Slinky asked a great question last week, how do you track your spending if you have a joint account between two people? Do you budget short term? Long term? Weekly? She asks because as a part of a couple with separate accounts she says isn’t it tough to know whose spending what, when? She says that separate finances works great because then the spender can spend and the saver can save; unless there is no income. Then it becomes a problem.
Well in joint budgeting, I am going to explain how I do it. We both spend money on a credit card. I pay off the credit card in full every month. We don’t overspend on any category because I track our spending. Now how do we not overspend?
First off, we communicate our purchases. That’s not to say we’re asking permission. NO. What we’re doing is informing the other person that we are going grocery shopping or we went grocery shopping and spent $35. Now if it’s a big purchase we do discuss it, say over $100. However, I think that discussing purchases over $100 is probably a reasonable rule of thumb for ALL couples whether they keep money separate or joint. You are a couple after all, and even if the money is never combined doesn’t mean that it can be spent without consideration to future goals.
Second, I reconcile the spending when it happens. This is necessary because even if I were single I’d have a budget for my credit card. In able to not go over, I treat my credit card like a checking account. It’s how I was taught by my mother. Just because it was spent on the credit card doesn’t mean it’s not REAL. No, it’s just like I cashed a check from my checking account. I need to account for the money spent PERIOD.
Thus, all expenses are reconciled as spent. I keep an excel spreadsheet to track each category, but the money is already spent before it even posts to the credit card statement. My DH was the same way prior to meeting me. This is necessary for anyone who uses a credit card and doesn’t want to pay interest.
But let’s say I used a debit card, I’d still reconcile all money debited as spent even if didn’t show up on the account. But how to reconcile? This is where communication comes into play.
My DH tells me I have these receiepts or I bought $x online. If he weren’t married he’d be reconciling it himself, I just happen to do it for him. So we’re constantly on top of our spending. Is it necessary? Yes if you want to stick to a budget.
Unless you are 100% cash, and even then you may have to write checks for utilities and mortgage payments, it’s pretty hard to not reconcile a checkbook or credit card as a single person. You have to track your spending to see if you are on track to spend $200/month on groceries. Or $200/month on eating out, you get the idea.
To us, it doesn’t matter who spends the money. The money is spent. We’re not here to nitpick over the details. We have a joint budget of X, Y, and Z. We stick to it jointly. We also don’t just go out and spend $100 on something because we have our own account and we can. Our efforts are joint and mutual.
My question to separate financers, how can you be sure that you are saving equivalent amounts? What happens if one person gets into a car accident and can’t afford to replace their car? Won’t the other partner pony up the money? Or is there a bit of resentment for not saving more? Do you split vacations? What happens if one person can afford a more expensive vacation than the other?
I understand the type of couples who have all money joint and two small separate accounts for fun money. NOT a large portion of the budget. But I wonder about couples who have a small joint account or take turns paying for this bill versus that bill. When you lose an income how can it be fair?
I guess with a joint account, it’s all ours. It’s all either for the greater good or not.
4 responses so far ↓
1 444 // Jun 29, 2009 at 11:10 am
Your method of tracking money sounds exactly like ours. We happen to have no joint accounts; each one is in my name or in his name, but that’s a technicality because it is all one big pot. Either of us use any and all accounts as needed and I happen to be the one who tracks everything more actively than he does. So he makes sure to report spending to me so that I can enter it and I let him know what money is available to use in which account, should he need to use money (like putting gas in the car is a recent example.)
We would never track “his and hers” money; that seems absurd to me, but I have a friend who has done that for her entire marriage – you should have heard them quibbling over who would pay for gas when they were newlyweds. I I always thought that was inane- but I think now their finances are one of those classic examples of what’s hers is hers but what’s his is both his and hers. (yuck)
2 fengshui // Jun 29, 2009 at 3:32 pm
I use mint.com, which has helped me track spending better.
I think the key to “joint budgeting/ saving” is starting it from the get go. My dh and I never shared money, and had no clue what the other was buying/ spending. We had separate savings accounts as well. I think that some of that was that we never shared money while we dated because we didn’t live together for long prior to marriage. And, we married “older” (we were 30). So, we were already “set in our ways” when we got married and didn’t want to change. It has been difficult, and a source of many fights for us.
Once you’ve established bad habits such as spending beyond your means, carrying credit card balances, not saving, not sharing money, it is really hard to “undo” all of those things. So, how do you start? I don’t know. I do know that it isn’t easy. I don’t want to have to “ask” to buy something, I do know that much. For example, if I wanted a pair of shoes or a purse, or something like that, and it is >$100, I don’t want to have to “ask” my dh because he is going to say that is a “ridiculous” purchase and it would start a fight. I’m sort of throwing that example out as devil’s advocate….
3 Meg from FruWiki // Jun 29, 2009 at 8:50 pm
My husband and I consider all our money to be “our money” — however, we have to have individual checking accounts for our “fun” money, in addition to the joint account.
The bills get paid automatically out of the joint account and we use the joint account to buy food, gas, or other household purchases — really, almost everything, even if it’s something specifically for one of us like his razors or my chocolate. We used to go over “the numbers” weekly and verbally budget things a bit, but now we do that every two weeks after each paycheck has cleared as well as the automatic payments. Of course, we still talk about money in the meantime and we check our accounts frequently to make sure things are as we expect them to be.
We have our separate accounts to buy gifts for each other, new clothes, books, etc. and we don’t have to run it by each other before buying stuff using the “fun” money. We both get the same amount automatically deposited every two weeks.
In practice, we still talk about just about every expense. We really don’t have a problem talking about stuff like that. So long as we have the money, my husband doesn’t really mind me buying stuff. He likes me buying new clothes just as much as I do, I think. I’m probably a bit tougher on him than he is on me, but if there’s something he wants I won’t deny him it outright. I’ll ask him things like if he’s shopped around, if he’s sure it’s what he wants, has he tried using X instead, etc. And he seems to appreciate that — and I appreciate it when he does the same with me because it’s good to have someone to help you control your spending. In previous years we encouraged each other’s spending too much, I’m afraid. In fact, lately we’ve both been taking a lot of our fun money back out to put towards debt. We just haven’t been buying a lot of stuff, so it’s better “spent” reducing our debt than just sitting there.
4 LAL // Jun 30, 2009 at 11:51 pm
Fengshui, why would you ask to buy $100 shoes? I don’t ask. I tell and my DH does as well. What is there to fight about?
I want shoes. Do I need them? Obviously or else I wouldn’t be asking.
Now if I had a spending problem it might be different. Or I was unemployed and unable to afford it. Then obviously I shouldn’t be spending that $100.
But I’m working. It’s part of the budget, what’s there to really ask? I need X, Y, Z.
I buy $150 sneakers quite often now and I tell my DH I am buying my shoes. He nods and barely listens.
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