Newlyweds and joint accounts for household expenses

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veindoc
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Re: Newlyweds and joint accounts for household expenses

Post by veindoc » Wed Feb 13, 2019 9:48 am

yeahman wrote:
Tue Feb 12, 2019 1:00 pm
How does joint + individual work in practice? We have Fidelity. Is it 2 login accounts, 1 brokerage account each (the individual account), 1 IRA each, 1 joint brokerage, 1 joint CMA, 1 family HSA, and both users being authorized to transfer funds between accounts as needed?
Essentially yes. My husband and I have separate checking accounts. We married in our mid thirties and our direct deposits were already well established in our own individual accounts and we didn’t want to mess with that. We opened a joint checking account and we both have separate log-ins. We also have a joint brokerage account. Again with separate logins that tie into our own individual checking accounts and the joint account. I can deposit money from my account and the joint account into the brokerage. Money can only be sent out of the brokerage into the joint. I can not transfer money from my husbands individual account into the brokerage. He has to log in to do so.

Thegame14
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Re: Newlyweds and joint accounts for household expenses

Post by Thegame14 » Wed Feb 13, 2019 9:50 am

this is exactly what my wife and I do, it is recommended by Suze orman. You calculate the total joint expenses, then calculate total income, and divide to get a percentage so that each person is putting in the same percentage, but not the same dollar amount, so you may both be putting in 50% of your net pay, or 40% or 60% that amount will not be the same as your income is not the same, but both people are putting in an equal percentage amount. There are some flaws to this method but there are flaws to any method, so it depends on what works for you.

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8foot7
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Re: Newlyweds and joint accounts for household expenses

Post by 8foot7 » Wed Feb 13, 2019 9:51 am

nick evets wrote:
Wed Feb 13, 2019 9:47 am
Jags4186 wrote:
Wed Feb 13, 2019 8:41 am
The othe problem with the separate accounts, again for me not for everyone, is the idea of “saving up” for something big. Let’s say I got $500/mo of Jags4186 money and decided not to spend any of it for 20 months and then on my own go out and buy a $10,000 watch/motorcycle/whatever. That wouldn’t be okay. We don’t make $10,000 purchases in my family without discussing it, regardless of where the money came from.
Why not? Granted the 'surprise' factor of a new motorcycle in the driveway might not be welcome, so a reasonable conversation might be: "Honey, as you know, I think if I don't play golf for the next two years, and save most of my discretionary money, I think I can afford that used Ducati..." A combination of separate and joint accounts doesn't preclude discussion.

Where there might be friction is if your savings creeps into other areas, that are budgeted and expected, and affect mutual lifestyle. Suddenly you start passing on a vacation, or going out to eat, or put off house maintenance, etc.
Agree. I probably wouldn't just go out and buy a motorcycle, but my wife would have known for a while ( a year or so at least) I wanted one and was saving for one and my bills were taken care of, and that's really the point of this for us at least...if she gets to veto the motorcycle even though it's my money I saved in excess of our bills and savings obligations, then that to me is an unacceptable level of control. If she wants to save up for a Louis Vuitton something then as long as her half of bills and savings are handled, it's none of my concern, either.

To me and I know very well to my wife a discussion is tantamount to asking permission. Otherwise there really isn’t anything to discuss other than “what color are you getting?”

But again that’s just us. If it works for Jags then nothing wrong with that!

Ybsybs
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Re: Newlyweds and joint accounts for household expenses

Post by Ybsybs » Wed Feb 13, 2019 10:50 am

8foot7 wrote:
Wed Feb 13, 2019 9:51 am
nick evets wrote:
Wed Feb 13, 2019 9:47 am
Jags4186 wrote:
Wed Feb 13, 2019 8:41 am
The othe problem with the separate accounts, again for me not for everyone, is the idea of “saving up” for something big. Let’s say I got $500/mo of Jags4186 money and decided not to spend any of it for 20 months and then on my own go out and buy a $10,000 watch/motorcycle/whatever. That wouldn’t be okay. We don’t make $10,000 purchases in my family without discussing it, regardless of where the money came from.
Why not? Granted the 'surprise' factor of a new motorcycle in the driveway might not be welcome, so a reasonable conversation might be: "Honey, as you know, I think if I don't play golf for the next two years, and save most of my discretionary money, I think I can afford that used Ducati..." A combination of separate and joint accounts doesn't preclude discussion.

Where there might be friction is if your savings creeps into other areas, that are budgeted and expected, and affect mutual lifestyle. Suddenly you start passing on a vacation, or going out to eat, or put off house maintenance, etc.
Agree. I probably wouldn't just go out and buy a motorcycle, but my wife would have known for a while ( a year or so at least) I wanted one and was saving for one and my bills were taken care of, and that's really the point of this for us at least...if she gets to veto the motorcycle even though it's my money I saved in excess of our bills and savings obligations, then that to me is an unacceptable level of control. If she wants to save up for a Louis Vuitton something then as long as her half of bills and savings are handled, it's none of my concern, either.

