Love Marriage and Money (Part II)

Well, you went ahead and you did it anyway. You are married. Now what? I am going to suggest something that is so far out of kilter with the zeitgeist, I expect some young readers will dismiss it out of hand. When you said, “I do,” two became one. There is no longer my money and your money. There is only our money. There are no longer your debts and my debts. There are only our debts. Merge your financial house as quickly and completely as possible. For the sake of this discussion, I expect two paychecks would be the norm for a typical young couple. The rules, however, would be no different if there was only one pay check.

When the paychecks arrive, they go into a joint account. At this point a negotiated budget would be very helpful in eliminating potential arguments. Here an Excel spreadsheet listing budgeted amounts for rent, groceries, utilities, cell phones, gasoline, car payments, and student loans would be helpful. It is not necessary to have a computer or know how to use Excel to budget your income. A piece of paper and a pencil works just fine. When all the expenses for the month are covered, the balance is available for saving for long term goals, such as a down payment on a house or discretionary expenses, such as restaurants and concert tickets. Approach this process with the idea in mind that money can only be spent once and avoid debt like the plague.

If you or your spouse spends more than the cost of a CD or a paperback book on something, decide on that expense together, as a couple. There are exceptions. My wife does not want to know about the power bill, tires on her car, or specialized tools she does not understand. Set your own rules and limits for your own marriage and stick to them. If you are not in debt, if you have a rainy day fund, and you are systematically saving for large long term goals, you can, as a couple, decide to create a blue checkbook and a pink checkbook for individual discretionary purchases. Again, if you wish to complicate your life with two additional bank accounts, make that decision together, as a couple.

It is likely husband and wife will bring radically different ideas of financial responsibility to a marriage. My aunt once told me that members of our family squeeze a nickel so hard that the buffalo bellows. That is an understatement. My wife, within reason, was given everything she ever wanted. Needless to say, this led to some heated exchanges during the early years of our marriage. Somehow, I intuitively understood that one joint account and agreement on most purchases would be the best path for our young marriage. A couple of times during those early years the ride got pretty bumpy, but we made it. In practice, this method worked out as follows.

I say, “Gee, I really need a combat handgun. It only costs $600.”

My wife would respond, “Yes dear. I really think you need a new combat handgun and I need a new pair of shoes and a little marble topped table to display the small shiny items I bought last year at the crafts fair.”

Then I would think, “Do I really need to spend $1,200 on a handgun?” I still don’t have a combat handgun, but she does have a little marble topped table in her perfect room.

Generally, using this method works pretty well. Together we saved for things we both really wanted like college diplomas and nice stereo equipment. We both love music. It is a big part of our lives. Really, I can only think of one instance when our consensus consistently broke down. My extended family decided that spending money on Christmas presents beyond the nuclear family was an idiotic waste of money and ended the practice. In my wife’s family Christmas is a big deal. People who barely know each other are expected to exchange gifts. Every Christmas for years this led to at least one major blow up. Finally, we learned how far we could push each other without violating the cease fire agreement. Both of us were unhappy with the outcome, but we at least learned how to avoid the big argument, at least most of the time.

We continued to use the one checkbook, one bank account, one credit card method for more than the first 25 years of our marriage. Then my wife received an inheritance from her great aunt. She wanted that money in a separate pink check book. After some negotiations concerning what expenditures would no longer come out of the joint checking account, such as certain presents, I agreed. Now we have two accounts, our joint account and one containing the remains of two inheritances that my wife uses for discretionary purchases. I do not have a similar checkbook. That is OK.

I am offering a principle to avoid a great number of arguments and a great deal of pain. How you work out the details in your marriage is your business. Financial issues are sometimes listed as the number one cause of divorce. Hiding debt and expenses from one another is a sure fire recipe for disaster. If you want more statistics and horror stories here are two good recent articles.

http://finance.yahoo.com/family-home/article/110075/keeping-finances-separate-can-be-costly

http://finance.yahoo.com/family-home/article/102540/Hiding_Debts_From_Your_Spouse_Can_Be_Recipe_for_Divorce