Solve Marriage Spending Differences by Having a Personal Account

Here's a piece from Kiplinger's that gives "Secrets to Marital and Money Bliss." (Yeah, right.) The article does have some good tips on how spouses can handle spending differences including the following:

Another solution [for managing spending conflict in marriage] is to allow each of you a slush fund to spend as you wish, with no questions or recriminations. Or agree that on purchases above a certain amount -- say, $500 or more -- you'll consult with each other before buying.

I've talked before about how my wife and I discuss major purchases before we make them, but I don't think I've discussed the other idea, though we do do it. (whoops, did I say do-do?) ;-)

Sorry, the 10-year-old in me took over for a bit.

Anyway, my wife and I have what we call "personal accounts." These are budgeted-for spending categories ($600 per year) that each of us can spend on anything we like without asking the other person and without getting the snide comments that might happen otherwise. I spend mine on bike and rose stuff while my wife buys books (I get all the books I can read free thanks to this blog and my library), dinners with friends, and gifts for various acquaintances. I always spend my entire amount every year -- my wife hardly ever spends all of hers, and she ends up giving it away at year end.

This system has worked extremely well over the 10 years or so we've used it. It keeps her from commenting negatively on the stupid things I buy (in her mind they're stupid) and keeps me from the same. I'm not sure how many arguments our personal accounts have helped us avoid, but I know it's a ton. I heartily recommend this sort of set up for those of you looking how to establish some spending flexibility for each partner in your marriage.

Comments

[Michael Cockrum]

Me and my girlfriend are getting married in a tad over a year and that is what we were talking about doing. Glad to see other people think the same way!

[Chris]

I also want to set up personal spending funds for my wife and I, but my question to you is this: How do you fund your accounts? Do you just have a set amount per year starting in January and refill it at the end of the year, and what happens to the money left over? Do you budget it every month and set aside that monthly amount into each account and let it accumulate or fill it right away from another savings source?

[FMF]

Chris --

We budget for them just like any other account. Just like we set aside money each month to buy food, we allocate part of our paycheck to our personal funds. If the money isn't spent that month, it rolls over to the next month and on and on.

[Chris]

Is that $600 each or total?

[FMF]

Each.

In earlier years, when we were younger and had less discretionary income, it was $600 total.

[Teri]

We do the same.

When times are good we never do the allowance thing - just no point - we see pretty eye to eye. Big purchases always discussed. But we pool our money and have little his/hers - very "ours" approach.

But in tighter times we do the allowance thing to avoid arguments. Today we both get $600/year. Sometimes we allocate some more windfalls (equally to be fair) to our allowances if we are really itching for something bigger, and we agree. & for cash gifts we generally get to keep our own small gifts. Bigger gifts are shared though - may go to IRA or savings or something. Just trying to keep it fair.

My hubby expects a windfall for some work he did and he can take what he needs to reinvest in his fledgling business. I took my Christmas bonus to reinvest in some work clothes - which we could have argued about - but taking from my bonus seemed fair. WE try to be flexible - I guess that is key too. But the allowance definitely eliminates the squabbles over if I really need a new pair of shoes or if the hubby really needs another DVD!!! Because that is what we are most likely to disagree on.

[Teri]

Oh yeah - for us it is just $50/month each to the allowance (budgeted). My hubby usually lets his grow for bigger purchases so I just keep a running balance of how much in our cash is for saved allowances.

[pf101]

I'm a big fan of the yours, mine and ours system of financial management. In my world it's been the best way to manage things so that we could meet our goals and still have some independence. We each got an 'allowance' to spend on whatever we wanted without question. We also had a $250 limit on purchases for the home, above which the other person had to be consulted. It worked well.

I recommend that every couple read the book Smart Couples Finish Rich by David Bach. In fact, it's my standard gift for bridal showers (boring aren't I!). I think it's a great book to get couples really talking about money because too many people hide things.

Thanks for a great post!
pf101

[Jeremy]

This topic (seperate accounts) comes up A LOT in my household. When my wife and I got married, I was the one that had the better credit, little debt, etc. She had no idea what FICO meant. Now that both of our finances are in good working order, she wants to have a separate slush fund account to do with what she will. My problem is this though: Having one account forces us to communicate (positively or negatively) about our spending plan. Our philosophies aren't aligned yet on money yet. She seems to look a couple of months ahead and I look a couple of decades ahead. Any help anyone can give would be great. I personally would love having a slush fund. I am a tech guy and love buying gadgets and gizmos when I see them on sale. :)

[Ben]

We also do the His, Hers, Ours method of finances. My Wife (26) and I (26) have been married since September '07 and this has worked out very well for us.

The His and Hers accounts are funded by a monthly "personal spending allowance" of $750 from which we can spend however we want without permission. Eating out when we're not together (Starbucks or not taking lunch to work), gas, haircuts, clothes, and other things we "want" come from these funds (deposited to two personal but visible accounts).

This allows me to save up and purchase things that are important to me... computer/tech gadgets, clothes, and eating out lunch when desired without causing grief. Likewise, she can stop by Starbucks, buy clothes/shoes, save up for an occasional purse, and get her hair done for whatever amount she wants to spend without me frowning upon it. We can spend it all every month, or save up for a larger purchase. Gifts for each other also come out of this money.

A more structured food budget (including eating out together & groceries), mortgage, student loans, savings plan, utilities, and all those types of things come out of the remaining monthly income (fully funded 401(k)s pre-tax for retirement). We don't cary credit card debt or car payments anymore. Purchases for the home beyond the $50-$100 range are typically consulted on (or we're together already and agree on the purchase).

I suppose that this method may have a few changes down the road when kids come into the picture and we purchase cars together (right now both our cars are pre-marriage purchases). I can also see a slight decrease in spending allowance and moving gas to the joint account later when kids come along, right now I drive my car and she drives hers for the most part.

[addy]

My husband and bring in very different amounts, sometimes it varies from month to month.
For expample, He has a steady job, then works extra side jobs.
I get Child support(which Ive been putting into all the bils account), and I bring in a small amount each month.
How do you determine how much the slush fund for each is? My husband seems frustrated that he brings in more and most of it goes to bills.
I have a handicapped daughter and feel that I shouldnt work full time. I even take some money out of my IRA to help with the bills, yet he feels I am not contributing as much as he is. It seems to cause resentment.
It is such a touchy subject for us.
I also have lawyer bills to for an ex, and my husband doesnt fel it should come out of his check at all.
We view money so differently.
Everything else is great between us, except that.

Any Ideas?

[robyn]

This seems to be a his and hers relationship. You are married he knew you had an ex and knew you have a child with special needs. If he feels that none of that should be paid for by him then you do not have a partnership. Why are you paying bills with child support. Tell him that is for the care of your child. See if the shoe is on the other foot how he feels. Be armed with information yearly amount of child support etc..

Though some may not think so, learning to patch up a relationship and keep it together is a skill that can be learned. I try to help others discover the keys.

[Tired of the complaining]

So what happens if you have a separate 'me' slush fund for each person, but one person consistently exceeds that amount, and dives into credit cards for incidental purchases? Then complains that they don't have enough money for 'fun' stuff, but doesn't seem to note that they are paying $50+ per month in interest on a $4k credit card loan, that was spent mostly at Starbucks? We both get $450/month, from that comes gas, eating out alone, coffee, reading materials, incidentals. I am losing respect.