To me and I know very well to my wife a discussion is tantamount to asking permission. Otherwise there really isn’t anything to discuss other than “what color are you getting?”

But again that’s just us. If it works for Jags then nothing wrong with that!
My spouse and I have separate play money that we spend freely, but either of us would be unhappy if the other one bought a motorcycle. Unlike a top of the line gaming computer or limited edition handbag, a motorcycle comes with continuing costs of insurance and potentially increases other joint (in our arrangement) expenses like life insurance rates and healthcare costs.

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8foot7
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Re: Newlyweds and joint accounts for household expenses

Post by 8foot7 » Wed Feb 13, 2019 11:06 am

Ybsybs wrote:
Wed Feb 13, 2019 10:50 am
8foot7 wrote:
Wed Feb 13, 2019 9:51 am
nick evets wrote:
Wed Feb 13, 2019 9:47 am
Jags4186 wrote:
Wed Feb 13, 2019 8:41 am
The othe problem with the separate accounts, again for me not for everyone, is the idea of “saving up” for something big. Let’s say I got $500/mo of Jags4186 money and decided not to spend any of it for 20 months and then on my own go out and buy a $10,000 watch/motorcycle/whatever. That wouldn’t be okay. We don’t make $10,000 purchases in my family without discussing it, regardless of where the money came from.
Why not? Granted the 'surprise' factor of a new motorcycle in the driveway might not be welcome, so a reasonable conversation might be: "Honey, as you know, I think if I don't play golf for the next two years, and save most of my discretionary money, I think I can afford that used Ducati..." A combination of separate and joint accounts doesn't preclude discussion.

Where there might be friction is if your savings creeps into other areas, that are budgeted and expected, and affect mutual lifestyle. Suddenly you start passing on a vacation, or going out to eat, or put off house maintenance, etc.
Agree. I probably wouldn't just go out and buy a motorcycle, but my wife would have known for a while ( a year or so at least) I wanted one and was saving for one and my bills were taken care of, and that's really the point of this for us at least...if she gets to veto the motorcycle even though it's my money I saved in excess of our bills and savings obligations, then that to me is an unacceptable level of control. If she wants to save up for a Louis Vuitton something then as long as her half of bills and savings are handled, it's none of my concern, either.

To me and I know very well to my wife a discussion is tantamount to asking permission. Otherwise there really isn’t anything to discuss other than “what color are you getting?”

But again that’s just us. If it works for Jags then nothing wrong with that!
My spouse and I have separate play money that we spend freely, but either of us would be unhappy if the other one bought a motorcycle. Unlike a top of the line gaming computer or limited edition handbag, a motorcycle comes with continuing costs of insurance and potentially increases other joint (in our arrangement) expenses like life insurance rates and healthcare costs.
...and to use this example, I'd be unhappy if I didn't buy a motorcycle. Who wins the happiness battle there?
(Although I have read that most marriages have two or three issues that are constant throughout the duration of the relationship and never get solved. I would imagine riding motorcycles is one of them.)

getthatmarshmallow
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Re: Newlyweds and joint accounts for household expenses

Post by getthatmarshmallow » Wed Feb 13, 2019 11:19 am

My advice is always the same: the important thing is that you two genuinely agree to a plan, and that you revisit it when circumstances warrant it. Everything else is just accounting. If you don't trust each other, a joint account isn't going to save your marriage.

We have joint bank accounts into which every thing is deposited and out of which everything is paid. We also have individual accounts, which we never use but were required by our credit union. We have a joint credit card which he uses exclusively, but I also have two of my own. We have individual retirement accounts, but joint taxable. I manage everything because spouse has possibly negative interest in dealing with finances, and I wouldn't trust anyone except myself.

retired_tom
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Re: Newlyweds and joint accounts for household expenses

Post by retired_tom » Wed Feb 13, 2019 12:32 pm

8foot7 wrote:
Wed Feb 13, 2019 11:06 am
Ybsybs wrote:
Wed Feb 13, 2019 10:50 am
8foot7 wrote:
Wed Feb 13, 2019 9:51 am
nick evets wrote:
Wed Feb 13, 2019 9:47 am
Jags4186 wrote:
Wed Feb 13, 2019 8:41 am
The othe problem with the separate accounts, again for me not for everyone, is the idea of “saving up” for something big. Let’s say I got $500/mo of Jags4186 money and decided not to spend any of it for 20 months and then on my own go out and buy a $10,000 watch/motorcycle/whatever. That wouldn’t be okay. We don’t make $10,000 purchases in my family without discussing it, regardless of where the money came from.
Why not? Granted the 'surprise' factor of a new motorcycle in the driveway might not be welcome, so a reasonable conversation might be: "Honey, as you know, I think if I don't play golf for the next two years, and save most of my discretionary money, I think I can afford that used Ducati..." A combination of separate and joint accounts doesn't preclude discussion.

