Comments on 2000 Dollar Budget Wedding: Q &A: Combining Finances

Hi Sara,
I've been reading your blog for some t...

2008-11-20T10:26:00.000-05:00

Hi Sara,
I've been reading your blog for some time now and thought I should comment on this one! My fiancee and I live together and had a lot of accounts before we combined even more so I understand the graph! I just found this website yesterday that I think would help you a lot: http://www.smartypig.com/
It is specifically to save for goals but it is at a bank (FDIC insured) but online!

This is fantastic! I hope people keep asking ques...

2008-11-17T23:42:00.000-05:00

This is fantastic! I hope people keep asking questions and responding! I feel like it's really hard to get people to talk honestly about money.

We're looking at a very similar system. It's important to both of us to feel a sense of autonomy at the same time as working hard toward the same goals.

But then when we layed it all out, I was like, "Do people really do this?"

I'm glad to know that, yes, people really do. Keep up the posting!

I think this is a great way to divide things up. I...

2008-11-17T12:52:00.000-05:00

I think this is a great way to divide things up. I've read a lot of articles from both financial and relationship experts and they say having your own allowances is very important. We'll be doing something similar but I'm not quite sure exactly how we'll handle it. He has a lot of student loan debt that he would like to keep seperate and I have a lot of investment/savings accounts that I've had for a few years. Any advice on handling that kind of thing would be helpful! Thanks for the post, most people never get down to the nitty gritty in wedding blogs!

@ dckate:

We do have three separate savings...

2008-11-17T11:50:00.000-05:00

@ dckate:

We do have three separate savings accounts for future cars, home improvement, and travel because the separate buckets help us save different amounts for each thing. If it were all in one big bucket, for example, we might be tempted to spend it all on our honeymoon. But because it's separated out, we know exactly how much we have saved for our trips versus our future cars (and how much more we still need to save!).

Because it was free for us to open all those separate accounts and set up the transfers to happen each month, we just went ahead and did it that way.

To your second question: In general, we don't maintain a big balance in the main ING account (Account #1). There is a little padding because we never want to overdraft on anything, but the goal is to have most of our money transferred into the right buckets right away.

@ hanna: This part is tricky! In general, anything we do or buy separately comes out of our personal allowances. So, if Matt runs a marathon, the registration fees come out of his allowance. When we ran the Human Race together, the registration fees came out of our joint allowance account because we considered it "Entertainment."

Dinner, on the other hand, would come out of our joint allowance (even if we eat separately) because we consider meals to be covered under our joint expenses. However, trips to Starbucks for morning drinks or mid-day snacks come out of our personal allowances (because those tend to be wants rather than needs).

There's definitely a lot of conversation that happens about the gray areas, even though the system is in place. In general, we pay for our needs out of our joint accounts, as well as our joint wants (like vacations and home improvements). We pay for our individual wants out of our personal allowances.

There's still some gray area here, as well. For example, I get my legs and bikini waxed once a month because a) it's way easier to me than shaving all the time and b) when I shave, my hair grows back very coarsely and it's uncomfortable. Matt and I have decided that I don't have to pay for this out of my individual allowance. Similarly, we decided that he doesn't have to pay for his running shoes out of his personal allowance.

We try to pay for our clothes/shoes/books out of our personal allowances, but if we really need something (e.g., more professional clothes for a new job), then we just talk to each other about it.

The underlying principles that guide all our decisions are:

1. We want to minimize frivolous spending on passing wants (hence our very tight personal allowance budgets) and maximize our savings so we can purchase more lasting wants (like furniture and vacations).
2. We want to be equal partners. Even though we make different amounts of money, we want to be on level ground in our relationship.
3. We want to minimize potential bickering and don't want to always ask for permission to buy little stuff.

Phew! That was a very long response. I hope I answered both your questions!

I really like your system. It is along the ideas t...

2008-11-17T11:27:00.000-05:00

I really like your system. It is along the ideas that I was thinking about, but you have it set out so nice and clear (I love the visual). My fiance and I aren't combining finances yet, but it's something that we will be doing before too long, I will have to show him this post.

I like this system a lot. My partner and I are pl...

2008-11-17T11:20:00.000-05:00

I like this system a lot. My partner and I are planning to do something similar, but one of the questions we're running into is what goes into our personal allowances. If you go out to dinner with your friends (and not with Matt), is that under personal allowances, or does that count toward the general shared pot? Is personal hygiene under personal allowances or the shared expenditures? How about clothes or shoes? Thanks for your advice!!

Since we're combining households next month, we st...

2008-11-17T11:07:00.000-05:00

Since we're combining households next month, we started having this conversation over the weekend. Your post is very enlightening! Our system in the end is going to look similar. I do have two questions for you though - Do you maintain a balance in the ING account, or is that just used as a pass-through? Also, for the car, home and vacation savings, do you actually have three separate savings accounts? We were thinking two savings accounts - one as an emergency fund and one for other savings - so home, vacation, etc. would all be together. Did you consider combining those? If so, what made you decide against it?

Thanks!