Healthy Way to Combine Finances When Married

Joint and Individual Accounts Keeps Couple Finances Fair and Fun

The following is a guest post by Shannon Pray.

I’ve been married for almost a year now. Prior to being married, we were engaged and kept our finances separate. We decided that if we were going to be married and sharing a home and many expenses for the rest of our lives, we needed to come up with a system for combining our finances. Having talked to other friends in similar situations, I’ve found that there are a number of different ways people have come up with to make this work.

Unique Ways Couples Manage Finances

  1. For one couple I know he owns the house they live in and she pays a set monthly rent and utilities, etc. This system may or may not change when they get married this fall.
  2. For another couple who has been dating for a long time, they own the home together and keep track of spending and work it out at the end of each month. This couple alternates who gets to pay for things when they go out with friends or on dates.

For a long time we were pretty similar to the second couple. We alternated who paid for things when we went out and we both wrote separate checks for rent and utilities. This worked while we were dating and when we were engaged, but as we were getting ready to get married and really start a life together, we decided we needed a new system. After discussing some different options (total combination, partial combination, zero combination) we came up with our plan:

Joint Income, Joint Account PLUS Individual Accounts

  1. We decided to do some math on how much money we spend on rent, utilities, cable, food, eating out and entertainment in a typical month.
  2. We took that total and divided by two. That’s how much money we each put into our joint checking account each month from our paychecks.
  3. I get paid monthly, so I put the whole amount in on the 2nd of the month, he gets paid bi-monthly, so twice a month he transfers half the total.
  4. We kept our individual accounts for savings, gifts, and our own decisions for what to do with it.

The main problem with combining our finances entirely was that we have different spending patterns. I love to buy shoes and clothes, he’s much better at resisting and only buying things when he needs, though every once in a while he “needs” a new golf club. I like to have dinner or lunch out with my girlfriends; he’s less likely to meet the guys for a similar event. He’s more likely to play round after round of golf in the summer, I am generally uninterested. While it’s possible that our various spending patterns would even out, I didn’t want to feel like I couldn’t buy things I wanted because in essence he was paying for them. Likewise, I didn’t want him to feel guilty about playing golf or grabbing a game with the boys since it was my money too. And, a biggie, I didn’t want to be able to look at our account online and see where he’d gotten me presents from, or vice versa.

In the end, we opened a joint-checking account with Charles Schwab because I’d heard great things and because they do high-yield checking, which was somewhat exciting to us. Interest on a checking account?! There have been some pros and cons to using Schwab checking, but overall we like it. In any case, we each have a check card, so we can use it whenever we need for whatever we need. I’ve come to realize that money is something we need to be able to talk about, so we’re working on that front. We discussed what we thought were appropriate things to use the check card for and we’re both pretty good about sticking to that. I do use it if I’m picking up groceries; I don’t use it if I’m buying lunch out with my girlfriends. Sometimes, by the end of the month we’ve overspent and then we each use our personal checking accounts to make up the difference on rent or cable or whatever it is. We’re still working out some kinks and reigning in our spending, but overall this system works for us. He always gets to pull out his joint-checking card and pay when we go on dates, letting him maintain a feeling of being a provider (he does after all provide half of the money in that account). I get to buy outlandish shoes out of my personal account and not feel guilty about spending his hard earned money on them. Mine, yes. His, no. When we’re buying things for our apartment we generally use the joint account, and when I take a weekend trip with my girlfriends I use my personal savings.

Communicate Openly About Money

One thing we’ve learned in this process is to talk pretty openly about our finances. We discuss large ticket purchases that might be coming up (house, furniture, international trip) and how we plan to pay for them and what sort of savings strategy we need. We hash out how to best attack out debt rather than keeping it as some hidden shame. Our system is not perfect, and I know it is far from the only one out there, but it works for us. We have our combined-life financial plan, but we also still maintain some freedom to make independent purchases without answering to one another about them. And, he never knows when I buy him presents because they don’t show up on our joint statement!