Where there might be friction is if your savings creeps into other areas, that are budgeted and expected, and affect mutual lifestyle. Suddenly you start passing on a vacation, or going out to eat, or put off house maintenance, etc.
Agree. I probably wouldn't just go out and buy a motorcycle, but my wife would have known for a while ( a year or so at least) I wanted one and was saving for one and my bills were taken care of, and that's really the point of this for us at least...if she gets to veto the motorcycle even though it's my money I saved in excess of our bills and savings obligations, then that to me is an unacceptable level of control. If she wants to save up for a Louis Vuitton something then as long as her half of bills and savings are handled, it's none of my concern, either.

To me and I know very well to my wife a discussion is tantamount to asking permission. Otherwise there really isn’t anything to discuss other than “what color are you getting?”

But again that’s just us. If it works for Jags then nothing wrong with that!
My spouse and I have separate play money that we spend freely, but either of us would be unhappy if the other one bought a motorcycle. Unlike a top of the line gaming computer or limited edition handbag, a motorcycle comes with continuing costs of insurance and potentially increases other joint (in our arrangement) expenses like life insurance rates and healthcare costs.
...and to use this example, I'd be unhappy if I didn't buy a motorcycle. Who wins the happiness battle there?
(Although I have read that most marriages have two or three issues that are constant throughout the duration of the relationship and never get solved. I would imagine riding motorcycles is one of them.)
It's funny that we talk about motorcycles. Right after we moved to Florida, I went out one day, and came home with a brand new Mustang GT Convertible. Pulled up in the driveway, beeped the horn and she came out. I said, "Look what I just bought?" No questions about where did the money come from, or why didn't you ask me first. A few years later, off I went and came home with a new Harley motorcycle. Same thing, no questions asked. There may be a little difference in our situation because we aren't married, so things like auto insurance, health insurance, are all separate expenses. As I mentioned before, we each put $2000 a month is the House account. That pays all the bills each month with somewhere between 500-700 dollars left over. We discuss what to do with the extra, right now we're paying down the mortgage with some of it monthly. After a couple of months, if there is still quite a bit extra in there, the overage gets moved to the House Savings account. That pays for house things that we may need like new appliances, home repairs, or vacations. The house account really pays for everything that we both benefit from. Going out to dinner, to a movie, purchasing yearly subscription to the symphony orchestra, or opera. On special occasions, like her birthday, I probably will take her out to a nice place, and pay for dinner out of my pocket, and she does the same for me. It really works for us.

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Meg77
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Re: Newlyweds and joint accounts for household expenses

Post by Meg77 » Wed Feb 13, 2019 2:11 pm

icedtea wrote:
Sun Feb 10, 2019 11:17 am
OP here. I appreciate all the responses. I think having a mix of separate and joint accounts is the right fit for us.

What I had envisioned doing was we'd each still have our income direct deposited in our separate accounts and then biweekly or monthly we'd each contribute to the joint account accordingly. Some of what I've read mentioned the opposite - put all income in the joint account and then move some of it to separate accounts. I suppose either way can work depending on the couple?
I've been married 5 years now, am a financial planner, and have talked several friend couples through this issue. Here is why I think having one primary joint account that all income flows through is better:

1. You can (and should) do your separate spending on credit cards and have them paid from the joint account. You get more reward points, autonomy, and flexibility this way. And it's a lot simpler than juggling 3 checking accounts (plus at least one savings account). That will make you feel like you have less cash since it'll be spread out, and you'll be transferring funds constantly.

2. The vast majority of your expenses are (or should be considered) joint. If you fund a joint account with only the bare minimum required for joint expenses, you are constantly going to be transferring money back and forth to cover for one another and having to determine which expenses are joint or should be separate. Holiday decorations, new furniture, personal care spending (waxes, haircuts), fancy restaurant dates? All are enjoyed by both but may be valued more by one party or the other. Who gets the tax refund? Who pays for trips to the other one's family? Who pays when the pet one party brought into the marriage needs expensive emergency surgery? What about if the health insurance comes out of one check but the other person has more taxes withheld? Trust me the list of things you'll have to think about and debate is endless if you try to keep things separate. And that's before the "real" negotiations like who cares more for kids but took an income hit, or who saved more for retirement and wants to pull the plug a decade early.

3. Income - and spending - fluctuates. Last year my husband wanted to upgrade our TV and speakers (and Amp and receiver...) for his 40th birthday. It was about $10k, and I gritted my teeth and cheerfully agreed. This year I wanted to go on a 10 day yoga retreat to Bali that will end up costing about the same all in. He returned the favor and even encouraged me to upgrade to business class seats. I made more the first two years we were together; he made more than me the last two years. I may stay home with kids at some point - or I may start a business that takes off in a big way. He could get laid off, or get cancer, or become disabled. Maybe I develop an expensive chronic illness. Do I pay for that alone?

