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01-27-2017 08:34 AM - last edited on 03-18-2017 08:10 PM by Irish80
I think we all know this can be a difficult conversation in many relationships and the simple fact that this section exists here on the forum means that there is plenty to talk about with respect to the topic.
I think a lot of men, myself included, tend to be logicial and analytical about this subject; I'm a numbers guy. I like to crunch numbers and and arrive at a conclusion that way. -Mod cut - Let's stay away from labeling people into a certain category based on their sex. Not neessary to get your point across.
That said, how do all of you break down what each of you will contribute to bills in your relationship?
I think there are obvious factors to consider...
1 - What income do each of you bring to the table
2 - What individual personal monthly bills do each of you pay (car loan, school loan, gym membership, car insurance, etc)
3 - What combined bills do you have (electric, cable, rent/mortgage, heat, etc)
4 - What net income each of you has at the end of the month after your income minus expenses
5 - Any DEBT that either of you currently possess
What other factors do you take into consideration? Number 5 on my list above is sort of a doozy to me that can be argued and needs to be clarified. By debt I'm referring to PREVIOUS debt, such as existing revolving credit card balances that must be paid monthly by a person. What I strongly believe DOESN'T count here is when one adds to that debt. For example I could go out this month and throw a $4000 TV that I can't afford on a credit card which would artifically inflate my existing debt, thus raising my expenses and in theory increasing my DTI. This however IMO is BS and that category shouldn't count for this discussion because if one of you has a spending problem in the relationship that spending shouldn't be included in their expenses. Their PAST spending (debt that already exists) of course should be considered, but I don't think it's fair to include continued unnecessary spending. Hopefully that makes sense.
So let's hear it everyone. How do you guys use these factors and/or any other factors to hammer out a monthly bills/expenses plan that makes sense for a couple in a relationship?
I look forward to hearing the different perspectives here.
01-27-2017 01:50 PM
Good question, and as you mentioned, you'll get lots of feedback with lots of different viewpoints.
As for me and my house, we live in 1957. Wifey has a full time job and her paycheck is direct deposited in our joint account. I have a full time job and my paycheck is deposited into the same account. As those two incomes aren't enough, I work a second job, and direct deposits and cash deposits go into the same account.
Then, I pay the bills. Using all of our available funds.
She has a gas card, a grocery card, and a "whatever" card for daily consuming.
I try to maintain a $1,000 slush fund in case either of us has to act without the other, but we BOTH prefer to discuss any purchases outside of the norm.
If I stop for a Big Mac on the way home, who cares? If she stops for a Big Mac on the way home, who cares?
If one of us stops at the car dealer on the way home and arrives in new wheels, I'm pretty sure that they'll hear the screaming two states away no matter which idiot did it.
There is no "correct" answer as every couple and every situation are different. Discussing the details is vitally important. However you two decide to work it out, make sure that each of you know what to expect from the other.
01-27-2017 03:17 PM
Determine how much money is required to cover all recurring expenses and a little extra: housing, utilities, food, entertainment, etc.... If there is a shared savings goal like downpayment for a house or a big vacation, it should be added up as well. Set up a joint account to which each person deposits a part of their pay that is proportional to their share of the household income. (For example one person makes 50K, the other makes 100K and recurring bills total 3K/month, then the one who makes 50K deposits 1K and the person who makes 100K deposits 2K.) All bills are paid from the joint account.
The money that doesn't go into the joint account is for each person to do as they wish -- ideally they contribute to their retirement fund, have a separate savings account, and pay for frivolous expenses.
This way there is freedom and accountability.
01-27-2017 05:15 PM
We are very much like tcbofade, except I hold the purse strings. All large purchases are discussed and planned. He has his weekly cash after contributing to our joint account and those funds are his. I dont question how he spends those funds. He doesnt grill me about how I budget.
He doesnt take anything extra out of our accounts. (He has about 60k in CL's on the cards he carries however I dont think he's ever used them ). If we need to save extra for something (like the new siding we need this spring), we both put extra into savings.
01-28-2017 03:46 AM
01-28-2017 04:43 AM
Everything goes in the joint account, each of us has our own CC's that we use for small personal things, larger items or family items go on one of the two joint cards we currently have. Our line is pretty rigidly drawn at $25 without consultation, unless it is one of those fantastic deals that can be explained.
01-28-2017 06:22 AM
"I think a lot of men, myself included, tend to be logicial and analytical about this subject; I'm a numbers guy. I like to crunch numbers and and arrive at a conclusion that way where women may tend to just shoot from the hip more or care less about it being "right" or whatever the would be."
