There was a time back in 2010 when my wife and I fought about money constantly.
We had a full joint account and, like jealous lovers on Facebook, we found ourselves scrutinizing each other’s every move. We questioned purchases, we argued over budgets, I checked our account from work and sent terrible, passive aggressive emails (‘How was the trip to the mall? Did we need more groceries?’).
Something had to change. Over our six-year relationship, we’ve tried many ways of managing our money together, and thrown many methods away. In the end, we settled on something I call the Limited Joint Account, and it has resulted in a drastic reduction in money fights.
Here’s how it works:
Open a Joint Account (but don’t close your personal ones). To make this work, two people need a joint account. Find a bank that has entered the digital age with vigor. In my opinion, managing money as a couple requires an easy to understand website that allows for scheduled transfers, online bill paying, and the ability to ‘label’ transfers to be able to make sense of all the money flying around. But here’s the important part: don’t close your personal checking accounts. First let your paychecks land in your account, and then transfer some to the joint account. That’s called a little monetary ‘personal space.’
Make a Spreadsheet (or steal mine). Spend a few hours together brainstorming all of your joint expenses – things like cable, mortgage, childcare and electricity – and tally them up in a spreadsheet. Decide at this moment what you consider your joint expenses to be. Will you tackle personal debt as a team, or keep it split? What about investments? The joint account will pay for everything on this list, so be complete. Tally up how much all of these expenses cost per month, and walk backward from that to your contributions.
You’re not done yet, though, because unless you’re the rare couple that earns two equal salaries, you’ve got to tilt the scales to be fair to the lower-earning spouse. My wife and I use a simple pay ratio; if, for example, I make 70% of the total income in our household, then I pay 70% of our joint expenses. (To see the spreadsheet we use, follow the link at the end of the article.)
Hold Money Meetings (but not when you’re hungry). No system, no matter how perfect, eliminates the need to talk about money. Those conversations are going to happen. So you need to decide whether you’d rather they take place in a structured, safe space, or in an ad hoc manner, venting in reaction to stress and sending the occasional passive-aggressive email? Choose the former (and eliminate the latter) by carving out a time each month to look over the joint account, check the budget and make tweaks. It’s all about clearing the air.
Allow for constructive criticism at these meetings, but either of you should be able to adjourn the discussion if you feel overwhelmed. Most importantly, don’t start a money meeting while hungry. (I’m not kidding.) I’m a full-stomach decision maker. Applications like Mint give great insight into spending habits, and others handle your joint investments. These apps require some regular maintenance, which are like tidying the kitchen: quick and easy if you do it regularly, painful if you put it off.
I won’t claim that this method works for everyone. But the basics can help most couples: come up with a system, commit to dialogue and openness and carve out specific times to talk about money. And don’t put it off: studies show your relationship depends on it.
To see a copy of my money spreadsheet, click here. It’s read-only – to use it, click File->Download As and select your file type.