Life is a roller coaster with unpredictable financial implications. Do yourself a favor and just consider yourselves a joint financial unit. You can always unwind it if you divorce. You'll end up richer in the meantime if you join forces and work together toward building wealth - even if you don't stay together forever.
"An investment in knowledge pays the best interest." - Benjamin Franklin

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Doom&Gloom
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Re: Newlyweds and joint accounts for household expenses

Post by Doom&Gloom » Wed Feb 13, 2019 3:31 pm

Meg77 wrote:
Wed Feb 13, 2019 2:11 pm
icedtea wrote:
Sun Feb 10, 2019 11:17 am
OP here. I appreciate all the responses. I think having a mix of separate and joint accounts is the right fit for us.

What I had envisioned doing was we'd each still have our income direct deposited in our separate accounts and then biweekly or monthly we'd each contribute to the joint account accordingly. Some of what I've read mentioned the opposite - put all income in the joint account and then move some of it to separate accounts. I suppose either way can work depending on the couple?
I've been married 5 years now, am a financial planner, and have talked several friend couples through this issue. Here is why I think having one primary joint account that all income flows through is better:

1. You can (and should) do your separate spending on credit cards and have them paid from the joint account. You get more reward points, autonomy, and flexibility this way. And it's a lot simpler than juggling 3 checking accounts (plus at least one savings account). That will make you feel like you have less cash since it'll be spread out, and you'll be transferring funds constantly.

2. The vast majority of your expenses are (or should be considered) joint. If you fund a joint account with only the bare minimum required for joint expenses, you are constantly going to be transferring money back and forth to cover for one another and having to determine which expenses are joint or should be separate. Holiday decorations, new furniture, personal care spending (waxes, haircuts), fancy restaurant dates? All are enjoyed by both but may be valued more by one party or the other. Who gets the tax refund? Who pays for trips to the other one's family? Who pays when the pet one party brought into the marriage needs expensive emergency surgery? What about if the health insurance comes out of one check but the other person has more taxes withheld? Trust me the list of things you'll have to think about and debate is endless if you try to keep things separate. And that's before the "real" negotiations like who cares more for kids but took an income hit, or who saved more for retirement and wants to pull the plug a decade early.

3. Income - and spending - fluctuates. Last year my husband wanted to upgrade our TV and speakers (and Amp and receiver...) for his 40th birthday. It was about $10k, and I gritted my teeth and cheerfully agreed. This year I wanted to go on a 10 day yoga retreat to Bali that will end up costing about the same all in. He returned the favor and even encouraged me to upgrade to business class seats. I made more the first two years we were together; he made more than me the last two years. I may stay home with kids at some point - or I may start a business that takes off in a big way. He could get laid off, or get cancer, or become disabled. Maybe I develop an expensive chronic illness. Do I pay for that alone?

Life is a roller coaster with unpredictable financial implications. Do yourself a favor and just consider yourselves a joint financial unit. You can always unwind it if you divorce. You'll end up richer in the meantime if you join forces and work together toward building wealth - even if you don't stay together forever.
We split household (and some other) expenses but "individual" expenses are just that. How we handled our instance(s) of your post that I bolded: DW watches much more TV than I do, but would be happy to watch on a 1960's vintage portable TV. I listen to much more music. I want good audio/video. She could really not care less about quality. In the past ~13 years I have bought 3 plasma TVs, at least 4 AVRs, at least 3 sets of speakers, two Blu-ray players, 3 Rokus, several Squeezebox players, a couple of Chromecast devices, and more subwoofers than I care to admit. Household expense, right? Nope. I just asked for agreement to place them; I never considered that they would be a joint expense. Similarly, if DW wants to buy decorative stuff for the house or yard, she buys them individually without discussion. No gritting of teeth, no disagreements, and, best of all, no hard feelings.

I know that your post is not addressed to me, but as to your questions about health and disability, we share all those expenses equally. If one of our accounts were drained due to that, of course the other would shoulder the load. DW has pursued a sideline business. She (unnecessarily asked if I would mind--more of a time commitment question that financial one). If it takes off, the benefits are hers. We might adjust our contributions to household expenses as a result, but that would be the extent of the impact.

I can state with confidence that our financial health would have been worse had we pooled our resources from the beginning as one of us is committed to living below our means; the other not so much (but much more so these days). One size does not fit all. I do not advocate one approach over another. I advocate doing what works best for a specific couple.

Gadget
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Re: Newlyweds and joint accounts for household expenses

Post by Gadget » Wed Feb 13, 2019 3:39 pm

Nissanzx1 wrote:
Tue Feb 12, 2019 7:56 am
The preacher says 2 become one.

