Finances and relationships

Here's the system we use, which can work pretty well. Figure out what your routine living expenses are (food, housing, transportation, utility bills, etc.). Then have each person contribute to those expenses in proportion to their income. So if expenses are $1000, and A makes 4 times as much money as B, A would put in $800 and B would put in $200. Then each person keeps what is left of their income to do with whatever they choose.

It's obviously unrealistic to expect someone with a very small income to pay half of everything, but having that person not contribute at all isn't good either. This way, each person is putting in the same fraction of their income and making a reasonable contribution to your shared expenses. If both parties are OK with this and clear on what's expected, then it becomes easier to "let go" of what the other person does with their own extra money.

Money issues are a major source of friction between couples. It seems one person is always the "careful" one who worries about it, and the other person is the "reckless" one who doesn't. Ideally, the careful one can learn to lighten up a bit, and the reckless one can learn to see the long-term advantages of being a bit more cautious. Often, unfortunately, the difference can just polarize people and make each them even less reasonable than before.

The more you can spell out explicitly and agree upon, the better. What makes these situations nasty is when the two people just have very different expectations and become frustrated by the other one's behavior. My advice: communicate when you're not upset about it, agree to some very specific things about how you will handle money as a couple, and then, once you have that agreement, let go of any issues you have with how the other person deals with money outside the conditions of your agreement.

Establish a clear common ground that you can both count on, but then respect that you are still different people with different priorities.

I've never had to deal with this personally, but I watched my parents handle it for years. They are financial counselors for many struggling families, and I think they're a fairly decent model for others.

When they got married, my mother was the breadwinner while my dad was in graduate school. My dad is the intensely practical person who could live on PBJ, carrots and celery for a month without getting bored. My mom likes a bit more creativity and variety, but she's not that much different than my dad. Since he always makes sense, she tends to go with what he wants for the family budget. (If he were managing the kitchen, though, the family wouldn't buy any more food until every bit of the perishable leftovers were eaten, even if they didn't taste any good because he hates wasting money that much.)

When I was two, the situation changed because my dad had gotten his Ph.D. and was working full-time. My mom had become a SAHM when I was born (ask me for the stories if you want to hear how they survived on their savings and my dad's stipend for two years) and hasn't gone back into the work force. I never observed them in the two-income years, but they do decide together how to spend the household money. They decided together to be a one-income family, and they decide together how much to spend on Christmas presents, which bills to pay first if things are tight, how often to go out to eat, which charities to support and how much, etc. Neither are interested in closets full of clothes or expensive toys, and my dad's obsession with bicycles ends up being a money-saver since he rides his bicycle to work every day rather than driving a car.

I don't have much longer to be online tonight so I'll just get to the main points you question:

How do you handle finances with your SO, especially if your incomes are very different? (Mainly in terms of spending money)

My husband makes all the money while I stay at home with our one year old son. We have a budget and know how much extra we have for other personal things during the month. I'm able to spend whatever I want as long as it's within the limit, it's not like he tells me NO. We're married and so it's OUR money, which is also how it is many times in long term relationships

How much does money matter to you? What helps when you're stressing out about it?

Money doesn't matter that much to me. Is it nice having it, yes. Do I care THAT much as long as things are taken care of? No. I tend to not stress out about it, so honestly I can't help with that all that much. Right now we're having some money troubles, but we try not to worry. We just work on being frugal.

If you were ever the provider for your family, did you feel guilty not buying things they ask for? how did you decide what they could/couldn't have? Did you have a hard time justifying getting anything for yourself when you couldn't provide everything for your family?

Of course I would feel guilty, but you can't give everyone every thing they want when money is tight. I would decide by giving them basic needs and budgeting to see what was left. Then we'd come up with a certain amount per family member they could spend how they wanted. I would never buy anything frivelous for myself if I couldn't provide my family with everything - and by everything I mean *NEEDS*. I would do the same thing for myself, I'd have a certain amount budgeted for my personal wants.

Am I selfish for feeling like the money I brought to the relationship is mine, not ours? I'm hoping that will get a little better now that he's contributing, but how do you determine what is yours, his or ours?

As someone who has been in a relationship where I was giving my contribution, I would have been upset if my partner didn't see me as an equal and that it was OUR money. If your relationship is to that point where marriage is on the horizon, I'd say to put that aside and realize that you're together and he's doing what he can to help out. ESPECIALLY if you're already living together, which I'm not sure if you are or aren't. Because living together is that one step closer to marriage, and I can tell you that in a marriage this "my money" thing does NOT fly in most cases.

Hope that helps!

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Originally Posted by lefty2026

So that's the background, my questions are...

How do you handle finances with your SO, especially if your incomes are very different? (Mainly in terms of spending money)

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We are separated currently so take this with some coarse ground sea salt...

