Tuesday, November 30, 2010

Yours, Mine, and Ours

David and Miriel are sitting at the kitchen table, talking finances. David put Miriel on a budget when she started her job, and he's excellent with money. He takes care of ALL of our finances, a fact which makes me inordinately happy. Perhaps it's because I have vivid memories of my finances during law school, when I was so poor that I had to borrow money from my church to pay my rent at the first of the month one August, because my scholarship check wouldn't be available until classes started in mid-August.

We get a lot of questions about how we handle finances, and I remember someone a long while back asking about it in the comments. I think it's a great way for married couples to deal with money, if they can handle the multitude of accounts it involves.

In a nutshell, we have:
  • A joint checking account,
  • A joint savings account,
  • My checking account,
  • My savings account,
  • David's checking account,
  • David's savings account, and
  • A money market account.
When David gets paid (and back when I used to get paid), David transfers portions of the money into the various accounts electronically. All of our household expenses, including the mortgage, utilities, car payments, groceries, gas, and insurance, as well as things like restaurant meals together, church tithing, and everything related to Nate, are paid out of the joint checking account. We also have a larger chunk of money--a few months of living expenses--in the checking account as an emergency fund. (It's in the checking account because it's an interest-bearing account with a large minimum balance.) (Also! I didn't even know it was in this account until David just told me. I thought it was in the money market account.)

Much, much smaller amounts of money go into our separate checking and savings accounts. Out of our separate accounts, we pay for things like our own clothes, makeup, books and magazines, haircuts and color, separate restaurant meals, gifts for each other, and so forth.

The joint savings account is where we stick extra money until we need to use it to cover things above and beyond what's in the joint checking account. It's also where we pay for holiday gifts and other gifts for family. This year, with the move and all of the associated expenses, there's pretty much nothing in the joint savings account.

Not to worry, though! Because the real "savings" account is the money market account, where we save up longer-term, bigger-ticket items. For example, this is what we use to pay for travel and large home purchases (like furniture or appliances). It's also the home for our tax reserve. Because David is a partner now, he is "self-employed" for tax purposes. This means that we have to pay estimated quarterly taxes; they aren't taken out of David's paychecks automatically. We have to set aside the money ourselves--and David told me to tell you that if everyone in America had to set aside money and write a check to the government several times a year, we'd all be Republicans.

The drawback to this system is this: It's pretty complicated. Clearly this isn't a drawback for me, considering that David handles all the finances himself.

But here's the upside: It's easy to know who should pay for what. Joint expenses come out of joint funds, instead of some convoluted division in which the husband pays Bill A and the wife pays Bill B. And yet! We still have our own money to buy each other gifts, which is nice. And David never gets bent out of shape about how much I spend on my hair, and I never get bent out of shape about how much he spends on his clothes--because it's our own separate money. This was a really important thing back when David had time to play golf or go to Vegas or Atlantic City with friends--expensive activities that I might have frowned upon if they were funded with money I'd wanted to use on, say, a new sofa.

I don't think anyone needs to have quite as many accounts as we have to make this idea work. The basic concept is just Yours, Mine, and Ours. Everything for the household and family is paid out of Our money, but You and I still get a little bit of separate money to spend or save as we see fit. I wonder how many money fights could be avoided with a little bit of separate money for each spouse.

So that's it: Yours, Mine, and Ours. I highly recommend it. Of course, I also highly recommend suckering your spouse into doing all of the finances, especially if you're fortunate enough to have one who is as good at is as mine is.


Patti Money said...

Tell David I feel his pain about the "self-employed status". Does he also have to pay the 15% and some change for Social Security? I had to do all that when I was a pastor. Although, I should clarify that James (my husband) handles all our finances, so he always wrote out and mailed the checks to Uncle Sam. And I bet those checks are a lot larger (and therefore more painful) for a law partner than a United Methodist pastor on minimum salary.

L said...

I feel like Miriel is one of your kids and find it oh so adorable.

Erica said...

we're in the
yours, mine, ours
club too!

Sarah in Ottawa said...

I think I was the one who asked about this in comments, so thanks for answering!

I am the one in charge of finances here -- I love it and have an aptitude for numbers. We have one chequing account, as well as an emergency account, and a variety of longer tern savings vehicles (registered and non-registered, as we have a different regulatory regime up here). It works really well for us.

And congratulations on successfully completing NaBloPoMo!

Erica said...

Hi - I didn't want to reply to your email address but I got an email from you last night and your yahoo account looks like it's been hacked.