I realize either philosophy can work. In my own circle of friends and acquaintances, those with joint accounts are in better overall financial health, as working on goals together gets traction and more quickly. Our friends with mine and yours are not funding retirement at the same level, continuing to leverage consumer purchases, and have anemic savings (IE they are normal) and even seem to have outbursts and childish friction more often.

I’d love to see some scientific research on this someday. I’d guess my observation isn’t unique.
I have the same observations. There are always exceptions. Likely many of the exceptions would be financially savvy people that would be inclined to post on a Bogleheads forum. But in my small circle of real life friends/coworkers, your generalization about couples with separate finances rings true. Except maybe the part about increased childish friction. I'd just say that couples that are overall not happy have more childish fights, which doesn't necessarily correlate to the financial side of this argument.

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8foot7
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Re: Newlyweds and joint accounts for household expenses

Post by 8foot7 » Wed Feb 13, 2019 3:42 pm

Meg77 wrote:
Wed Feb 13, 2019 2:11 pm

1. You can (and should) do your separate spending on credit cards and have them paid from the joint account. You get more reward points, autonomy, and flexibility this way. And it's a lot simpler than juggling 3 checking accounts (plus at least one savings account). That will make you feel like you have less cash since it'll be spread out, and you'll be transferring funds constantly.
I don't see how his and her credit cards plus joint account is really much simpler at all than his and her credit cards plus his and her checking. Credit cards can be paid from any checking account without any issue. Savings accounts pay so little as to be virtually useless anyway; the real yield is in a money market fund, which in many brokerages couldn't be joint anyway.
2. The vast majority of your expenses are (or should be considered) joint. If you fund a joint account with only the bare minimum required for joint expenses, you are constantly going to be transferring money back and forth to cover for one another and having to determine which expenses are joint or should be separate. Holiday decorations, new furniture, personal care spending (waxes, haircuts), fancy restaurant dates? All are enjoyed by both but may be valued more by one party or the other. Who gets the tax refund? Who pays for trips to the other one's family? Who pays when the pet one party brought into the marriage needs expensive emergency surgery? What about if the health insurance comes out of one check but the other person has more taxes withheld? Trust me the list of things you'll have to think about and debate is endless if you try to keep things separate. And that's before the "real" negotiations like who cares more for kids but took an income hit, or who saved more for retirement and wants to pull the plug a decade early.
I don't think any advocates for separate accounts are saying that the ideal situation is to nickel and dime your partner. There are obvious joint expenses, such as mortgage, utilities, insurance, groceries, eating out, cars, home improvements, pets. Anyone who puts together a complete budget understands what is generally for the benefit of both parties and what isn't. The rest of it sort of naturally evens out. My spouse and I have operated this way for 10 years now and I can count on one hand, literally, the times we've really wondered whether something was joint or not--and the default is to make it joint so we're both on the hook.
3. Income - and spending - fluctuates. Last year my husband wanted to upgrade our TV and speakers (and Amp and receiver...) for his 40th birthday. It was about $10k, and I gritted my teeth and cheerfully agreed. This year I wanted to go on a 10 day yoga retreat to Bali that will end up costing about the same all in. He returned the favor and even encouraged me to upgrade to business class seats.
This would also happen perfectly smoothly with separate accounts.
I made more the first two years we were together; he made more than me the last two years.
Each couple needs to decide if that's a problem for them or not; as I suggested earlier in the thread, couples whose individual incomes exceed their joint expenses may find more success with separate accounts than those where one partner never has any leftover money. If one partner always feels poor compared to the other, the system isn't working for them, and they need to find something different. To each their own.
I may stay home with kids at some point - or I may start a business that takes off in a big way. He could get laid off, or get cancer, or become disabled. Maybe I develop an expensive chronic illness. Do I pay for that alone?
If your circumstances change that drastically you certainly need to re-examine your finances in detail and whether you pooled money or kept it separate would absolutely be an important agenda item for that discussion. Nothing is permanent.
You'll end up richer in the meantime if you join forces and work together toward building wealth - even if you don't stay together forever.
I don't think there's any objective evidence to support that couples with a joint checking account are richer than couples with separate accounts, and the system you use to manage everyday finances should have no bearing on how well you're able to accumulate wealth and invest it.

I think people should feel free to use the system that works for them. If joint works for you, great! If separate works for you, great! But asserting that joint is better because you'll be richer seems to me to be a stretch.

Fresh Air
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Re: Newlyweds and joint accounts for household expenses

Post by Fresh Air » Wed Feb 13, 2019 4:14 pm

icedtea wrote:
Sun Feb 10, 2019 9:21 am
I posted a thread earlier about becoming newlyweds and perhaps consolidating medical insurance. I have another topic I'd like to bring on the board: establishing a joint account for household/common expenses.