When we started living together I paid 'my' bills and he paid 'his'. Which I think is fair. However, since he didn't drive I took him to and from work, to visit his family (who won't allow me in their homes so I had to go back home and come pick him up again), friends houses, etc. He didn't chip in for gas since it was 'my' car, nor did he help with the car payment since it was 'my' car unless I asked. Repeatedly.

He made more than I did, had fewer bills and liked to spend whatever was 'leftover'. So after a couple of months of struggling to stretch my gas to get myself to work we sat down and made some decisions. I would no longer buy meat with 'our' groceries because I couldn't bring myself to support that, he wouldn't give me money for cigarettes because he didn't want to support that slow suicide. Otherwise we split everything else 50'50...ish.

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Originally Posted by lefty2026

How much does money matter to you? What helps when you're stressing out about it?

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Money? Not important. The security that money can bring if managed correctly? Extremely important. We were both raised by single, financially stressed, public assistance mothers. He's choosing to go down the money path saying 'it's all going to work out, stop worrying about it!'. I think that if you plan things will be easier. I would rather live on Raman for a month to get finances straight, he'd rather buy a new video game and hope the money for rent 'appears'.

Sometimes all you can do is step back for an hour and take a walk. Make a pot of coffee and check your e-mail. Call a friend and complain. Then, when you're more emotionally stable, go back to it. You aren't going to get anything accomplished or figured out if you're stressing out.

Quote:

Originally Posted by lefty2026

If you were ever the provider for your family, did you feel guilty not buying things they ask for? how did you decide what they could/couldn't have? Did you have a hard time justifying getting anything for yourself when you couldn't provide everything for your family?

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You just have to suck it up. So do they. Sounds mean but it's true. (I'm speaking of SO's, not children, a parent is going to have to answer that for you.) I'm not usually the type of person to say 'I told you so!' or anything but usually I would say something to the effect of; 'We can budget for that next month but we are here to buy groceries/get one pair of pants/pick up a wrench'. Simply telling someone (assuming that person is a SO and has some say in finances and a job) no doesn't help. Just tell them to remind you to put it in the next budget.

I'm the type of person that will go a year or more before getting a new pair of shoes. My last pair lasted 16 months of everyday wear before I replaced them.

Quote:

Originally Posted by lefty2026

Am I selfish for feeling like the money I brought to the relationship is mine, not ours? I'm hoping that will get a little better now that he's contributing, but how do you determine what is yours, his or ours?

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I thought it should all be 'ours', he thought it should be a 'his, hers, ours' thing. Looking back, he was right. How long have you been in your relationship? If you aren't in a married/committed relationship then you shouldn't have to contribute as much as you say you are. If you want t,o that's different.

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Originally Posted by lefty2026

I just really need an outsider view, I talk to him about it all the time, but we see the situation very differently, so it's tough to get perspective. Thanks!

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Good luck! Remember to communicate, not just talk!

Rebbecca

my husband and i follow the advice from The Two Income Trap which recommends that your fixed costs be covered by a single income and that any secondary income used in investments, for fun money (a movie, vacation, etc), for pocket money.

i think this works best if you're in a committed relationship--otherwise, other methods for splitting expenses might be better. but if you're a 'team' and you plan to be a team in the long term, living off of a single income is a good way to develop financial security.

ok, so here's how we do it.

first, fixed expenses are covered by DH: housing, transportation, important bills (electricity, etc), food, clothing, and $200-700 per month into savings (his 401k as well, but that comes before the 'take home' anyway).

second, individual expeneses are covered by the individual: DH pays for his school loans (he's now loan free as of june!), I pay for mine; i pay for anything related to my business such as buying yoga clothes, continuing education, and whatever else you can think of. to this, i maintain three accounts--checking, savings, and second savings for bank transfers, etc).

third, pocket money: my husband's pocket money comes out of his income, my pocket money comes out of my income.

fourth, all extra money: any money that is extra outside of what i need to maintain my business (and those three accounts), goes into our general 'pile o' money.' this 'pile' is divided in various ways. we always desire to save more--it's our favorite thing--so we strive to put as much in savings as possible. beyond this, either one of us might have something that we want to do for fun, continuing education, etc, that's not reallyu nder the auspices of my business or his work. so, we might put that money into a separate account (such as my business account) or we might put it into savings but "ear mark" it for various things, and then sometimes we'll keep a bit in our checking (his, which is also "ours," and mine, which is mine) so that we have more "pocket money."

this works very well for us, because it creates a lot of financial stability. we started this process 3 years ago and we had about $200 in savings a piece and we were hardly making ends meet. then, we figured out how to live on one income--it forced us to reevaluate a lot of things, and DH went and asked for a promotion and raise too! as we did this, my income became much more fun, and we started putting more and more away.

