Relationship Hacks: An Allowance System for Adults
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I'm setting a goal for myself to finish my half-finished book relationshiphacks.com this year. In an attempt to make that happen (and because the recent podcast with my wife was wildly popular) I'm going to try to blog some guiding principles. Then I'll attempt to collect the feedback and comments, improve the posts, then move them into the book.
I got a Nintendo Switch yesterday. Bought it with cash, brought it home, set it up, and - with neither shame nor regret - showed my non-gamer spouse.
"That's cool," she said. "Is that the new Nintendo 64 they were talking about on the radio?"
No judgment. Not a comment about the $300 price tag. Nothing was said like "do we really need another game?" or "what credit card did you buy that with?"
How is this possible? No fight (not even a lowercase F fight) and no tension.
My wife and I give each other an allowance. In cash.
Every two weeks when our paychecks are deposited, we each get an allowance. It's a $100 a week (yes, for some that's a lot, for others, it's not. It works for us.) and it's the same for each of us. We put all our money in one account, give ourselves the allowance, pay the bills, then if there is anything left over it goes it savings.
Let me back up. We used to a bicker and judge each other for our purchases. If you'd log into our bank you'd see something like:
- Paycheck
- Mortgage
- Car Note
- $5 Starbucks
- $3 Subway
- $8 Chipotle
- $60 GameStop
- $70 Nordstrom
HOLD UP. What is that GameStop? Well, what's this Nordstrom? Did you need to be getting that [widget?]
You get the idea. We needed to remove all that noise at the bottom of the ledger as it was distracting us from the larger goals.
Then my wife had the idea that we just needed to pay ourselves first. We can spend that money however we like - with promised zero judgment from the other spouse. That's crucial, otherwise the system doesn't work.
The allowance for anything that isn't "necessarily living stuff." So it's not for toothpaste, but it IS for eating out when we don't need to eat out.
I could have eaten at Chipotle each day this week, but that would come out of my allowance. Instead, I chose to eat at home all month and save my allowance for a Nintendo Switch.
This works - of course - both ways. My wife has hobbies and social stuff that she does, and she uses her allowance for that.
If you made it this far, perhaps you're thinking, "wow, you're a wimp" or "gee, he/she has you in their pocket." Wait.
Step back and absorb. We are grown-ass people. This system works because we designed it for us. All arguments around "frivolous" spending are gone.
This allows us the best of all worlds.
- It keeps credit card spending to an absolute minimum.
- We are empowered and we empower each other with this system.
- There's a certain sense of power in carrying cash. You know exactly how much you have and exactly when you have to stop spending.
- We can decide if we want $200 shoes or a $100 meal or a $50 game. One spouse comes home excited about their purchase while the other greets them without resentment. The fixed allowance amount handles that.
- Additional spending is discussed on a case-by-case basis. But we've picked an amount that is large enough that I could buy something crazy like a Vive - if I am willing to forgo movies, excessive eating out, etc.
- It sets a good example for the kids as they watch us weigh the pros and cons of a purchase. Money is spent when it's in-hand and not on credit.
My wife and I are in a mixed marriage. It's not that I'm White and she's Black, is that I'm a techie/geek/nerd and she's fairly normal. ;) Of course, this kind of mix isn't gender or race specific. I know lots of couples of varying combos and flavors that bump up against issues in their relationships because of budding resentment, missed or poorly set expectations, divergent points of view around problem solving, and more.
I'd love to hear YOUR story of your partner and your "mix" and how you (mostly) solved it with a simple Relationship Hack like this. Sound off in the comments.
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About Scott
Scott Hanselman is a former professor, former Chief Architect in finance, now speaker, consultant, father, diabetic, and Microsoft employee. He is a failed stand-up comic, a cornrower, and a book author.
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March 07, 2017 9:36
Excellent idea! :)
Lloyd
You ever have any times where you both conspired to raise your allowance together... just for a quick purchase fix?
Garrett and I have a really similar system.
He's catastrophically terrible with money. Like so bad that it is obviously either a total block or a straight up disability. Because of that, he leaves everything up to me. Which I actually don't like because I don't want to bear 100% of the responsibility of when things go wrong. But what I've done is I've figured out exactly how much we need to contribute to a joint account for bills and regular contributions to savings. The rest we keep for ourselves and can spend however we want to. Sometimes we go over with big purchases like a vacation or a new bike. But luckily we both tend towards hedonism and so extra spending like that is regarded as good from both of us. We've never been the couple to bicker over spending. Now, if you have a relationship hack for how to cope with a mother-in-law that is missing the gene for listening, I'd love to hear that!!!!
He's catastrophically terrible with money. Like so bad that it is obviously either a total block or a straight up disability. Because of that, he leaves everything up to me. Which I actually don't like because I don't want to bear 100% of the responsibility of when things go wrong. But what I've done is I've figured out exactly how much we need to contribute to a joint account for bills and regular contributions to savings. The rest we keep for ourselves and can spend however we want to. Sometimes we go over with big purchases like a vacation or a new bike. But luckily we both tend towards hedonism and so extra spending like that is regarded as good from both of us. We've never been the couple to bicker over spending. Now, if you have a relationship hack for how to cope with a mother-in-law that is missing the gene for listening, I'd love to hear that!!!!
We run pretty much the same system at home and have done so for more than ten years. I'd recommend something like this to anyone. It's a very simple way to remove what might otherwise be a source of friction.