Our plan generally speaking is to maintain our separate bank accounts but we are talking about establishing joint accounts (checking/debit and credit card) for common expenses such as groceries, dinners out together, household items, etc. We haven't quite defined the full list of what would be considered joint expenses but this is the idea. Whereas one of us buying ourselves lunch on a weekday or that random cup of coffee would be handled from our separate accounts.

We would fund the joint account from our separate accounts on a regular basis, either 50/50 or 60/40, to reflect my slightly higher income.

I'd like to get some input on this approach. Have any of you established similar joint accounts for common things? How did you structure it?

Up until now we pay separately for common items and then I reconcile the expenses each month between the two of us so it's about 50/50. But it's a big headache and doesn't really reflect our move to become a marital unit.

Thanks,
Iced Tea
We take a relatively simple approach. Money is fungible. The accounts themselves don't matter, only how the money is spent.

We have one joint checking account, one high-yield savings account, and our investment accounts. We also have a myriad of credit cards which give bonus points for different categories. We then use YNAB to track and budget joint categories.

Within YNAB, we have an allocation each month to "fun money" - which is totally, guilt-free, no-questions, independent money. Because this "fun money" category only exists within our budget, it doesn't matter where it is spent from. A lunch out with coworkers goes on the uber card for 4x restaurant points. Something from Amazon goes on the Amazon card for 5% points. Something saved for next month goes in the Ally 2.2% interest account.

We are still able to handle joint & individual expenses, and avoid the tension of partners spending un-equally, but don't give up the optimization of finance.

Your miles may vary, but it works well for us.

HornedToad
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Re: Newlyweds and joint accounts for household expenses

Post by HornedToad » Wed Feb 13, 2019 5:01 pm

FlyEaglesFly2000 wrote:
Mon Feb 11, 2019 11:08 am
Coming from someone married 12 years where we have always done the one pot of $$ thing, I have always been intrigued by the joint account for household and separate account for individual expenses. I would love to not stress about my wife spending more than I understand on a new purse or her to disagree with my fantasy football budget, so maybe we need to work on that. The examples below aren't meant to be critical, I'm just genuinely curious how the separate finances crowd handles these type of situations.

What I am curious about for those of you with separate accounts, how do you handle joint expenses that aren't in the household budget? If you go out for a nice dinner, do you split the check? Does one of you "treat" the other? Or are all shared experiences handled from the joint account?

Also, with kids is seems difficult. If your 12 year old wants $15 to go to the movies, do you each give her some $? If you take the kids to Disney, do you split up the cost of the trip evenly?
We do yours, mine and ours accounts. The individidual accounts though are small and just for personal expenses. It's $200/mo.

So it solves the individual splurges, gifts for each other and if we want to "treat" for nice dinner. Anything that would be for kids, vacations, etc is joint.

Over time we've also been less strict with the personal accounts and use joint for more things, and if the personal accounts get too big then we transfer it to joint. But it works well if one of us wants to splurge on something that the other isn't comfortable with the price and then they either pay out of personal, or pay half personal and half-joint expense for the splurge. Ala nicer computer, more expensive purse, etc.

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Re: Newlyweds and joint accounts for household expenses

Post by Moneta » Wed Feb 13, 2019 5:20 pm

My father told me that in his opinion, couples who don't combine all their finances "aren't really married"! :annoyed

Since I was a newlywed at the time, I couldn't help but take it as a veiled criticism and a suggestion about how I should change my life.

I blithely disregarded his opinion, and my husband and I have kept on doing what we've been doing this whole time -- the "his," "hers," and "joint" account thing.

21+ years of being together and we've never fought about money. I don't have to fume about how much he spends on Dungeons & Dragons books, despite him admitting that he already has far more game material than he could ever use even if he lived to 100. And he doesn't have to roll his eyes at my discretionary purchases either. Meanwhile, all the household expenses are taken care of, and we're saving towards our goals.

So I guess according to my dad I'm "not really married," but I'm OK with it.

delamer
Posts: 9296
Joined: Tue Feb 08, 2011 6:13 pm

Re: Newlyweds and joint accounts for household expenses

Post by delamer » Wed Feb 13, 2019 5:26 pm

Moneta wrote:
Wed Feb 13, 2019 5:20 pm
My father told me that in his opinion, couples who don't combine all their finances "aren't really married"! :annoyed

Since I was a newlywed at the time, I couldn't help but take it as a veiled criticism and a suggestion about how I should change my life.

I blithely disregarded his opinion, and my husband and I have kept on doing what we've been doing this whole time -- the "his," "hers," and "joint" account thing.

21+ years of being together and we've never fought about money. I don't have to fume about how much he spends on Dungeons & Dragons books, despite him admitting that he already has far more game material than he could ever use even if he lived to 100. And he doesn't have to roll his eyes at my discretionary purchases either. Meanwhile, all the household expenses are taken care of, and we're saving towards our goals.