I'm sure you meant nothing of it, but the this comment is a bit sexist. I know plenty of women who are the successful "CFOs" of their family's budget. Please don't generalize that most women are careless with their finances. It is untrue. I know where every penny of my money goes, I am incredibly regimented when it comes to tracking my money and ensuring my goals are on track and my credit is stellar. When my boyfriend and I moved in, I immediately took the reins to get my boyfriend's credit credit score raised from 619 to the mid-800's. No "shooting from the hip" with me! There are a great number of us ladies that like to crunch some numbers (and we're good at it) and plenty of men who are fairly irresponsible with their finances. Good natured rant over.
With that said, my BF and I each pay half of the joint household expenses (Mortgage, prop taxes, utilities, PLOC payment from our recent renovation, etc...),as well as contribute an equal amount per month ($1500 each) into our retirement accounts. He transfers this amount to me each month and I pay the bills. The rest of our money is ours to cover our personal expenses (he has a car payment and mine is paid off, car insurance) and to spend as we please, no questions asked. We each have our own checking and savings account as well as a joint savings account for dive vacations.
We each cook separately (I eat healthy and he doesn't), so we each do our own grocery shopping. I buy all of the household chemicals (laundry detergent, dish detergent, etc) and he buys all of the paper products (TP, PT, Kleenex, etc..). We alternate buying dog food, as we have 3 dogs and split all vet bills, day camp/boarding expenses.
Large one-time expenditures are discussed. If we both agree with we want to move forward with the purchase, then we split it. If one of us does not feel the expense is needed, the other can choose to pay for the entire expense themselves.
We both make at least $130k per year, so we pretty much split everything down the middle and it's worked really well for us. Neither of us have student loans or credit card debt.
I was in a previous relationship where I got royally screwed financially and worked really hard to right the ship. When my current BF moved in together, it was really important to me to keep things separate. As the years have gone by, he's proven to be responsible and trustworthy, so I've allowed more mingling of finances (we're both on the mortgage) and long-term financial goals (retirement contributions), but I will likely never be comfortable with all of our income going into one account. I will never put myself in a position to have to "ask" to buy something I want if I can afford it.
Our arrangment isn't for everyone, but it's what works best for us!
01-28-2017 07:55 PM
I'm sure you meant nothing of it, but the this comment is a bit sexist. I know plenty of women who are the successful "CFOs" of their family's budget. Please don't generalize that most women are careless with their finances. It is untrue.
Show me where I said that women are careless with their finances? I didn't. From my personal experience, I've found women to "take the reigns" as you put it less often in relationships. This is what I've encountered in my own personal life across many relationships over decades, discussions with family members and friends and with the 1500+ employees that have worked for me over the last 15 years. I'm not saying this is a 90%/10% split or something that dramatic, but from my personal experience this is what I've experienced in my life. Certainly there are others out there that have experienced the opposite which is absolutely fine.
01-28-2017 07:58 PM
I'd like to hear more real numbers (budgeting data) from those that have sat down with their significant other and hammered out a plan. I'm interested in the factors that went into the discussion and how the numbers were arrived at. I'm assuming that a lot of these things were mentioned in my original post, but if there are other factors as well I'd very much like to hear about them!
01-29-2017 02:48 PM - edited 01-29-2017 03:18 PM
I agree with the recommendation on discussing your finances. I am black and I tend to think that people are different places but one person can improve the other persons situation with basic information that is not necessarily judgemental or attacking but simply pointing out fiscal literacy and financial myths can help improve some situations. And never judge a book by its cover, that power suit or dress, may have $100s of thousands of student loan or other debts hanging around it's neck. I always recommend Dave Ramsey's Financial Peace University, the 9-week course, which helps people see a different perspective of financial matters from debt and retirement to building wealth and buying insurance. It helps you to see beyond the immediate and plan for long-term solutions, ie a will, paying off the house, carrying the mortgage in the event of death or other circumstances like disability. You should put the person in a position to carry the burden of the financial situation together because if you do everything and pass away, the person you thought was stupid with money before will now do stupid with zeros attached to it. A nine week course is a lot easier than everytime your partner rolls over you giving them the tip of the day or a 20 minute lecture. Also, this way you are not starting at the top where you are financially, but creating more level ground. I, also recommend either using an envelope system either cash or electronic to combine finances without giving the other person access to your personal bank account. I love the idea of prepaid cards to address any household spending items. This way the other person is not spending rent/mortgage money. Budgets are only important if you both are using them. YNAB, themint, FIRE Calc are great places to start. For more advanced financial couples, financial planning or spending and savings plans will probably align well and be much more suitable than just a basic budget. I would definitely find that companionships takes many forms and you need to surround yourself with a group of trustworthy individuals but that is not going to mean that they understand what is directly happening in your relationship. They only see things from their own point of view. It is incredibly important to be able to openly discuss some major things in your relationship especially if this is the number one reason for divorces. Do not underestimate the positive aspects of sharing knowledge. Depending on background, philosophy, religion, world view does not mean the other person knows anything about basic personal finance.
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