Joint Accounts: One for you, One for me, One for us
A couple months ago, I talked about how sharing money works for our marriage, and one comment really stood out. I want to reprint the comment in its entirety here. I won’t share any of my own ideas about the method that Tim and his wife use in their marriage because I want your feedback! (I’ll just add some formatting for readability)
My wife and I have three joint accounts.
- One account gets all our paychecks and income direct deposited. That account has sub-accounts in it, so it makes it very easy for us to budget because it automatically moves $X to subaccount 1, $X to subaccount 2, etc., and we then have subaccounts for groceries, gas, bills, mortgage, insurance, etc. each with their own amount in them. At the end of each month, we can see how much over/under we are in each account as we go through the credit card (we charge everything to get cash back) and move money from each appropriate subaccount into our credit card payment subaccount. Anytime we realize we’re consistently over or under in a particular subaccount, we adjust both our budget and the auto-transfer amount to compensate if we think it’s necessary. (comment from Mike: Is this the “envelopes” method?)
- The other two accounts are joint only so that if something happens to one of us, the money is still under the control of the other person. However, those are only used individually. We each get $25 a week auto-moved from our main account into each of our “individual” accounts. This is our spending money, or allowance, and we’re not responsible to the other person for how we spend it, its our individual money. I happen to spend mine on going to the bar with my buddies, or buying comic books or games; she spends hers on movies and eating out with her friends, and sometimes buying stuff for her garden or clothes. At the moment, I’ve got maybe $150 saved in my account, because I want to buy a nice new video card for my computer.
This works for us; we share all our finances, but we each get an allowance basically that is in its own account with its own debit card, that we can spend on whatever we want without needing to ask the other person, because that allowance for each of us is built into the budget and automatically transferred every Friday. The rest of our money is 100% each of ours, and we decide together what to do with it, how to budget it, when to spend it and what to spend it on, how to do savings, what to invest in, etc.
We’ve only been married a year (yesterday was our first anniversary actually), but we discussed how we were going to do things before we got married, and implemented all the changes to our finances within the first month of being married. Incidentally, my wife is a loan officer at a credit union, so she knows a lot about credit and loans and interest and making money, and she’s a real whiz at it, and I’m not, so I let her do most of the work because she enjoys it and looks at all of our accounts probably once a day on average, so I’m very blessed to be in that kind of situation.
(Comment from Mike: This last paragraph is a different topic, but a very good tidbit of information that I didn’t know!)
Here’s something I learned from her last week that I had never heard before: your credit score drops if you have more than 50% of your available credit taken out. So, you have a card with a $10,000 available balance, and you’re carrying $4999 on it, your credit is fine. Charge a $2 coffee, and your credit score drops. This apparently happens on whatever day your credit card reports to the credit bureaus the owed/available ratio; since they don’t advertise that to people, apparently it’s best for your credit to keep your balance enough under 50% that you can still charge if you need to but not get hit with a credit drop.
So readers, what do you think of this method?