RSS
Twitter
Email
This is the second post of my mini-series of combining finances in a relationship. The first post intended to help determine the right system for you and your significant other. In this post I will focus on managing your financial accounts with a hybrid of the completely separate and the completely joint.
The first step is to discuss with your significant other. The question is, once you decide, where do you go from there? Setting up accounts with financial institutions can be a tedious. Today I’m going to talk about how my girlfriend and I have our accounts set up, and hopefully it’ll give you some ideas of how you can do this with your significant other as well.
The Big Picture
Here is the big picture of how my girlfriend and I manage our accounts.
Cashflow In
It all starts when the new paycheck comes in. We configured direct deposits through our employer to automatically deposit $1,000 per paycheck into our joint checking account. The remainder of our paychecks go into our respective personal checking accounts. At this point, “our money”, “her money”, and “my money” are completely separate and remain this way for the rest of the process.
Fortunately for us, both of our employers have the same pay schedule. If you don’t have the same pay schedule as your partner then you will need to calculate how much you both need to contribute to make it even. If this happens, the most important thing is that both of you are involved in the decision process and understand how the deposits work. Communication is key.
If your employer doesn’t offer direct deposit, or it doesn’t offer direct deposit to multiple accounts, deposit your entire check into your own checking account, then schedule automatic transfers into your joint account.
How Money Goes Out
Both my girlfriend and I manage our own personal bills. For example, I will pay for my personal credit card through my personal checking account and my girlfriend will pay for her credit card through her checking account. Any joint expenses that we pay for will come of our joint account. This includes things like rent, utilities, maintenance, insurance, etc.
It’s important to make sure you talk to your significant other about what will be paid out of the joint account and what won’t be. Don’t assume that it’s obvious, or that they will understand. If you’re ever unsure, be sure to ask! Communication is absolutely necessary.
Dealing with Savings
Aside from bills, it’s also important to account for saving in your system. We have a few joint savings for things like vacation and emergencies. You should determine what savings accounts you create based on what goals you have. Having the separate savings accounts will help you keep track of each goal individually.
My girlfriend and I also both have our own personal goals we’re saving for. We both have automatic contributions from our personal account towards our individual savings goals. For example, I’m currently saving for a down payment (on top of paying down my student loan debt!), while my girlfriend is currently saving up to purchase a new car.
Do the Banks Matter?
While it would make it much more convenient to manage if all of your accounts are with the same bank, it’s not strictly necessary. Depending on your past, you both may already have long standing checking accounts with different banks that you’re both happy with. That’s fine, just figure out where it makes the most sense to open up your new joint account. For my girlfriend and me, we decided to open a joint account and personal accounts with Chase. We figured that the added simplicity (and having a local bank) was worth the hassle of opening new accounts.
One thing to remember if you end up using multiple institutions is that transfer times can take a while. It seems like it differs from bank to bank, but you don’t want to be caught in a situation where you’re out of money in your joint account with rent due in a couple days. This is one reason why I argue it’s important to keep enough money in your accounts to cover one full months worth of expenses.
(Photo credit: markhillary)
Related posts:
{ 1 trackback }