Review of YNAB 3.0 You Need a Budget Software for PC or Mac

Best Envelope Budgeting Software: You Need a Budget YNAB 3.0 for PC or Mac

YNAB Electronic Envelope Budgeting Just when I thought I had it all figured out by using online tools like Mint, I repeatedly saw mention of one of the top rated budgeting software for download on your PC or Mac, YNAB 3.0 (You Need a Budget). YNAB is a budgeting software that incorporates the envelop method of budgeting. This may just be the next step for me in advancing my money management and control of our finances. The tools that I am currently using are easy to import my financial information and great for big picture trending, but we still haven’t really done well at isolating how to break some of our patterns and stick to our budgeting goals.

One of the goals of this tool is to help you get off of living only paycheck to paycheck. This is accomplished through the “YNAB Buffer” or by organizing your money in a way that you are able to save enough to off set one month of bills.

Your YNAB Buffer is the equivalent of one month’s income which, once saved, will allow you to use paychecks received during the current month for the following month, removing you from the “Paycheck to Paycheck” cycle.

This tool is not for the faint of heart. It is for people that are truly committed to managing the budget and investing the time and energy necessary to do so. When your are ready to get serious, give this tool a try.

Rating: ★★★★☆

Type of  Tool: Downloaded Budgeting Software for PC or Mac, imports .OFX, .QFX or .CSV files (Download from your online banking)

Price: $59.95

Compatiblity:
Windows 7 / Vista / Vista 64 / XP / 2000
Mac OSX
Linux

Pros:

  • Simple, user friendly interface includes “Accounts”, “Budgets” and “Reports”
  • Intuitive categorization
  • Flags for follow up
  • Excellent reports for trending with ultimate control of what you are looking at and exportable to Excel or to Print
  • Helpful how tos section and blog for getting started
  • Helps set up and manage your funds for one time expenses
  • Helps save for larger 1 time expenses
  • It can help you track EVERYTHING you spend – even cash which I hate because its usually disappears without a trace.
  • Very helpful for people with variable income

Cons:

  • Getting started can take a long time to set up. Unlike some other tools (Mint.com) that auto categorize the majority of your expenses, you need to manually categorize all of your expenses, at least at first.
  • Cannot auto-import your information, you must download it and import it into the tool (This could also be seen as a PRO for some that are weary of the online only methods for security reasons)
  • Not as full featured as Quicken or MS Money for investment and business tracking

Screenshots:

Reports Trend for YNAB


Practical Gifting for Friends & Family

Not long ago, I admit that I wanted lots of “things” for birthday and holiday gifts. It is really nice to get something that you wouldn’t ordinarily buy yourself for the holidays such as lotions, electronics, books, etc.

practical giftingLately I’m a big fan of practical gifts. When you are on a tight budget, things that may once have seemed normal to spend money on such as socks, nice shampoo, getting your hair done, going to the car wash, etc, are all pushed out and minimized. What once seemed like a norm to purchase has become a luxury.

For my birthday this year, I asked my parents for a gift card to a hair salon. I just got back today and am very pleased with my do. I couldn’t think of a better gift, as I really can’t make myself justify spending the money myself, but I really, really want to get my hair done every 4 or so months.

I have had a difficult time taking care of my ‘wants’ vs. ‘needs’ list since I have had a child and we are only on my income. However, it is so great to have those things that I have had to let go be given to me on occasion.

So What’s a Practical Gift?

If you are still searching for a meaningful gift for the holidays for your family or loved ones, I suggest something creative-ly practical such as:

  • A full service car wash
  • Contribution to someone’s specfic savings funds
  • A gift card for a restaurant + offer to baby sit
  • Gas card gift certificate or auto maintenance service
  • Gift card to their hair salon
  • Gift card to a specialty grocery store
  • Some of their favorite, but expensive snacks such as nuts, dried berries, etc

Any other creative but practical gifts that you can think of?

photo by kevindooley

Tips for Sticking to a Budget

how to change budget habitsTop Habit Changes That Help You Stick To a Budget

It can be a struggle to stay within your budget, especially around the holidays. I’ve been more actively monitoring my budget and income/expenses for a while now. I’m proud to say we did decrease our spending significantly in November. We also shifted some spending to more quality things such as education and investments.

However, unfortunately, on one income, we still spend more than we make. Not good. I’m confident our plans will take us where we need to go with this, including lifestyle changes, awareness & monitoring, conscious spending, and increased income from other areas.