So I guess according to my dad I'm "not really married," but I'm OK with it.
But you obviously are still fuming. You’ve just eliminated the fighting about it, which is a good thing.

Each partner is going to have “I don’t understand why you spent that much money on X” moments. The trick is to recognize that is goes both ways and not have a fight about it.

yeahman
Posts: 194
Joined: Thu Mar 02, 2017 11:27 am

Re: Newlyweds and joint accounts for household expenses

Post by yeahman » Wed Feb 13, 2019 5:33 pm

Fresh Air wrote:
Wed Feb 13, 2019 4:14 pm
We take a relatively simple approach. Money is fungible. The accounts themselves don't matter, only how the money is spent.

We have one joint checking account, one high-yield savings account, and our investment accounts. We also have a myriad of credit cards which give bonus points for different categories. We then use YNAB to track and budget joint categories.

Within YNAB, we have an allocation each month to "fun money" - which is totally, guilt-free, no-questions, independent money. Because this "fun money" category only exists within our budget, it doesn't matter where it is spent from. A lunch out with coworkers goes on the uber card for 4x restaurant points. Something from Amazon goes on the Amazon card for 5% points. Something saved for next month goes in the Ally 2.2% interest account.

We are still able to handle joint & individual expenses, and avoid the tension of partners spending un-equally, but don't give up the optimization of finance.

Your miles may vary, but it works well for us.
But what if someone goes over budget? The point of individual accounts is forced budgeting. Then again, I suppose you can empty your account and just keep on spending from the joint.

vested1
Posts: 1832
Joined: Wed Jan 04, 2012 4:20 pm

Re: Newlyweds and joint accounts for household expenses

Post by vested1 » Wed Feb 13, 2019 5:48 pm

Someone mentioned that their's was a second marriage, and so keeping finances separate seemed like a good decision. I'm on my third marriage and my wife is on her 2nd. We've been married for 26 years and have 3 daughters between us. I will be 67 this year and my wife will be 66.

My mom and dad were married for 72 years and always kept their finances a secret from each other, assigning household bills to each other permanently to be paid out of their separate accounts. My dad even had a safe that my mom didn't have the combination to. You would think that all that secrecy would have lead to hidden stashes, but they both died with zero savings, large credit card bills, and a shared mortgage in their 90's. The opening of the safe at my dad's death was similar to the Geraldo Rivera/Al Capone safe opening in all its anti-climatic glory. Keeping things separate caused constant fights during those 72 years of marriage.

My wife and I have one checking account from which everything is paid, and one savings account. We consider both accounts as "our" money, just as our separate IRA's are "our" money as well. Keep in mind that by separating your accounts you may be setting yourself up for future unforeseen, and perhaps emotional circumstances that may affect your relationship. Case in point; My wife received an inheritance in late 2018 that added over 10% to our combined savings, tax free. Despite my assurances that this windfall was hers to spend, she kept insisting that it was "our" money to be spent as we always do, with joint approval.

We've been retired for 3 years, and her inheritance allowed us to fix/replace some things around the house that were long overdue, helped us to provide a 30k down payment for her 1st house to one of our daughters, gave us the resources to make (2) 30k principal payments on our dwindling mortgage in 2019 and 2020, and will allow us to avoid IRA withdrawals (subject to taxes) for at least two more years (2019 and 2020) during our current delay of SS. Her inheritance will also save us approximately 12k a year in combined taxes for both 2019 and 2020. If I had insisted on keeping our money separate 26 years ago, assuming we would still be married today, all of the aforementioned benefits in this paragraph may not have been possible to achieve. On the other hand, my wife could have been driving around in her new Tesla and sporting that diamond necklace she's always wanted. A history of combined finances eliminated any selfish considerations.

runner540
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Joined: Sun Feb 26, 2017 5:43 pm

Re: Newlyweds and joint accounts for household expenses

Post by runner540 » Wed Feb 13, 2019 5:59 pm

Moneta wrote:
Wed Feb 13, 2019 5:20 pm
My father told me that in his opinion, couples who don't combine all their finances "aren't really married"! :annoyed

Since I was a newlywed at the time, I couldn't help but take it as a veiled criticism and a suggestion about how I should change my life.

I blithely disregarded his opinion, and my husband and I have kept on doing what we've been doing this whole time -- the "his," "hers," and "joint" account thing.

21+ years of being together and we've never fought about money. I don't have to fume about how much he spends on Dungeons & Dragons books, despite him admitting that he already has far more game material than he could ever use even if he lived to 100. And he doesn't have to roll his eyes at my discretionary purchases either. Meanwhile, all the household expenses are taken care of, and we're saving towards our goals.