In our particular implementation, we (figuratively) both put all income into a common pool and distribute from there. Some part of the money goes to a bank account dedicated for recurring stuff like mortgage, insurance, etc. Another part goes to a bank account for regular consumption, such as groceries and gas; we both have a debit card for that account. The rest of the money we split evenly into our personal bank accounts. Once in a while, because none of us are really big spenders, we'll both have excess funds and we'll just coordinate to move so-and-so-much to our savings account.
In our particular implementation, we (figuratively) both put all income into a common pool and distribute from there. Some part of the money goes to a bank account dedicated for recurring stuff like mortgage, insurance, etc. Another part goes to a bank account for regular consumption, such as groceries and gas; we both have a debit card for that account. The rest of the money we split evenly into our personal bank accounts. Once in a while, because none of us are really big spenders, we'll both have excess funds and we'll just coordinate to move so-and-so-much to our savings account.
I have been doing this with my partner for years now. However, I never seem to have any of my allowance left because my partner likes me to take her out at weekends. She seems to be able to spend her allowance and mine!
That's just the first issue, the second problem is how you justify countless hours of game playing when you should be doing something more useful like groceries or the dishes or cooking or looking after the kids etc : )
"is that I'm a techie/geek/nerd and she's fairly normal. ;)" => Priceless
I'm single and don't have to answer to anyone but myself but still feel guilty when I feel like I should be saving every penny towards buying a house.
I did buy the Switch and could easily do so from my discretionary spending but I still had to debate whether to buy it.
Perhaps this allowance system would work for me too.
I did buy the Switch and could easily do so from my discretionary spending but I still had to debate whether to buy it.
Perhaps this allowance system would work for me too.
It's an excellent system. My wife and I use a similar one. She gets paid every 2 weeks, me every 4, this goes into a common account offset against our mortgage. Every 2 weeks we do a disbursement and allocate funds to various accounts: household, bills, direct debit, kids, presents, and our allowances. Our deal with our bank allows us unlimited accounts with no additional fees, so it works out well for us.
I don't game, but I do LEGO :) So I agree, it's great to be able to bring a new toy/thing home without having to try and justify the cost. Then your partner can get excited for your excitement.
Any big expenses we discuss, e.g. travel, home improvements, tools, appliances this has lead to some occasions where I'm shopping for an appliance (for example) find one I like and say to the sales person "cool, I'll discuss it with my wife and get back to you" This has resulted in the sales person making a comment about being under her thumb... not a good way to attempt to close the sale.
I don't game, but I do LEGO :) So I agree, it's great to be able to bring a new toy/thing home without having to try and justify the cost. Then your partner can get excited for your excitement.
Any big expenses we discuss, e.g. travel, home improvements, tools, appliances this has lead to some occasions where I'm shopping for an appliance (for example) find one I like and say to the sales person "cool, I'll discuss it with my wife and get back to you" This has resulted in the sales person making a comment about being under her thumb... not a good way to attempt to close the sale.
How do you guys handle big ass things that come up?
* car nightmare - audi needs $2300 fix
* wife turns 50. Wants a $7K - 170 people bday bash.
* new tesla "only" $35K? I want it.
* new pc for the geek - $2200
* car nightmare - audi needs $2300 fix
* wife turns 50. Wants a $7K - 170 people bday bash.
* new tesla "only" $35K? I want it.
* new pc for the geek - $2200
$11,200 / year seems a bit steep for the Misc. category. A few years ago I wouldn't have blinked an eye at it in my own circumstance, but since I've started reading http://www.mrmoneymustache.com I now see that as an extra 6 years I'll have to work for the man instead of spending those 6 years as I choose.
My wife and I have the same principle, and it also works for us. It wasn't judgement free at first, but now we're both much more careful with our spending in order to save up for big ticket items.
My wife and I work things slightly differently. We split things on a percentage earnings basis - mainly because I work for money and she for love. I.e. I prefer to have money to spend on the things I love outside of work whereas she prefers just doing what she loves (and sadly that meant, particularly in the early days of her career, earning less than she could elsewhere). So, we have a household budget set out for standard monthly costs (incl. some luxury stuff like dinners out, parties, etc.), as well as savings for everything from combined holidays, household mishaps, emergencies, x-mas/birthday presents, etc. We then contribute to that based on how much we earn. E.g. If our monthly costs come in at 20k (randomly picked number for easy math's sake) and I earn 75% of our combined income (30k) and she 25% (10k) then I would contribute 15k and she 5k. The rest of what we earn is our own to spend on what we choose. We revisit the budget annually, so, based on any annual increases, etc. you could start contributing more to the household, but, you will also have a little more to yourself as well. The disparity, as hinted at above, was somewhat large in the beginning but over time it has become far more equal and we both now have more "pocket money" as a result.
This approach seems sensible to me - as long as you've agreed on it, can afford it and are paying the bills.
I no longer feel guilty about bringing home new bike parts (and occasionally new bikes), and she doesn't feel guilty about buying new things for the house (mainly because I usually don't notice them, unless I have to install them)
I no longer feel guilty about bringing home new bike parts (and occasionally new bikes), and she doesn't feel guilty about buying new things for the house (mainly because I usually don't notice them, unless I have to install them)
Our approach is quite different : we put in our common account all the money for the bills and for the other erants (I did an average from the last 12 month). The money we put in is proportional to our salary and we keep the rest for saving or for funny things to buy. I spend less money but I earn more so when she needs a bit for a dress, I'll pay it for her. Each of us has a saving account and we have a common one for the holidays and for house/baby furniture.