1) Watching the Little Dollars – For us, its not about ‘skipping the latte’ specifically, but instead the things that you buy as habit that there are alternatives for. For example, making lunches and cutting back on eating out, even if its fast food, is healthier and cheaper.

2) Sharing the Knowledge – One of the most significant changes has been a true evaluation of what’s important to us, and a family goal of working towards our future. I have previously been managing the money more than my husband, and he is now playing a more active role. Sharing the ‘burden’ helps us be more aligned with our goals together, and has significantly minimized some of the confusion or disagreements.

3) Gotta Love Coupons – And of course, there’s nothing like the good old fashioned coupon. Its my personal belief that I have to save at least $1.00 off of something to make it worth my time. And I only use coupons for something I would have bought already.

4) Awareness & Monitoring – I’m actively monitoring my spending and money habits on Mint and Thrive, and I have weekly email reminders and alerts being sent to me. Even if I wanted to forget, too bad, I have now made it a habit not to.

5) Conscious Spending – I wrote a post about How to Curb Impulse Shopping, and for me, the online shop-a-holic, unsubscribing from tempting emails was the trick. It has significantly helped me from thinking about or wondering if I’m missing out on a good deal. Its helped me from justifying why I just have to buy something because of the bargain, since I don’t actually know about the bargain. My husband is great at sticking to the grocery list, and this saves a lot on impulse grocery buys. Overall, I’m trying to wait at least 1 day to 1 week on purchases outside of the norm to determine if they are impulsive or not. I’m not perfect at this, but this is my goal.

6) Setting Expectations with Friends & Family – This is a tough one, but it helps. I talked with my family and friends this year about cutting back on holiday spending, most of us are in the same boat, so it makes it easier. Its almost a relief when you talk about it that everyone says you don’t have to spend too much. This doesn’t mean you can’t do something thoughtful. I’m already finding that I have more quality time lined up with friends and don’t have to worry about the gifts, but instead can spend a little on the event itself.

Finally, I definitely recommend that you don’t push too hard and cut yourself some slack with changing habits. You can’t change habits overnight, or you won’t stick to them. I know that I’m too hard on myself about this, and it is okay to slip as long as you stay true to your goals overall.

Anything I should add to this list?

photo by girlonaglide

Review Free Online Budgeting Tools: Yodlee MoneyCenter

Review of Free Online Money Management and Budgeting Tool: Yodlee MoneyCenter (moneycenter.yodlee.com)

Rating: ★★★½☆

Pros:

  • Free
  • Automatically import your accounts (including my credit union account!)
  • Calendar spending view (this is my favorite feature!) Helps show when I’m spending money, not just totals.
  • Excellent reporting for spending, expenses, budget vs actual spending
  • Import real estate, investments, rewards accounts, manage net worth
  • Share account feature that allows you to show limited information to other users (such as your tax accountant)

Cons:

  • Slow loading time
  • Hard to navigate, not very intuitive user interface
  • Pay bill feature doesn’t have a lot of bill payers, doesn’t allow payees that aren’t already in thier system
  • When you re-categorized a transaction, you can’t easily save that category setting for the future
Yodlee Calendar

Yodlee Calendar

I was initially impressed with Yodlee MoneyCenter based on the amount of investment and account options that you could manage in the interface. However, a certain key feature that Mint had is lacking in Yodlee. As I mentioned above, if a transaction is imported in as un-categorized or had the wrong category, I can re-categorize it. In order to have similar transactions categorized correctly in the future, you have to create a rule in the “custom categories rules” tab. For me, this would involve a lot of going back and forth that I’m unwilling to do.

My Choice:
Although I love the calendar spending view chart, I have decided to use Mint for the simplicity and ease of use with importing my account information and trending. It has a few less options than Yodlee, but overall meets my immediate needs for budgeting. I recommend you give Yodlee a try if you are looking for a lot of features as mentioned above in my Pro list, and Mint or Thrive for a something a little more user friendly.

