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Managing Money After Marriage

How Managing Money Changes When You’re Married

It’s one thing to manage your own money and a budget you create. It’s a whole different story when there is another person involved who thinks differently than you do. This is everything I’ve learned budgeting with my wife.

Not to brag, but I’m pretty good with managing my money. I set my goal at saving roughly 50% of what I earn, and while I only meet that ambitious goal once every four months, I do save more than 20% nearly every month. I’ve been doing this for many years so at this point it feels like second nature.

When my wife and I were dating and living together, some expenses were shared, rent for example. That was the beginning of my journey budgeting and managing money for two.

Now we’ve been budgeting and building our wealth together for more than four years.

A lot has changed for us since getting married and interestingly, so has how we’ve treated money in our relationship. As I’m sure others can attest, money can be a touchy subject that complicates an otherwise great relationship.

Laura and I always strive to manage our money in such a way that we don’t fight about it because there are much more important things to fight about – like who does the dishes. As a result of our constant experimenting, we’ve come up with two approaches that have worked for us.

We constantly flip back and forth between the two, further improving them as time goes on. Many readers have asked about managing money in relationships so I’m going to share what Laura and I have learned. It’s my hope that you can apply some of it to your own relationship.

Our Dating Approach

I’m a big fan of Freakonomics and specifically, how to approach problems like an economist – even though I’m not really an economist at all. One thing I really believe in is division of labor, especially around things that each person is good at.

For example, I’m pretty high up on the investment nerd scale so when it comes to investing our money for the future, it makes the most sense for me to handle that. Laura is the social one so she usually handles all of our plans.

It’s not that Laura can’t invest or I can’t make plans with friends, it’s just that we both generally stick to what we’re good at. Investing is however, very different from budgeting.

Originally when Laura first moved in, I proposed a system for us to manage our joint expenses in a way that was fair to both of us (mostly her).

At the time, if you had added together both my monthly take home salary (after taxes) and Laura’s, you would find out that roughly 68.5% of the income came from me. I interpreted that as I should cover 68.5% of our joint expenses and Laura should cover the remaining 31.5%. So, at the time we paid an extremely high rent of $1,750 and of that I paid $1,200 and she paid $550. Fair enough, right?

The problem was that rent was one of the few expenses which actually remained constant month to month. Things like the electric bill, our grocery bill and especially our discretionary spending would change month to month.

We dealt with that in three ways:

  1. All necessity spending, like electricity and groceries were averaged over the course of the past few months and split based on the averages. That was pretty fair and accounted for enough spending spikes/dips that our estimates were pretty close to what we really spent month to month. We then split these estimates based on our core proportions.
  2. We were living together so we obviously liked each other and weren’t about to be at each other’s throats over a misappropriated $20 dollar expense. With that in mind, we took discretionary things like eating out or bar tabs as a way to treat each other. Usually I would cover more of the restaurants (more expensive) and she would cover most of the drinks at bars and we were both happy with that as I hated dealing with bartenders and she liked to be taken out for a fancy meal on me.
  3. We each kept our own Mint account to track everything. This allowed us to track our own expenses along with joint expenses so we could learn to trust each other while having “shared money”.

As for the actual paying of the bills, managing the money and creating of budgets, that all fell to me. Since it was something I was good at, I figured in the whole scheme of division of labor, this one was my task. All money was funneled into my personal account and then all bills were put in my name and paid by me.

At the end of the day, whatever we each saved was our own business. Laura took that opportunity to plunge into debt a bit although, it was not a large amount by any measure.

We continued with this approach until we got married.

Our Marriage Budgeting Approach – Attempt #1

When we got married it was time to switch our thought process from separate, individual futures to a joint future. As part of that joint future, we decided that we would start it off by merging our accounts.

We created a joint account that our salaries went into and our bills got paid from. I managed the account, the bills and pulling savings out of our joint account to invest with. This made sense because it was minimal additional effort for me to manage all of our money instead of just mine, I was good at it and Laura was bad at it. Basically a further defining of our division of labor. We used my Mint account as our main base of operation.

At this point I had grown my salary substantially and as a result we had a lot of money coming in every month between the two of us. The hardest part about a joint account is that our expenses are joint and we now had to police each other to control frivolous spending.

Every two weeks we would try to sit down and go over our budget, where we were financially and where we wanted to be. Almost always, spending was too high and we often called each other out for silly expenditures. I would put a lot of money into the small business I was trying to grow and Laura would put a lot of money into the wardrobe she was trying to grow.

I would be lying if I said we didn’t fight over money with this approach. Sometimes someone would get called out on an expense and they would take it really personally. That made these bi-weekly conversations a bit tougher than we initially thought they would be.

With this approach I also started to feel a bit under appreciated. All of the money went to and came out of the same place so everything kind of melded together and I felt like my efforts were taken for granted. Laura also became unhappy as she felt controlled by my budgets and was upset that she was not being as responsible spending wise as she used to be.

That lead to a nice drunken discussion where we changed our approach yet again.

Our Current Marriage Budgeting Approach

We had a heart to heart in varying degrees of drunkenness and talked about why things were not working and what we could do to fix them. We both wanted to be happy and agreed that money was a stupid thing to fight over.