right now, while we're not worth much, we're currently worth about $250,000 and going from pretty much 0 to 250,000 in three years isn't bad. btw, that's total equity such as our house, car (at it's current value), savings, retirement funds, investments, bank accounts, and life insurance.

we're doing very well and very happy with our lives. every one of our dollars goes a long way, and we're in better financial condition than most of our friends who earn two or three times what we do (combined) and yet still have a ton of debt because they don't know how to save, how to budget, etc.

and, we live very well on our budget. it helps us define what we want--we never buy anything extraneous. every purchase is carefully and joyfully considered. it's really great.

as to the pressure of being a sole breadwinner, the idea of being the one that "everyone is relying on!" can be daunting. at first, my husband was terrified about that prospect. it scared him that it all came down to him, that i was relying on him, and that any children that we have would rely on him. it was tough!

but, as he began to see the real benefits of it financially, as the whole process started to take shape, he became very confident in our ability to live on one income (even though i earn money too), and he became really proud of the fact that we live on a single income and that we are able to save so much while still doing totally awesome stuff like going to NZ or Europe for 3 weeks or more at a time--things that most of our friend's can't do because of the crazy debt and financial trouble they're in.

now, he wouldn't have it any other way, and each day, we find new ways to save money, new ways to make our money work better for us. it's really fun and dynamic.

and, as a back up, my DH knows that should anything happen to him, we know exactly how much money I need to earn to cover our costs. i can move into work that will allow me to earn that much (either through yoga or another field), and then, as he is able, he can supplement that income.

also, we've set up our life insurance and disability insurance in such a way that should either one happen, we can get the whole lump sum, invest it, and live off of the dividends of the investment alone for a number of years while we try to reorganize our lives. it's a great way to create a buffer "just in case." and it can be affordable.

If you were ever the provider for your family, did you feel guilty not buying things they ask for? how did you decide what they could/couldn't have? Did you have a hard time justifying getting anything for yourself when you couldn't provide everything for your family?

i wanted to answer this separately because i think it's really interesting and important.

my husband and i see ourselves as a team--in every way and that includes financially. we are working together for financial success, which means we need to strategize together, evaluate together, and decide together. once the strategy is determined, once the decision is made, we both have to do our parts to make it work.

my husband never tells me what i can or cannot have using our money. nor do i tell him what he can or cannot have. but we do discuss most purchases except what we choose to buy out of our allotted pocket money.

we talk about what we want and why we want it. we see whether it's a one-time deal or something that is perpetual. then, we look at our budget and we see if we can exchange it (that is, take something out that's about the same cost and then bring this in) or if it's something that we'll need to save up for, or if it's something that we want to become a lifestyle change, a financial change, and then we brainstorm how to either adjust the budget (via exchange) or increase our spending power (hopefully without loosing savings, which is always our goal).

everything is discussed in detail until we agree on how to spend that money. for example, i want to do a specific yoga training. i have been unable to do it for two years now, because of our budget.

it's not that anyone said "no" but that between the two of us and our discussions, we realized that, right now, the return on investment isn't that great. we have other expenses that we consider more important that would be expensive, one-time deals. therefore, i put more money into savings so that we can draw from that savings to pay for these expensive, one-time deals.

when it comes to things that are "fixed" such as our food costs, it is really important to both of us that we feel that our food needs are met. to me, food is a quality of life issue. it's the last place one should skimp, if they're in the business of skimping. oddly, in our culture, it's usually the first place that people skimp.

but anyway, food is relaly important to us. we like local, organic "slow" food. we pay premium prices for this food. we feel that those prices are worth it and that we can live without long distance service, high speed internet, and a variety of other bills that other people consider more important than food.

when we want to make a change in our consumption--such as when we went from "regular" food to organics--we research what the difference in cost will be, we discuss whether it should be something worth "cutting into monthly savings put by" or if we can 'exchange' something else for the difference between the two.

in our specific case, we transitioned. we prioritized what we wanted organic--and then we bought the rest non organic, keeping the food bill basicly the same. then, when my husband got a raise (annual), we used the money from the raise to move to all organic. thankfully, he got enough to cover both that difference and still put a good piece into savings--but it's the way we prioritized that money.

So, for us, it's really important to think and work like a team.

Quote:

Originally Posted by Seusomon

Here's the system we use, which can work pretty well. Figure out what your routine living expenses are (food, housing, transportation, utility bills, etc.). Then have each person contribute to those expenses in proportion to their income. So if expenses are $1000, and A makes 4 times as much money as B, A would put in $800 and B would put in $200. Then each person keeps what is left of their income to do with whatever they choose.

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This is what my partner and I do, his salary is vastly bigger than mine so my contribution is much smaller than his. I transfer my share from my bank account to his every month and the bills come from his account. He also pays for food shopping. I pay for all our guinea pig bills (which are bigger than you'd think!).