Review of Free Online Money Management Tools: Mint.com

Review of Mint.com Online Budgeting and Account Aggregator Tool

mint.com

If you are searching for a free online money management or budgeting tool, mint.com offers a very nice interface. It’s popular for a reason, its user friendly and easy to use. I thought it went without say, but perhaps not for everyone, you have to use online banking to use Mint and all of the online budgeting tools that I review.

Rating: ★★★★☆

Attractive, Interactive Charts

Attractive, Interactive Charts

Pros:

  • Easy of use, nice design
  • Easy to securely import financial information (accounts for multifactor authentication, or in other words those extra questions in your online banking)
  • Best online tool for remembering your rules for categories (Saves LOTS of time)
  • Nice charts and graphs for trending, with drill-down options for more detail
  • Great over all picture of your monthly net income and expenses
  • iPhone App

Cons:

  • Hard to account for one time or future planned expenses
  • Budget tracker color codes are misleading for recurring exact expenses
  • Budgeting tool isn’t that user friendly or helpful for sticking to a budget
  • Intrusive partnership cross-sells with big banks (etrade, scottrade, etc)

I’ve imported my financial information into Mint.com and re-categorized my expenses. Overall, it serves the basic purpose of seeing where I’m spending my money, and will be good for showing my trending. It’s a very user friendly interface, easy to use and nicely designed.

Budgeting Indicator Bars

Budgeting Indicator Bars

So far I’ve already realized quite a few things about where my money goes. I am way over budget on things that I didn’t realize like groceries. I thought we had that down to about $300 a month, but after a few Costco trips, that went down the drain. That being said, I have a hard time accounting for 1 time expenses in Mint. Its possible, but not that easy. Additionally, I am over budget on shopping by well a lot since I don’t really have a shopping budget. This will be the hardest thing to kick. I don’t really buy that much for myself anymore. But I’m always justifying something I need to buy for my toddler.

What I’m not impressed with is their way of managing one time expenses. They have a way to budget for 1 time or recurring expenses in intervals, but it doesn’t seem very realistic for my lifestyle. So, overall, I’d say that I like the design, ease of use, and simplicity of mint.com, but I feel like something’s missing. It just isn’t as ‘robust’ as I was hoping for.

Additionally, the budget tracker is nice, but it is distracting to see your budgeted categories in yellow or red when they are actually recurring exact expenses that you budget for each month. It shows that you are over budget if you have something that was a planned for large expense, but it happened to fall in a certain month. It would be pretty neat if it allowed you to adjust your budget on a monthly basis due to planned and unusual expenses, but also kept an expected budget. Or at least adjust the budget threshold percentages so that what you think is “yellow” or “red” could be set by you. As it is, you’d have to be way under budget every month to stay in the “green.”

Also, I realize that its free, so they have to make their money from advertisements and partnerships with financial companies, but its all over the place. It’s just a little too much for me. I’m all for obvious ads, or ads that aren’t totally intrusive, but when its interruptive, I get pretty annoyed. I get asked every time I click on the investments tab if I want to move my money to somewhere else. The way they say it is that they can help you save certain amounts of money by switching, but to me, its somewhat misleading that they design it to look like they’ll easily help you, but the true intention is to get you to open more bank accounts so that they earn a profit from their partnerships.
UPDATE: 8.19.10 – Mint has added goal tracking tools that are very helpful. Though for me, they can be somewhat depressing – based on the goals I believe I can retire when I’m 125 years old !

Top Free Online Budgeting Money Management Tools

Review of the Best Auto – Import Online Money Management Tools

I signed up and tried out various online money management tools that manage your finances. Here’s the list of the top 4 reviewed and my main criteria for my decision. (You have to use online banking to use these tools!)

My main criteria are:

  1. Free
  2. Import majority of my financial accounts automatically (no upload, manual, etc)
  3. Easy to use, simple interface
  4. Easy to interpret budgeting
  5. Doesn’t require a lot of manual work to sort through the categories

Top Free Personal Finance Sites that Import (Almost) All Accounts:

A note on a few other popular tools: Geezeo is now only for private Financial Institutions and Wesabe look great, but won’t auto import my credit union accounts (bummer!)

Update: I’ve been using a combination of Mint and Thrive for a while now. Great start, but I’m going to be on the look out for another budgeting tool. Neither of these give me all that I want for setting easy budgets.