Friday, December 12, 2008

married household finances

The next potato wedges column will deal with Potato's take on managing joint household finances. He was recently married so this topic has been on his mind lately. I thought I'd preamble potato wedges with my view on married household finances....

My wife and I met during university in 1999. Since then our finances have just kind of slowly melded together and formed solid like a good jello. It is actually difficult to pinpoint exactly how all of this evolved, but a turning point must have been before we were married when my wife (girlfriend) at the time loaned me $4,600. When I completed university I decided that I wanted to do away with my $4,600 student loan, pronto. The only problem was I didn't have $4,600. However I knew someone that did, and she happened to live in the same one bedroom apartment with me. I drafted up a win/win proposal where she would lend me the money right away in full, I would pay off the loan and then proceed to pay her half of the monthly rent until the loan was paid back with 5% interest. It saved me from paying the Ontario Scholarship Assistance Plan any interest, and instead she made an easy $230. I'd much rather give the interest to her. This showed her trust in me and began to foster the trust that exists now in our relationship around money. I really think most of managing money in married life comes down to trust.

Fast forward to 2008 where we run our financial household like this:
  • One joint bank account, 100% managed by me
  • Pay for everything possible on credit cards and always pay balances in full
  • We're both pretty frugal, and have very similar money habits and attitudes toward money

This has to be one of the simplest ways to manage your joint-finances. I basically manage the works and my wife likes it that way. I enjoy it as you can probably tell, and it's one less thing for her to worry about. She trusts that I'll do a good job. I have the best interest of our family and our future as my driver in managing our family finances. I am really happy to say that I can not recall a money-related argument ever cropping up. The key to the whole thing is likely the last bullet point above, and we are lucky that this happens to be the case.

How do you handle joint-finances?

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Finance Matters said...

My wife and I have always done things this way, my wife had trust issues based on her first marriage so I let her keep control of bankbook etc at the start so she could be comfortable. Now that I'm a financial planner and I take care of all the investments but she looks after the bills and bank accounts. Works for us.

MG (moneygardener) said...

That is interesting FM. How do you determine savings for investments?

sampson said...

Wow, MG, that sounds exactly like me. Are you sure you aren't actually me in disguise.

I also started dating my wife in '99, also had her loan me money to pay off a small student loan, share a joint account (we do have individual accounts, but they hold < $100 and we share passwords).

You summarize everything well and I think the points of trust and the fact that your spending habits are similar are the keys. If either of those is out of balance, I don't think the situation would work. In fact, we're the only couple in our peer group who shares all finances, everyone else seems to split (more common in these days of high divorce rates?).

I've never understood the other way around, I know couples who split childcare costs, one parent pays for the food the other pays for clothing etc. If my wife were like that, I know my kid would be wearing tattered clothing all the time ;)

MG (moneygardener) said...

I find it hard to understand how having your own account would work as well. You can never actually split everything down the middle, it's just not practical.

Emp said...

Don't you need to keep track of investments separately to account for attribution rules ?

Janette said...

My husband and I have been married 26ish years. Ours is simple, he made the money and I managed it. He has the business degree, but would rather carve wood. I have the education degree and like to make sure there is plenty of money in the bank.
Our trust came the year I was home full time after the baby was born. I told him we were broke and could spend nothing more. He went on total shut down- spending no money. At the end of the month he sighed relief. "Whew," I said, "we were out of the woods. We made it through without touching our savings." "WHAT SAVINGS? I THOUGHT WE WERE BROKE!" Opps....
From that moment on he trusted that I always knew how to care for our money:>)
Our circumstances have change and I now make the money and he carves wood full time with a pension well earned. I still care for the money.
There will never be a homeless woman coming out of this relationship. (Which is something ALL women worry about....)