Married dual income finances

[Pandamonium]

I've been doing some reading this afternoon regarding how dual income familes do finances.

Here's what I've found:

1) Pool both partners' salaries into a joint account. Pay everything out of joint account.
2) Pool both partner's salaries into a joint account, but withdraw a defined allowance from this account to separate accounts for discretionary spending.
3) Leave partners' salaries in individual accounts, pooling 50% of each salary into a joint account.

The problem I've seen with all of these occurs when there is a significant disrepancy between salaries. I'm looking at it like the tax system though- I feel a flat tax is more equitable than a progressive tax. Similarly, the option I would think works best is if both parters contribute identical dollar amounts to the joint account to cover shared expenses. That way both parners can save for their retirement separately, so in the event of a divorce, neither person is left in financial ruins.

What works for you, why, and what else have you heard of other couples doing?

Edit:
Things to consider:
1) opportunity for BOTH spouses to learn/experiment with investing
2) how finances (and retirement funds) will be split in the event of a death or divorce
3) minimization of stress over expenses (eg: the lower income spouse won't feel like s/he must deny the higher income spouse of certain expenses because the lower income spouse cannot afford them)

 

[Zugzwang152]

Not married, but the pool salary + defined allowance is popular amongst the people I know. Retirement funds like 401k or IRAs are withdrawn before donating to the joint account.

 

[Christobevii3]

Pool salaries and pay bills. Then with expenses over say $250 discuss beforehand. Then like each month say invest like 25% of disposable income, 40% towards a bigger upcoming expense (car?), then the rest keep in savings for hookers and blow.

 

[JS80]

Originally posted by: Pandamonium
I've been doing some reading this afternoon regarding how dual income familes do finances.

Here's what I've found:

1) Pool both partners' salaries into a joint account. Pay everything out of joint account.
2) Pool both partner's salaries into a joint account, but withdraw a defined allowance from this account to separate accounts for discretionary spending.
3) Leave partners' salaries in individual accounts, pooling 50% of each salary into a joint account.

The problem I've seen with all of these occurs when there is a significant disrepancy between salaries. I'm looking at it like the tax system though- I feel a flat tax is more equitable than a progressive tax. Similarly, the option I would think works best is if both parters contribute identical dollar amounts to the joint account to cover shared expenses. That way both parners can save for their retirement separately, so in the event of a divorce, neither person is left in financial ruins.

What works for you, why, and what else have you heard of other couples doing?

then stop voting democrat

 

[NEWKILLA]

or you can send her out to work and you sit on the couch
and scratch your nuts,

i can dream cant I?

both salaries in the kitty, i have a pension(union) it comes out b4
direct deposit, the wifey has a 401k and an annuity same deal for those,
just remember when the shiot hits the fan SHE GETS HALF OF EVERYTHING
and thats if your lucky ,

***K***

 

[Sqube]

I like Christobevii3's idea the best.

 

[Eos]

My g/f and I were going to do something similar.

Because she makes about 2 1/2 times more than me, she determined than we split up the rent and bills according to amount made. She would pay the bulk of the bills and we would both have some left over for personal stuff.

But at this point, we just dump all income into one account. My income pays for almost all of rent and utilities. She pays for everything else.

 

[Stunt]

Topic Title: Married dual income finances
Topic Summary: How do you do it?

Well...there's our account/money and her account and money

 

[dxkj]

We both put all our money into one account.

We pay all our bills out of this account.

If either of us wants something, we buy it. We are responsible and budget well... If the item is over $100 we will talk it over first, most of the time.

 

[FoBoT]

you are going to plan for your divorce?
good luck

 

[Shame]

Originally posted by: FoBoT
you are going to plan for your divorce?
good luck

^--- Best advice yet!

 

[DCFife]

Originally posted by: dxkj
We both put all our money into one account.

We pay all our bills out of this account.

If either of us wants something, we buy it. We are responsible and budget well... If the item is over $100 we will talk it over first, most of the time.

Same here. Besides groceries and gas for her car, my wife pretty much leaves purchases to me anyway.

 

[pinoy]

<------married, one joint acct & pays everything out of that acct.

 

[jadinolf]

<----------------Wife never worked. Wish she had.

 

[shadow9d9]

Originally posted by: Pandamonium
I've been doing some reading this afternoon regarding how dual income familes do finances.

Here's what I've found:

1) Pool both partners' salaries into a joint account. Pay everything out of joint account.
2) Pool both partner's salaries into a joint account, but withdraw a defined allowance from this account to separate accounts for discretionary spending.
3) Leave partners' salaries in individual accounts, pooling 50% of each salary into a joint account.

The problem I've seen with all of these occurs when there is a significant disrepancy between salaries. I'm looking at it like the tax system though- I feel a flat tax is more equitable than a progressive tax. Similarly, the option I would think works best is if both parters contribute identical dollar amounts to the joint account to cover shared expenses. That way both parners can save for their retirement separately, so in the event of a divorce, neither person is left in financial ruins.