Maybe your system is simpler because you don't have to calculate the amount you need on the common account, you just fix what you keep. But my wife prefers because I use less money than she does so I can increase my saving for our next apprtement :)
Anyway, you have to have a system where you feel free and still responsible
Maybe your system is simpler because you don't have to calculate the amount you need on the common account, you just fix what you keep. But my wife prefers because I use less money than she does so I can increase my saving for our next apprtement :)
Anyway, you have to have a system where you feel free and still responsible
My wife and I have a very similar system. We have a spreadsheet with all our outgoings and incoming, various savings accounts and misc (we have a car account to cover services/repairs etc as and when they happen).
What's left over is divided equally between us and is ours to do with what we want.
The great thing is that this is based more or less only off my income, for a while my wife was a stay-at-home mum (something looked upon as an oddity nowadays) and during that time we made our finances work. Now she is back to work part time, and her income becomes our family treat account, as we don't want to rely on it to make ends meet.
What's left over is divided equally between us and is ours to do with what we want.
The great thing is that this is based more or less only off my income, for a while my wife was a stay-at-home mum (something looked upon as an oddity nowadays) and during that time we made our finances work. Now she is back to work part time, and her income becomes our family treat account, as we don't want to rely on it to make ends meet.
There's so many great points to take away from this wonderful post. However, two that stick out for me are:
1) Budget!
Call it an allowance, call it pocket money, call it whatever you want. Whether you're in a relationship or not it's so vital to budget your finances and give yourself a stable cash flow. Make sure the bills are paid, make sure you're putting away money for savings and from what's left, give yourself a reasonable budget for incidental expenses, fun stuff, etc.
I'd even go so far as to say that's a vital part of budgeting, otherwise it's far too easy to justify dipping into savings (or worse...) for that one time and minor expense.
2) Communicate!
I genuinely believe that about 90% of issues, whether they're relationship issues or workflow issues with colleagues, come down to poor or a lack of communication. How many sitcoms and films have we seen where the entire plot could have been resolved by two people just talking to each other? The same is true for real life. Half the time, it's not even about you having to talk to your colleague/partner, but just listening to them - and I mean really listening.
Great post, Scott. I've been eagerly awaiting that book for ages now, fingers crossed you guys can finish it this year!
-Stephen
1) Budget!
Call it an allowance, call it pocket money, call it whatever you want. Whether you're in a relationship or not it's so vital to budget your finances and give yourself a stable cash flow. Make sure the bills are paid, make sure you're putting away money for savings and from what's left, give yourself a reasonable budget for incidental expenses, fun stuff, etc.
I'd even go so far as to say that's a vital part of budgeting, otherwise it's far too easy to justify dipping into savings (or worse...) for that one time and minor expense.
2) Communicate!
I genuinely believe that about 90% of issues, whether they're relationship issues or workflow issues with colleagues, come down to poor or a lack of communication. How many sitcoms and films have we seen where the entire plot could have been resolved by two people just talking to each other? The same is true for real life. Half the time, it's not even about you having to talk to your colleague/partner, but just listening to them - and I mean really listening.
Great post, Scott. I've been eagerly awaiting that book for ages now, fingers crossed you guys can finish it this year!
-Stephen
The other alternative is to create a virtual entity which has its own budget that is used for common expenditure. Like "my budget, your budget and our budget" In total: 3 budgets.
So when i got my paycheck I transfer obligated amount into "Our Budget" and remaining to "My budget" and my spouse does the same. This way we are able to decide to buy smth for our house together. If we want a new washing machine then we increase the amount of transfers to "Our Budget" proportional to our salaries in previous months.
This way, everyone in this system is free to spend his/her money after deduction of general living costs proportionally. Say that i earn 1500 and she earns 1000 viceversa, if "our budget" requires 1200 each month, then participation to "Our Budget" is 720 to 480 viceversa. Where 720 is the proportion of personal salary to total income, in this case (1500 / (1000+1500)) * 1200 = 720
If you want to save some common money too (i.e going to a couple hobby courses etc), just increase the amount of "Our Budget" timely to afford the activity.
This way, i am restricted by the common budget participation however free as the personal budget surplus where i/she can spend as without any questions.
So when i got my paycheck I transfer obligated amount into "Our Budget" and remaining to "My budget" and my spouse does the same. This way we are able to decide to buy smth for our house together. If we want a new washing machine then we increase the amount of transfers to "Our Budget" proportional to our salaries in previous months.
This way, everyone in this system is free to spend his/her money after deduction of general living costs proportionally. Say that i earn 1500 and she earns 1000 viceversa, if "our budget" requires 1200 each month, then participation to "Our Budget" is 720 to 480 viceversa. Where 720 is the proportion of personal salary to total income, in this case (1500 / (1000+1500)) * 1200 = 720
If you want to save some common money too (i.e going to a couple hobby courses etc), just increase the amount of "Our Budget" timely to afford the activity.
This way, i am restricted by the common budget participation however free as the personal budget surplus where i/she can spend as without any questions.
Scott, I really like the work from John Gottman, have you seen his books and interviews? He's done decades of research on couples and relationship management.
Geeks like you and me tend to have more difficulties with relationships. Gottman's books help me a lot.
Geeks like you and me tend to have more difficulties with relationships. Gottman's books help me a lot.