After that the rest of my money is mostly for spending whereas he tends to save more but splurge on a new lens for his camera every now and then. We discuss most of our spending though, not for permission or anything like that, it's just part of our open communication I guess.

I think money can be a major issue if you let it be, I let it really stress me out for quite a long time with me having such a small contribution. What I found most helpful was to put myself in my partners shoes and think about how I'd feel. There's not much point in both people feeling guilty after all!

I guess it's just one of those issues that really just needs good communication

How do you handle finances with your SO, especially if your incomes are very different? (Mainly in terms of spending money)

My BF works full time and I'm getting my PhD and live on a research assistant's stipend. He makes 2.5X more than me each month. I pay my half of the rent, and buy all the groceries from the co-op. I also do more chores around the house, cook all the dinner, do all the laundry, clean up more, etc... (He still has to do the dishes and take out the trash and help when I need it, but I do a lot more). He pays his half of the rent, groceries from the conventional store, internet/cable (I didn't even want the cable ), and electric. We split the cost of vacations and things. He buys a lot more "stuff" than I do, toys and whatever, but it's his money. *shrugs*

How much does money matter to you? What helps when you're stressing out about it?

I stress out about it because I just break even every month and I want to be saving for a house. I just remind myself that in another year I'll be working again and I'll be making heaps more money when I'm done with my PhD.

If you were ever the provider for your family, did you feel guilty not buying things they ask for? how did you decide what they could/couldn't have? Did you have a hard time justifying getting anything for yourself when you couldn't provide everything for your family?

As NOT the main provider, I feel guilty asking for things. I keep my demands to a minimum. My BF tells me I can use money in our joint account for household things, but I don't because I feel like I need permission and that that's his money.

Thanks for all the responses, definitely some good things to think about it. To clarify, yes we live together, with the intention to be married in the future.

He just got another job offer, so now we have a lot of thinking to do. He's definitely got a big decision to make. If you've read my other post, the whole getting drugged thing kinda has distracted me, but this is still something to work on.

I think it will be some sort of compromise, me learning to see the money as ours and learning to place a little more value on the things he does (most of the chores for example) I think that living off one income is a pretty good idea to try. Like all bills and expenses come from my income and leftovers will go to savings. His income can be divided in half, and that will be our money. That should help me out. I like the idea of us both having the same amount of personal money. Otherwise I will just end up paying for things. I will ask him what he thinks. If it doesn't work for us, we'll try again.

Right now he just wants to deposit his paychecks into my bank account, but like I said I really want us to have a little more freedom, so we'll work on it. I think deciding everything together would be wonderful except that we are very different people. Suesomon's point about making a very specific agreement and then not worrying as long as we are sticking to our parts is a good one.

When my boyfriend and I moved in together, we decided to get a third, mutual checking account for bills. Each month, we just transfer our shares of rent/utilities/internet into the account and write checks from there. Then we each pay our individual bills from our separate accounts. It's worked out very well so far. I like the mix of sharing and independence that it allows us to have. It's also nice to still be able to treat each other to things with our "own" money. When one of us is low on money and the other has more, the one with more will generally pay for food and extras for a while.

That said, I think it helps that we are pretty evenly matched on income. When we got together, he made a bit more, now I make a bit more. I think it also helps that we are both pretty mellow and laid-back about things evening in the end.

Here's something somewhat on the flip side. . . I was in another LTR several years ago. This one was right after college. We shared a joint checking account (too early on, I now know) and split all our bills. At one point, I got a good job, and she got laid off. So we were living off of my income. . . Which probably would have been okay for a while, but she had a large college debt, so that combined with our other bills ate up ALL the money each month. And yes, at the time I was rather resentful about it. But it was me who continued to do it and me who couldn't seem to communicate my resentment. I look back on it now and see that the quality of the relationship was very poor, and I think we were both immature at the time.

I've since learned that that key to any issue, especially one as big as finances, is constant communication. I'm not implying that you don't have good communication with your SO (how would I know?), but that's just what's worked for me.

Ummmmm..sorry to say that your boyfriend reminds me a lot of my ten year old. I'm concerned tha you've whittled away at your savings to the tune of missing out on your Calfiornia trip. One solution I've heard about and wish i'd tried with my own X (he was an overspender), is to have one shared account for household expensesss that each of you contribute to...and seperate accounts for your personal savings. Particularly as a woman this is important as many of us STILL tend to leave ourselves very vulnerable to spousal credit problems (I know I did). When I divorced I had to start from the beginning with credit because of this. I'm speaking from experience though. You need to not let anything be assumed here, and stop this before it gets to be a habit. Sit down together and talk about how you want to work out finances and what the money you've earned means to you...ie how you feel about saving and being frugal.

As for the checkout line at the grocery, you just have to do what I do when my ten year old stands asking me for candy or soda....NO. Sorry, but No.

B