Your plan sounds fine to me. It is very similiar to ours: Our combined pnesion/SS goes into our joint account which is used to pay all our day to day expenses. On the 1st of the month, a set amount is automatically transferred to our personal spending accounts. He uses his to pay for his car hobby. I use mine to pay for my itunes and book purchases and buying gifts for the grandkids. This works well for us. Neither of us are spendthrifts - we just have different priorities. The one agreement we have is to never carry a balance on the credit cards.
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