We've tried that for a while and it kind of worked, but for some reason we've stopped. Gotta get back to it.
Yeah, my wife and I have what we call a "notification limit".
We have a joint account for everything household and child related. This includes big purchases and holidays as well as groceries and school stuff. It also has budget lines for fun stuff we do together like cinema, eating out etc. We use YNAB (thanks Omar) for budgeting of this account. From the budget we can work out how much we need to contribute each month.
The remainder we can spend or save into our own accounts.
When we want to buy something for ourselves if its over the notify limit we have to discuss it. Otherwise no problem. The limit is set at a figure equating to a fair few of Scott's allowance months so I guess its the same effect.
We have a joint account for everything household and child related. This includes big purchases and holidays as well as groceries and school stuff. It also has budget lines for fun stuff we do together like cinema, eating out etc. We use YNAB (thanks Omar) for budgeting of this account. From the budget we can work out how much we need to contribute each month.
The remainder we can spend or save into our own accounts.
When we want to buy something for ourselves if its over the notify limit we have to discuss it. Otherwise no problem. The limit is set at a figure equating to a fair few of Scott's allowance months so I guess its the same effect.
My wife and I do something similar and it works out well for us. We each put the same amount of money in our joint account on offsetting Fridays. Currently it's $400 so we each put $800 in per month. That doesn't seem like much but no mortgage and no kids will do that to your expenses. This money is used for common expenses like utilities, food, housewares and anything we do together like dining out, movies etc. For savings we max out our various retirement accounts each year and we can do whatever we like with what's left. For bigger bills we make one time transfers to the joint account - things like quarterly house taxes, yearly car insurance, special trips or house improvements.
We were both married later in life, me at 40 and her at 32 and used to having good jobs with our own money. The benefit of having a joint account for all those little purchases has been huge for us. No more bickering about who's buying dinner, takeout, groceries, booze and all the bills that come during the month. I mentioned this system to younger friends of ours that just got married and they love it too.
A couple other things I would also suggest.
1) Have a single person pay the bills. The only bill my wife pays is her own credit card. This ensures that all of the bills get paid in full and on time.
2) Maintain a spreadsheet of your net worth. At the start of the month I fill in the columns of the balances of various accounts, assets to track how we are doing. My wife emails me her account balances and I add those too. The spreadsheet is shared so we can both see how we are doing together. It's a nice win each month to see our nest egg growing and provides incentive going forward.
We were both married later in life, me at 40 and her at 32 and used to having good jobs with our own money. The benefit of having a joint account for all those little purchases has been huge for us. No more bickering about who's buying dinner, takeout, groceries, booze and all the bills that come during the month. I mentioned this system to younger friends of ours that just got married and they love it too.
A couple other things I would also suggest.
1) Have a single person pay the bills. The only bill my wife pays is her own credit card. This ensures that all of the bills get paid in full and on time.
2) Maintain a spreadsheet of your net worth. At the start of the month I fill in the columns of the balances of various accounts, assets to track how we are doing. My wife emails me her account balances and I add those too. The spreadsheet is shared so we can both see how we are doing together. It's a nice win each month to see our nest egg growing and provides incentive going forward.
We've done the same for several years. We each get our own "blow it" funds. It's called "blow it", so we don't "blow the budget".
I currently spend mine on bass lessons, my wife likes to spend hers on things for the house or the kids. It works, and it does exactly like Scott said... none of those "why did you spend X at Y"...
I currently spend mine on bass lessons, my wife likes to spend hers on things for the house or the kids. It works, and it does exactly like Scott said... none of those "why did you spend X at Y"...
My wife and I do exactly this. We call it our "Don't judge me" fund.
My wife and I do the same thing. We also have an "entertainment" budget that's used for family stuff, but the adult allowance is great for anything we personally want. Mine tends to go to lunch with friends from the office or Kickstarter games. Hers go to picture frames and nice boots, as far as I can tell (and I don't really care).
We have a similar system but we put them in separate back accounts directly deposited from ours paychecks. The problem is I am cheap and still don't spend my money. She always has less than $100 in her account.
It's funny that we just talked about this last night. My wife and I are doing this same thing (with different dollar numbers because she stays at home with our son) and it works fairly well, but we find we can be a little more liberal about our spending at times. Now that we're moving to a larger house and thinking about having another child, we definitely needed to revisit the spreadsheet and debit card spending. Talking about money is probably my least favorite thing ever, but it's so important to be on the same page.
Thanks for sharing!
Thanks for sharing!
We do something like this, but it's a little different. At the end of the month, after all of the bills are paid and we know exactly how much money is left, we take a percentage of the leftover money as our allowance. The rest gets divided into a number of buckets... general savings, retirement, kids college, and so forth.
Discretionary purchases have to come out of our allowance, much like you described in your post. However, basing the allowance on the money leftover at the end of the month rather than on a fixed amount forces us to try to minimize expenses across the board in order to maximize the allowance potential. :-)
Discretionary purchases have to come out of our allowance, much like you described in your post. However, basing the allowance on the money leftover at the end of the month rather than on a fixed amount forces us to try to minimize expenses across the board in order to maximize the allowance potential. :-)
My wife and I started this exact same plan about six years ago and all our money fights ended. The amount doesn't matter as much as the freedom to us the money without complaint or question.
I will say I like Aaron's approach of getting paid out of the excess at the end of the month.