We decided on a list of what was important to us and had to be taken into account in our new approach to managing our money:

  1. We needed to do better in saving for the future. Things had degraded to a point where we were saving less than 20% of our take home a month. That was seriously setting back our retirement goals.
  2. Laura wanted to control her own money. She wanted to come up with her own budgets and spend her money where she wanted without being questioned. She also wanted to have a sense of responsibility around her spending and work to control it on her own – without me nagging.
  3. I wanted to feel more appreciated for my efforts at work as I had growth my income such that over 78% of our take home income was now coming from me.
  4. We wanted to be able to buy gifts for each other and have the other person actually be surprised.

Having decided on the list of what was important to us, we set about to effectively merge our first two approaches to money using what we’ve learned over four years.

The new approach would start with us splitting our income into our own accounts again but we would keep the joint account. All of our bills would come out of the joint account which would be visible on each of our personal Mint accounts. We set our pay to automatically transfer to the joint account ahead of our bills so everything could remain automated.

Since we still had to consider our future, we both committed to automatically saving at least 20% of our take home pay by transferring it to Betterment. Laura opened her own Betterment account so she can see her portion of our savings grow as a result of her own efforts – something that is hugely motivating.

Take Aways

I quickly learned that when more than one person is involved, managing money can become very complicated. Simply put, the approach to money in a relationship shouldn’t remain static. It’s crazy to think that we would get it right on the first try, or even the third try. It’s important that we remain flexible in our approach so we can shift the approach when our circumstances change.

We also learned that even as a team, we were still two different people with two different sets of needs and goals. Hopefully this approach will work for awhile, but I’m sure we’ll change it again.

In the end, we were able to meet our savings goals, cover our expenses and most importantly, be happy with how things were being handled.

Do you and your significant other have a different way to manage your money? If so, please share it in the comments. I’d absolutely love to hear it as we’re still learning ourselves!

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  • Erin @ My Alternate Life

    Our finances are completely joint. Neither of us are gift givers, and neither of us cares to receive gifts either, we’d rather blow the cash on a nice dinner and drinks :)

    We haven’t really had problems with joint finances. We talk big purchases over, and neither of us buy little stuff, so it works for us! I think every couple should do whatever is best for them and not worry about what anyone else thinks. Joint finances are my homeboy, but not everyone agrees and that’s fine. You do you :)

    • Erin, that’s great the joint situation is working for you two. I do think it’s less overall work although it can definitely lead to arguments. Again props to you two if you are able to completely avoid arguments about money. We’re pretty good about that but it really depends on the expense (coffee for example is sacred).

      We do however resonate with spending money towards good times like dinner and drinks over material things. We feel that the best money spent is in creating great memories!

  • Cassandra

    We just got married this year, but were living together for almost 4 years beforehand with completely separate finances. A little over a year ago, we set up a joint account and although our salaries were deposited into our personal accounts, we transferred enough into the joint account to cover our joint expenses, bills, rent, groceries & nights out together.

    A couple of months ago, I realized that every month our joint account was emptied out and that we had no joint money saved up. Turns out my husband had about $1500 saved and I was chipping away at my credit card debt (from before we were together) by myself. My debt is on a card with 0% until 1/16 so I am not accruing interest on it, yet.

    We just changed our plan. Instead of just pooling money jointly to cover expenses, we are doing it more like an allowance (I hate that word). My husband take a portion of his paycheck into his personal account and everything else goes into the joint. Which ends up being over $100 more a week than before. I will put a little less of my monthly paycheck into the joint account and concentrate on paying off my credit card debt before it starts accumulating interest and then I will go onto a similar allowance. I assume once we have kids that we will have less and less in our separate “allowances” but I know that I like having some separate money. I think I would become the nagger and he would drive me nuts if everything was joint.

    Hoping to start investing in Betterment once my debt is all gone.

    • Cassandra, that sounds like an awesome start! Definitely focus on that debt but when you do bring it to zero and start investing, write in and let us know!

  • Great post! Super easy to read and very informative. I appreciate the honesty about which approaches caused problems, I’ve experienced some of them first hand.

    On one of the episodes it was mentioned that two people could open up a joint account together without being married. I think this is a great idea for people who are still “testing the waters” (aka me). I’m seriously considering doing this myself!

    My only question: How often do you check that the other is saving 20%, or do you? I mean, marriage is all about trust, but I was wondering if there was any “enforcement without nagging” going on. If that makes sense, haha.

    • In truth, you both keep each other honest. Marriage is like 90% trust so while there is a lot of that we frequently have an “all on the table” discussion with laptops.

      We poke at each others spending pretty equally (I’m no spending prude). To be honest, I’m probably the worst offender so I’m lucky in that I don’t have to be the police :)

      At the end of the day I make it my responsibility to meet that 20%. Sometimes we sell crap on ebay or miss it and save double the next month.

  • Cory Ruegg

    I’m curious, how have well have you and laura done on this strategy a year or 2 out from this original article. I personally love the idea of figuring our what is important to the both of you and each making the commitment to achieve those goals individually.

    • So we’ve actually moved completely towards managing everything under one set of accounts. While we do still have our individual accounts, they’re more set aside for specific purposes (like Laura’s budding finderskeepers.co business). They’re all visible and managed in one Mint.com account.

      I think growing together had an affect on it but we also spent a lot of time talking about things over the past two years and have landed in a place where our goals are aligned. I wrote this article early on in our marriage and while married we were still having withdrawal on our independence.

      We’re actually coming out with a course very soon on managing money in a relationship that will cover this and a ton more based on our experiences, the experiences of our friends and a ton of conversations with people in the audience. If you’re a subscriber you’ll be the first to know when it comes out. If you’re in the Community you’ll get it for free ;)