What works for you, why, and what else have you heard of other couples doing?

We simply keep 2 separate accounts and each pay half of the bills. Cake.

 

[Kenazo]

My wife and I had our seperate accounts from before we were married for the first couple of years, but eventually we just ended up going for the joint account system, seems to work great for us.

 

[shadow9d9]

Originally posted by: jadinolf


<----------------Wife never worked. Wish she had.

You picked her!

 

[Pandamonium]

All of these plans make sense, but in the likely event of a divorce (it is foolish to ignore the possibility because "you have faith"), how are retirement funds handled? Most people I've heard use more than their 401k for retirement planning. So if you pool income into a joint account and then invest from there with a single portfolio, the problems become:
1) Ostensibly one of you will manage the portfolio more than the other; the person who manages less misses out on learning by experience.
2) Back to the the divorce case, if the income distribution is 80k/20k, how is the portfolio split up?

The case that seems to avoid this is to maintain separate accounts and split the bills together. But then the problems are:
1) It makes it seem like you're roommates - not a married couple.
2) Lifestyle related expenses must be discussed at length in the 80k/20k case, because the person making 20k might not want to splurge on things like cable, air conditioning, etc. This discussion can strain the marriage because it quantifies the reality of how much one spouse is supporting the other.

 

[Pandamonium]

Here's the story.

I have always planned to put 50% of my paycheck into some form of a retirement vehicle. I figure that there are people who live on less than what I'll make, and if they can do it, then so can I. Marriage is a few years off, but my significant other seemed to feel that we should both put 50% of our paychecks into a joint account and use that to cover expenses. Depending on how our careers pan out, there very well could be a discrepancy between our incomes. I put forth the notion that we should have a joint account for bill paying purposes, and contribute 50% of expected bills to it, leaving the rest of our earnings for use at our discretion. She feels that this is a selfish way of doing things, but I think it is perfectly sound. Her mother agrees with her. I feel that because finances are a significant source of stress in most relationships, this is a topic that we should clarify before marriage. So for my part, I am trying to see what other arrangements people use in order to hopefully find one that will work for us.

 

[Geekbabe]

Joint savings, individual checking, an agreed upon amount for groceries,sundries.Purchases over $150 discussed before hand.

 

[DCFife]

Originally posted by: Pandamonium
Here's the story.

I have always planned to put 50% of my paycheck into some form of a retirement vehicle. I figure that there are people who live on less than what I'll make, and if they can do it, then so can I. Marriage is a few years off, but my significant other seemed to feel that we should both put 50% of our paychecks into a joint account and use that to cover expenses. Depending on how our careers pan out, there very well could be a discrepancy between our incomes. I put forth the notion that we should have a joint account for bill paying purposes, and contribute 50% of expected bills to it, leaving the rest of our earnings for use at our discretion. She feels that this is a selfish way of doing things, but I think it is perfectly sound. Her mother agrees with her. I feel that because finances are a significant source of stress in most relationships, this is a topic that we should clarify before marriage. So for my part, I am trying to see what other arrangements people use in order to hopefully find one that will work for us.

After reading this I agree with your previous comment that it seems like you're roommates, but I don't think this is a "selfish" way of doing it...it seems to me to be more practical than anything. I don't see anything wrong with making sure you look after Number One so long as it's not detrimental to the relationship and I don't think splitting bills and saving/spending your money is necessarily a bad thing.

On that note, I can't really personally relate. My wife makes a little more than me, we have our own 401(k)'s from our jobs, we make too much to make contributions to our Roth IRA's, and all of our take home pay goes into a single account where it gets distributed to various savings/investments and bills. All of the non-retirement accounts are joint. If I want to throw a few extra grand on our mortgage I just mention it to my wife and she says "cool..do it!" If she wants to help her mother put a down-payment on a car I say "cool...do it!" She can go to the bank and take everything out and run to Vegas just as easily as me...it's all about trust and practicality.

 

[Raincity]

Joint accounts, I pay the bills and handle all the investments because I am a better money manager than her. I leave enough disposal income around to accommodate our lifestyle spending. It seems to work for us because we have never had a fight about money for the last twenty years.

 

[Squisher]

Joint everything. I'm more anal retentive, so I pay the bills.

She makes a little more than me.

 

[spidey07]

Originally posted by: Pandamonium
The problem I've seen with all of these occurs when there is a significant disrepancy between salaries. I'm looking at it like the tax system though- I feel a flat tax is more equitable than a progressive tax. Similarly, the option I would think works best is if both parters contribute identical dollar amounts to the joint account to cover shared expenses. That way both parners can save for their retirement separately, so in the event of a divorce, neither person is left in financial ruins.

I see divorce in your future.

What you don't understand is that any retirement income or future earnings is fair game no matter how you structure it.

She gets half, even if she contributed nothing. Absolve yourself of this fact and you'll be fine.

 

[fitzov]

it's easy: you buy whatever you want, and if she doesn't like it, it's knuckle sandwich time.