I will say I like Aaron's approach of getting paid out of the excess at the end of the month.
Love this! My wife and I started out assuming we would be able to do without allowances. While we communicate very well, the frequent "Hey, what's this Steam thing for $9?" or "Is it ok if...?" just got to be obnoxious. "We are grown-ass people" was exactly our sentiment when we decided to work out a separated blow-money system.
My addition to the conversation is simply that the two of us spend money very differently. I have no problem purchasing a $300 game system or bike or doo-dad, assuming I can afford it, but she might have the cash in hand and wouldn't feel comfortable making purchase of that size. It's spurred on a lot of discussion about how we both grew up understanding money and handle it now. Allowances are certainly proving useful, and in our experience, it has been an evolving system.
Also: The podcast with Mo was so good! Thanks for inviting her!
My addition to the conversation is simply that the two of us spend money very differently. I have no problem purchasing a $300 game system or bike or doo-dad, assuming I can afford it, but she might have the cash in hand and wouldn't feel comfortable making purchase of that size. It's spurred on a lot of discussion about how we both grew up understanding money and handle it now. Allowances are certainly proving useful, and in our experience, it has been an evolving system.
Also: The podcast with Mo was so good! Thanks for inviting her!
My wife and I have done the same thing since we married (17 years ago).
I have tried a few times to talk her in to putting all money in to the joint first but she never felt comfortable about this.
We have compromised by putting the difference from our accounts in to the joint so we are left with roughly the same each. Seems to work.
I have tried a few times to talk her in to putting all money in to the joint first but she never felt comfortable about this.
We have compromised by putting the difference from our accounts in to the joint so we are left with roughly the same each. Seems to work.
My wife and I do exactly the same thing. It works perfectly. I'm currently saving my money up to build a new gaming PC - it's been rewarding to work not to spend my cash, and I'll feel absolutely no guilt when I do buy it.
It's wonderful, but I agree, it has to be tuned to each couple.
It's wonderful, but I agree, it has to be tuned to each couple.
My wife and I do something very similar, but we have a trickle-down system with our fun money allocated towards the bottom of the list.
We have a spreadsheet we update each month for any money we have left over after all of our expenses. On the left we have our buckets, like emergency funds, new car savings, interior decor, and each of us has a line item for clothes and fun. Each bucket has a max monthly contribution amount and a max total amount, and each bucket is in priority order from top to bottom. For example, our new car savings bucket might be $20,000 and the max monthly contribution for it is $400. So, we contribute $400 to that until we get to $20,000.
Our fun money buckets are towards the bottom, so we only get fun money if we still have enough after our other savings goals.
It works pretty well for us because we usually have enough left over every month to hit our savings goals.
We have a spreadsheet we update each month for any money we have left over after all of our expenses. On the left we have our buckets, like emergency funds, new car savings, interior decor, and each of us has a line item for clothes and fun. Each bucket has a max monthly contribution amount and a max total amount, and each bucket is in priority order from top to bottom. For example, our new car savings bucket might be $20,000 and the max monthly contribution for it is $400. So, we contribute $400 to that until we get to $20,000.
Our fun money buckets are towards the bottom, so we only get fun money if we still have enough after our other savings goals.
It works pretty well for us because we usually have enough left over every month to hit our savings goals.
Our situation might be a little unusual. My wife and I both make good money. We don't have any children so we're not saving for things like college and weddings. Perhaps due to that, we just keep our finances separate. I pay the bills out and she buys the groceries, we keep track of our spending in those areas and one of us writes the other a check for the difference at the end of the month. That way if I want to buy a new car I just do it.
We've done this for years now. Any other arrangement would feel unnecessarily complicated.
Nice Article Scott. I am curious if clothing and grooming are base-budget items or individual-budget items. The wife's (fairly valid) argument is that female maintenance costs more than a man's in these categories. We have certainly had the 'discussion' that one nails/hair/shoes purchase for her cost more than my PS4 (which was on sale! ...and I needed a second one) and a trip to the barber shop.
I'm sure I'm not alone here in needing to run everything though an efficiency filter, so it pains me to see you not taking advantage of credit card rewards.
You're looking at a real-world return of about 2-2.5% if you're looking for cash or cash-equivalent rebates and the upside potential is even higher if you use it for travel.
Why not separate credit cards instead of cash? With $10,400 of annual fun money spending between the two of you, it's like getting a free Switch every year.
You're looking at a real-world return of about 2-2.5% if you're looking for cash or cash-equivalent rebates and the upside potential is even higher if you use it for travel.
Why not separate credit cards instead of cash? With $10,400 of annual fun money spending between the two of you, it's like getting a free Switch every year.
This is totally the way to go and my wife and I do the same thing. I know others who do not do this and in fact keep their money separate. It causes so many problems for them. They are constantly living paycheck to paycheck and trying to figure who will cover which bill. Madness!!
My wife and I view the money we make as our money, not my money and her money. With a combined account we can accomplish so much more that way. Our allowance is way lower than yours is, but we have the same general rule and it keeps us on budget while still allowing us to pursue things we enjoy that they other person may not be too keen on.
My wife and I view the money we make as our money, not my money and her money. With a combined account we can accomplish so much more that way. Our allowance is way lower than yours is, but we have the same general rule and it keeps us on budget while still allowing us to pursue things we enjoy that they other person may not be too keen on.
