Monday, July 9, 2007

How we split the money

I just read this post today and the comments brought a little something to mind. The way that my fiance and I split the money seems kind of unique.

My fiance and I maintain both separate AND joint accounts. We've just started this in the last month (we just moved in together), so we're still working out the kinks.

The way it works is that we split the bills by income for the month and then we keep the rest in our separate accounts. This way I can buy her gifts and it's actually me buying, likewise, I can take myself out for a coffee and not feel like I've "stolen" money from her. The weighted split is the neat part though, if I make 2/3 of the money for the month and she makes 1/3 of the money, then we split the rent/groceries/phone/etc the same way: I pay 2/3 of the tab, she pays 1/3.

The goal was to make kind of a self-correcting system. If she goes back to school and starts making 1/6 of what I make, I just start paying more and we both live a little poorer, but we both have our own money. In the same way, it encourage positive growth. If my partner can find 15% more income, then it's in my benefit to help them b/c it reduces my expenses.

If you do the "I pay this, you pay that" method, then people start to feel like it's "their" money. If one person makes the car payments and the other makes the mortgage payment, people start to get a sense of propriety over the "thing" they're paying for ("my car", "my house", etc).

If you do the 50/50 split, someone is almost inevitably making less and there's the tendency not to throw money back into expenses when the number changes. Plus it doesn't encourage partner growth, if you're splitting 50/50, then your 10% raise is "your" money; if you're splitting by weighting the income, the the 10% raise helps both of us.

I like the individual accounts though b/c having all the money in one big pot can also lead to competition issues: who's spending more? who's habits are more expensive? "you did that so I should be able to do this", "I can't believe that you spent OUR money on this".

The whole system seems pretty fair, so is it? What do others do?


Adventures In Money Making said...

everything goes in a joint account.

the wife spends on whatever she wants and nags me on everything I buy. this system works fine for us ;-)

Gates VP said...

Seems to be the popular response, even on the original blog.

We'll see if our strategy doesn't change over the next years after we get married :)