So I guess according to my dad I'm "not really married," but I'm OK with it.
Sounds grudging to avoid fuming and eye rolling.
Spouse and I each have personal preferences on where to spend discretionary money. We include those in our shared budget and it's transaparent. I love to see him enjoying those things, and vice versa even if I don't participate. I don't want to hide where I spend money. If things were tight we would cut back across the board because we're a team.

Fresh Air
Posts: 42
Joined: Thu May 19, 2016 9:04 am

Re: Newlyweds and joint accounts for household expenses

Post by Fresh Air » Wed Feb 13, 2019 6:20 pm

yeahman wrote:
Wed Feb 13, 2019 5:33 pm
But what if someone goes over budget? The point of individual accounts is forced budgeting. Then again, I suppose you can empty your account and just keep on spending from the joint.
Exactly. Or either could overspend directly on credit cards.

When we have gone over our individual fun money (and we both have), we discuss and either reduce it the next month or let it go. It's good to keep the conversation open, and some months we adjust simply based on known upcoming activities. We're talking relatively small amounts, regardless, nothing that will derail retirement or risk the mortgage not getting paid. Life is too short to get into major fights over $50 here and there, and I've found just sharing a budget between two people encourages positive behavior.

Every system only works so far as both parties want to participate. I think it's great that the OP is having open communication at the start of the marriage. I know many people who just expect it to work, often with dissimilar mindsets. They are not too happy.

dcabler
Posts: 1138
Joined: Wed Feb 19, 2014 11:30 am

Re: Newlyweds and joint accounts for household expenses

Post by dcabler » Thu Feb 14, 2019 8:28 am

retired_tom wrote:
Wed Feb 13, 2019 6:57 am
dcabler wrote:
Wed Feb 13, 2019 1:50 am
Jags4186 wrote:
Mon Feb 11, 2019 1:12 pm
dcabler wrote:
Mon Feb 11, 2019 10:56 am
Jags4186 wrote:
Sun Feb 10, 2019 9:23 am
It’s just so much easier to open a new checking account and have all of your paychecks go into that one account going forward.
+1 When we got married 30 years ago, we tried his, hers, and ours checking accounts. What a total pain in the butt! Lasted about 6 months before we stopped that. One checking account, two paychecks, and a HUGE amount of mutual trust...
TBH, I don't even get the "HUGE amount of mutual trust" idea. If you're getting married you should have HUGE amounts of mutual trust. Otherwise why get married? If you have a plan for your money, then it shouldn't matter which checking account the paychecks go in:
I think you just proved my point. With full trust in each other there is no need to create a separation of funds in the first place by creating separate checking accounts for each of us. It all goes into a single pool and we trust each other not to do anything stupid without discussing with the other.
I think the bolded portion above, is the whole crux of the matter in this discussion. Do I really want/need to ask if I can purchase new golf clubs, or does she need to ask if she can purchase a new dress? We trust each other implicitly, but it's so much easier to just go out an buy what I want with my money and she can do the same with hers. As long as all the bills are paid with the money in the joint account, having individual accounts is a non-issue.
In my first marriage, we held everything in one account. And we'd constantly have to ask if we could buy something. Well, that snowballed into, you bought X for Y, and now I can spend the same amount on something I want. Eventually, the money in the account started diminishing quickly, and before you know it, we were arguing about money issues all the time. It didn't take long for the divorce to come along.
We started off with 3 accounts precisely because we'd both been independent for a very long time and didn't want to answer to anybody about any personal spending. But a combination of it being a pain to keep up with 3 accounts and trust that neither of us would go off and spend a huge sum without discussing (as in discussing, not asking permission) led us to simplify. The money is there and when I bought my clubs, I bought my clubs. Likewise for art supplies for her. But if it's time for one of us to plot down multiple Kilobucks on a new car, for example, then, yeah, we'll have a discussion first. Is there a hard line where one of us is supposed to have a discussion? No. We both know each other pretty well at this point. And of course this has changed over time based on where our finances are these days vs. where we were in our 30's.. It all works out for us. YMMV

nick evets
Posts: 243
Joined: Wed Mar 01, 2017 5:40 pm

Re: Newlyweds and joint accounts for household expenses

Post by nick evets » Thu Feb 14, 2019 8:54 am

delamer wrote:
Wed Feb 13, 2019 5:26 pm
Each partner is going to have “I don’t understand why you spent that much money on X” moments. The trick is to recognize that is goes both ways and not have a fight about it.
These two sentences summarize the entire thread, I think. Every comment is simply a description of how couples address this issue through accounting.

Our preference is to maintain individual accounts along with several mutual accounts. I truly don't WANT to see what my wife is spending money on, day-to-day, and vice versa. Why unnecessarily annoy myself, if I see a large birthday check written to a particularly poisonous niece on her family's side? We trust each other to pay the respective share of the bills, fund savings and mutual accounts, and beyond that -- respect each other's privacy and independence.

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