The thing we do slightly differently than you is instead of cash for our allowance we direct deposit from our bank to accounts with Simple(the online bank ... and based out of Portland). We both have one with our own card so that we don't have to carry cash and can track our spending of our personal money as well.
Some years back, my wife and I started using a joint checking account. I found this extremely frustrating at first because she likes to use her debit card for everything and that means a million debits from the account when I'm used to just seeing a dozen per month :p I prefer to use credit cards so I get the cashback. But such is life.
At the start of the month, my paycheck goes into the account and then all the bills (mortgage, car payment, student loans, credit cards) come out. We've never tried splitting the expenses - we figure it's all OUR money. We discuss before a major purchase (furniture, appliances, the Lego Ghostbusters Firehouse...) but otherwise just try to spend a reasonable amount. I don't need her input on which boardgames to pick up (unless there's one she wants, of course), and I don't need to know how much she spends to get her hair done.
We probably SHOULD try to stick to a budget, but when we overspend it's generally on things like eating out that we're doing together.
At the start of the month, my paycheck goes into the account and then all the bills (mortgage, car payment, student loans, credit cards) come out. We've never tried splitting the expenses - we figure it's all OUR money. We discuss before a major purchase (furniture, appliances, the Lego Ghostbusters Firehouse...) but otherwise just try to spend a reasonable amount. I don't need her input on which boardgames to pick up (unless there's one she wants, of course), and I don't need to know how much she spends to get her hair done.
We probably SHOULD try to stick to a budget, but when we overspend it's generally on things like eating out that we're doing together.
Online Transactions
My wife and I are still in the early days of marriage (just 2 years out of college and 5 years into marriage). I've wanted to do this for a while but we have been prioritizing getting out of debt and saving up for big items like a car to support our growing family. Now that we are getting close to those goals I would love to start implementing this.
My question, Scott, is how do you handle online transactions? Cash works great for going to game stop, eating out, etc but when it comes to online purchases how do you translate the cash into the purchase or keep it from counting in the online bill like you showed (ex. $5 Starbucks...)?
Thanks,
Kevin Hinton
My wife and I are still in the early days of marriage (just 2 years out of college and 5 years into marriage). I've wanted to do this for a while but we have been prioritizing getting out of debt and saving up for big items like a car to support our growing family. Now that we are getting close to those goals I would love to start implementing this.
My question, Scott, is how do you handle online transactions? Cash works great for going to game stop, eating out, etc but when it comes to online purchases how do you translate the cash into the purchase or keep it from counting in the online bill like you showed (ex. $5 Starbucks...)?
Thanks,
Kevin Hinton
We've had joint accounts since we've been married (11 years) and no credit cards. Early, there were some lower-case-f fights, but in general we're both frugal Dave Ramsey fans and yet accommodating of the other's spending. She doesn't fuss too much if I eat out, and I don't tease her too bad about organic rice puffs for the baby. We have a target savings level and big purchases we talk to each other about.
Related, finish the book! I remember vividly learning about Leanpub from your podcast. I was mowing the lawn and could show you where I was standing. Inspired, I started my own book, published lots of updates, and have enjoyed the process and small extra income. So, thanks and get with it!
Related, finish the book! I remember vividly learning about Leanpub from your podcast. I was mowing the lawn and could show you where I was standing. Inspired, I started my own book, published lots of updates, and have enjoyed the process and small extra income. So, thanks and get with it!
I like the allowance hack. Might give that a try.
In other relationship hacks, like this one, as others have said, many just boil down to better communication. Or communicating once and turning what you learn into a system so you never have to talk (argue) about that thing ever again.
One of the things that comes to mind for us is dealing with hated chores. I hate doing dishes, but don't mind putting them away. Becky hates putting them away but doesn't mind washing. We discovered this in the early days of our marriage, and neither of us has had to do the chore we hate except in extremity for years. That is a handy parallel in our preferences, but the same can work for less-closely-aligned chores.
Another thing that's important is recognizing introvert/extrovert needs. I'm way more introverted (energized by alone time) than Becky is. Add in that she's retired and I'm still working. So when I get home she's ready to socialize. And I'm ready to hide. The hack here is awareness so she knows that she needs to let me come to her when I come through the door at the end of the day and if she forgets and chatters at me when I'm burned out she knows not to take it personally when I say I need to go for a walk or hide in my cave for a half hour. When we're both home for a long stretch, it's even handy to have a signal flag somewhere when you need a break from communication, like the ON AIR sign in a radio station, you know not to breeze into the studio when it's on.
Love the Mo episodes of the podcast. More, please!
In other relationship hacks, like this one, as others have said, many just boil down to better communication. Or communicating once and turning what you learn into a system so you never have to talk (argue) about that thing ever again.
One of the things that comes to mind for us is dealing with hated chores. I hate doing dishes, but don't mind putting them away. Becky hates putting them away but doesn't mind washing. We discovered this in the early days of our marriage, and neither of us has had to do the chore we hate except in extremity for years. That is a handy parallel in our preferences, but the same can work for less-closely-aligned chores.
Another thing that's important is recognizing introvert/extrovert needs. I'm way more introverted (energized by alone time) than Becky is. Add in that she's retired and I'm still working. So when I get home she's ready to socialize. And I'm ready to hide. The hack here is awareness so she knows that she needs to let me come to her when I come through the door at the end of the day and if she forgets and chatters at me when I'm burned out she knows not to take it personally when I say I need to go for a walk or hide in my cave for a half hour. When we're both home for a long stretch, it's even handy to have a signal flag somewhere when you need a break from communication, like the ON AIR sign in a radio station, you know not to breeze into the studio when it's on.
