How to- Finances when Married?

[stephie26]

I could really use some input regarding how finances are worked for you when you are married?

And if you've tried different things, what seems to work out the best and most fairly?

 

Also please share income differences and how that works?

 

Most often the bills are all shared and those are paid together, but what is fair is regards to discretionary income, who spends what and how do you keep it fair?

[Raistlin]

1 word: Communication

[shes2smart]

We've kept things fairly separate. His ex-wife is...........a...um.....real piece of work. Without getting into a lot of details, if she thought she had the slightest chance of getting any monetary gain, she'd cause as much trouble as she could. So, if we keep our financial stuff separate, it's pretty clear what's mine and that she has no claim to that at all.

 

Anyway, for most of our marriage I was the main source of income. At times, I was making twice what he was. (He's 11 years younger than me and not as far down the career path as I am, so the income gap is to be expected). However, that changed when I got downsized earlier this year and decided that was also a good time to get out of the industry I'd worked in for 25 years. This year, his income will probably be higher than mine and that's only happened one other year out of the 6-and-a-half years we've been married.

 

Our house is in my name only (see first paragraph about ex-wife above). We split the bills in a way that makes sense to us - I've got the house payment, groceries and home phone and he gets electric, gas, internet, cell phones and his car payment. If we go out, whichever of us has the cash buys.

 

We do not have a shared checking account, shared savings accounts, shared credit cards...nothing. The only financial thing we do together is file taxes.

 

If you want to be fair about the how bills are split, here's what financial author Suze Orman suggests - split things by a % of your income.

 

So if you make, say, $60,000 a year and your spouse makes $40,000 a year (a combined household income of $100,000 just to make the example simple), then you're not going to split your shared expenses 50/50. You'd split them in a way that was proportional to your income -- the person making $60k would pick up 60% of the shared expenses and the person making $40k would pick up the other 40%.

 

Suze Orman suggested 3 checking accounts - "his" "hers" and "ours" -- you'd sit down and figure out what your shared expenses were -- rent or mortgage, groceries, utilities, etc -- and total those up, then divide that total based on the income % as described above and each party would put that amount in the "ours" checking account. So, for the ease of my poor math skills, let's say monthly expenses are $1000 for our hypothetical couple above -- the spouse earning $60k a year is going to put $600 into the shared checking account and the $40k earner is going to put $400 into the shared checking account each month.

 

Income above and beyond that goes into the "his" and "hers" accounts.

 

The "rule" we operate under is this: If the purchase is under $100, we discuss it amongst ourselves *before* making it. Under $100 it's up to the discretion of whichever one of us is looking to spend the cash.