Love the Mo episodes of the podcast. More, please!
My wife and I put 50% of each of our incomes into a joint account and keep 50% for ourselves. How much of the remaining 50% we spend or save is up to us. If one of us works more or less hours, or earns more or less per hour, it's still fair. As long as adding together 50% of each income covers or exceeds normal monthly expenses this works well. If that's not enough try a 60/40 split.
I'm getting married this summer. We was expecting to do exactly this, glad to hear that it works for others! ;)
I've been doing this for years and it helps with my budgeting. I have a separate debit card account that I use and find it nice not to have to explain my purchases.
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I'm THRILLED to hear that my wife and I aren't the only ones doing this!
This post is familiar in so many ways, especially the "wow, you're a wimp" part. I've had so many people in my life look at me like I'm some kind of idiot when I tell them I'm out of spending money. "Well just don't tell your wife" they say. That's when it's my turn to look at them the same way. I firmly believe that money disagreements are a huge factor in arguments and divorce. Figure it out from the beginning and you can immediately remove a huge blocker in marriages.
Thanks for sharing!
This post is familiar in so many ways, especially the "wow, you're a wimp" part. I've had so many people in my life look at me like I'm some kind of idiot when I tell them I'm out of spending money. "Well just don't tell your wife" they say. That's when it's my turn to look at them the same way. I firmly believe that money disagreements are a huge factor in arguments and divorce. Figure it out from the beginning and you can immediately remove a huge blocker in marriages.
Thanks for sharing!
We have a similar system. In addition, since we live in an apartment that my wife bought before we got married, and that is not owned by me, my wife needs to pay her mortgage. So every month she gets the amount needed for the mirage from our shared account, and I get the same amount - that way she maintains her ownership without me paying for it.
Bravo dude. Love it. The missus and I are not funny about money yet. Yet. When we do become so, this hack will be employed.
I too am going to speak in praise of credit cards; not for credit but for cashback, rewards and just keeping your cash in an interest bearing account for a few extra days. Don't do it if you're going to overspend, but if you're disciplined enough to stick to a budget, you're disciplined to pay your bills with something that gives you an advantage and pay it off in full every single month. Our joint credit card is from John Lewis/Waitrose so every few months the money we spend at the supermarket generates a £10 voucher we can spend at the supermarket (or the department store) - free money!
We're probably doing this wrong - I have a nerd fund, she does not. $35 a week into mine, plus my bonus. The rest of our combined income is joint, and it gets disbursed from there into savings to help absorb big costs (like a home repair or an assessment) when we need it. I'd like her to get an equal nerd fund. Maybe we'll talk that over.
This is a great system Scott!
I have been with my wife for 15 years now and married for 3 years.
We tried separate accounts at first but real soon in the relationship, we opened a joint account. Then we had a similar system where we deposited 80% of our respective salaries in that joint account. We then moved on to deposit all our gains in the joint account and then get a 20% allowance from it. Later on, probably 5-6 years ago, we just decided to move on and spend whatever was necessary to spend as long as we could pay the credit card each month.
We both have the same plan to retire as early as possible. We put as much as possible into saving accounts to meet that goal. Once all common expenses are taken into account, we do as we please with the credit card.
No one gets upset with what the other spends. After all these years, we figured it didn't make a difference and that nothing the other person spent bothered us.
Of course all big expenses are discussed ahead of time! Communication, communication, communication!
In the end, does it evens out? No clue, don't care... :)
I have been with my wife for 15 years now and married for 3 years.
We tried separate accounts at first but real soon in the relationship, we opened a joint account. Then we had a similar system where we deposited 80% of our respective salaries in that joint account. We then moved on to deposit all our gains in the joint account and then get a 20% allowance from it. Later on, probably 5-6 years ago, we just decided to move on and spend whatever was necessary to spend as long as we could pay the credit card each month.
We both have the same plan to retire as early as possible. We put as much as possible into saving accounts to meet that goal. Once all common expenses are taken into account, we do as we please with the credit card.
No one gets upset with what the other spends. After all these years, we figured it didn't make a difference and that nothing the other person spent bothered us.
Of course all big expenses are discussed ahead of time! Communication, communication, communication!
In the end, does it evens out? No clue, don't care... :)
My wife and I do this too.
It used to be that she was paid weekly and I was paid monthly. Despite some disparity between our incomes, all wages went into the joint account and we'd each get £300 a month, allocated just after I was paid, to spend on personal stuff (games, shoes, gadgets, presents, etc). The rest was used for bills and any leftover was added to our savings.
Now that my wife has left work to be a full time Mum, we only have my wage coming in each month, so we've reduced the monthly allowance to £200 each. There's not much left after the bills are paid, so that savings are taking a hit, but that's a temporary situation until she goes back to work in a few years time. The system still works and we can spend/save our allowance as we see fit and without any judgement.
Would highly recommend this system to anyone.
It used to be that she was paid weekly and I was paid monthly. Despite some disparity between our incomes, all wages went into the joint account and we'd each get £300 a month, allocated just after I was paid, to spend on personal stuff (games, shoes, gadgets, presents, etc). The rest was used for bills and any leftover was added to our savings.
Now that my wife has left work to be a full time Mum, we only have my wage coming in each month, so we've reduced the monthly allowance to £200 each. There's not much left after the bills are paid, so that savings are taking a hit, but that's a temporary situation until she goes back to work in a few years time. The system still works and we can spend/save our allowance as we see fit and without any judgement.
Would highly recommend this system to anyone.
Thanks for the app idea :) needed a simple idea for a React Native app, I think an allowance system where you can also forgo daily nice things like coffee and have an allowance added each week would be cool.
I have recently implemented this with my wife. I am curious about how you guys keep track of each other's spending. I have a google spreadsheet but sometimes is a pain to maintain. I wonder if there is any good app to keep track of this and probably even set the auto-add allowance balance.
Also, I would like to know your thoughts on how you decide what is considered a household expense vs a personal expense. I am thinking about cases where you need to get clothes. Do you set a budget for it and then if one of you goes above that budget pays the difference?
Also, I would like to know your thoughts on how you decide what is considered a household expense vs a personal expense. I am thinking about cases where you need to get clothes. Do you set a budget for it and then if one of you goes above that budget pays the difference?
Hubby and I have been successfully doing this using YNAB (www.youneedabudget.com) for about 5 years.
Knowing our budget and monthly expenses made it possible for me to become a SAHM, and not feel that I wasn't contributing to the household, or that I couldn't have some frivolous spend. Although our Fun Money categories aren't huge at the moment, they give us that little wiggle room and save us a lot of awkward discussions about spending.
All money that comes in is Our Money, and is distributed through the budget as agreed. Having a FFFF Meeting (Family, Food, Funds and Fun) once a week has also helped when we need to discuss anything that's coming up. The weekly meeting is usually all of 10 minutes, but know it's there means when there is something to discuss we have the time set aside.
Knowing our budget and monthly expenses made it possible for me to become a SAHM, and not feel that I wasn't contributing to the household, or that I couldn't have some frivolous spend. Although our Fun Money categories aren't huge at the moment, they give us that little wiggle room and save us a lot of awkward discussions about spending.
All money that comes in is Our Money, and is distributed through the budget as agreed. Having a FFFF Meeting (Family, Food, Funds and Fun) once a week has also helped when we need to discuss anything that's coming up. The weekly meeting is usually all of 10 minutes, but know it's there means when there is something to discuss we have the time set aside.
Hi Scott,
I wanted to ask if you have similar agreement to time as you have to money. Since the time is even more precious, it would make sense to have "time allowance" as well :).
Do you try to balance time at work + household duties, etc.?
I wanted to ask if you have similar agreement to time as you have to money. Since the time is even more precious, it would make sense to have "time allowance" as well :).
Do you try to balance time at work + household duties, etc.?
My wife put me on an allowance years and years ago, after I spent the bank account bare and then we suffered 19 overdrafts for songs I had purchased on iTunes. (19 * $35 = $665.) I have my own bank account that I transfer funds into each payday; it's my responsibility to stay within limits. I have access to the checking account, and credit cards for an emergency, but my wife will grill me about every charge on those items when she runs Quicken. Shame is a primary motivator in keeping my spending under control. My allowance is $250.00 a pay period. (It used to be $450.00 but that was too much.)
My wife doesn't partake of the allowance system herself. She's got control of the finances and knows what we have to spend and what we don't. She's the one who has to work us out of any problems she creates. I've offered (several times) to let her have something similar but she isn't interested.
Still this setup has worked well for us. We haven't overdrafted any account for fifteen years, our credit scores are almost maxxed, and I still get to freely spend money on Humble Bundles, GOG, Steam, and Amazon. With limits, but limits are part of being an adult IMO.
My wife doesn't partake of the allowance system herself. She's got control of the finances and knows what we have to spend and what we don't. She's the one who has to work us out of any problems she creates. I've offered (several times) to let her have something similar but she isn't interested.
Still this setup has worked well for us. We haven't overdrafted any account for fifteen years, our credit scores are almost maxxed, and I still get to freely spend money on Humble Bundles, GOG, Steam, and Amazon. With limits, but limits are part of being an adult IMO.
Some details I missed: we both have separate accounts and two joint (checking and savings). I surpass her income by almost 500% so a 50%/50% split wouldn't be fair. The money that comes in is family money; my allowance is deducted from that. Any items considered necessary for life (work, food, car repairs, clothing) is deducted from family money. If it's a necessity, it's family money. If it's a desire, it's personal money. You have to weigh individual items that don't quite fit into that model: my SO shouldn't be purchasing a couch with her allowance, for instance. If I don't think we need a new couch that should be paid for out of family money, my "no" should mean that my SO drops the suggestion. Communication and cooperation are still key.
The way we handle it is by having separate accounts. This makes it clear when someone dips into the other account or a credit card.
The way we handle it is by having separate accounts. This makes it clear when someone dips into the other account or a credit card.
Excellent Article!
This describes my wife and I to a tee. I hope to try something like that again soon. Last time we tried something like this it just didn't work out. But this was when money was more tight and we really didn't have extra money to spend on ourselves. Budgeting has always been a challenge when it comes down to daily spending on things such as eating out, clothing, grooming, etc. Scott you've inspired yet again.
This describes my wife and I to a tee. I hope to try something like that again soon. Last time we tried something like this it just didn't work out. But this was when money was more tight and we really didn't have extra money to spend on ourselves. Budgeting has always been a challenge when it comes down to daily spending on things such as eating out, clothing, grooming, etc. Scott you've inspired yet again.
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