The title of this post is more than just a rip-off of the book, “Zen and the Art of Motorcycle Maintenance.” There are useful parallels between perspectives in that book, and my thoughts on couples budgeting.
In the book, Robert Pirsig discusses two different personality types: romantic and classical. The romantic tends to live in the moment, whereas the classical digs into the nuts and bolts of things to learn how to master them. What the narrator comes to realize as the story progresses is that neither viewpoint is better than the other. Which approach is needed depends on the specific situation. He suggests that viewing the world both by living in the moment and using classical rationality can lead to a higher quality of life. (Wikipedia)
I see the two different types applied to couples:
- The “live-in-the-moment” romantics – who pool all their income into one account and yet (incredibly) live together in perfect harmony
- And the classical couples – who selectively pool resources to pay for shared expenses, and yet retain some funds to spend independently.
I admire those couples that are able to just throw everything together in one pot and have it just “work” for them. I think that’s great (It boggles my mind a bit, but I respect it). However, I do have to roll my eyes and sigh when I read comments that suggest that couples that don’t share every last penny are inferior in some way. The comments tend to go something like this: “If you have separate bank accounts, you’re just roommates. Why get married?”
My theory is that couples who are able to pool money harmoniously over long periods of time have very (extremely) similar values and goals. With such minor differences they are able to intuitively agree with each other most or all of the time – so no conflicts arise. Similar views and/or enough individual flexibility allow these couples to come to joint decisions organically – thus “live-in-the-moment” romantics.
But sometimes it is our differences that attract us to each other. And although I might predict problems if someone with a 580 credit rating got together with a 780, I think that discussion and agreements beforehand can do a lot to offset those differences. Couples with differing fiscal views can have relationships that are just as stable as those that seem to be like two $100 bills stamped from the same set of engraving plates. For the classical couples, delving into the details and making plans and agreements beforehand allows them to live in the same harmonious state of bliss as the romantics.
I specified “over long periods of time” earlier because my ex and I started out by pooling all our resources. We put all our money into one account because that’s how we thought you were supposed to do it. Who knew you had choices? (I know, I know, you saw the word “ex” back there and are now thinking “What’s a freaking divorced guy doing trying to give me advice about couples budgeting?!” Ok, that’s a fair question. Well, I have 14 years of married financial experience. And once we resolved our differences we never had a fight over money again. (Hallelujah!) When we did get divorced it had absolutely nothing to do with finances. In fact, we are still good friends. And it’s the story of how we resolved those differences that I hope will help others step around the piles of dog crap that we stomped right through.) [Ex-wife’s note: “Yup, it’s true we’re still friends. He asked me look this over for accuracy.”]
With us, pooling everything worked fine – for a while. We made it about five or six years before it started taking its toll on our relationship. We had some consumer debt (about$6k – seemed like a lot at the time) and she would want to pay it down. Which was fine but I still wanted to be able to do and get things I wanted sometimes. It started putting us at odds. I began to feel that if I wanted to be able get something I wanted, I had to go out and get it right away when we had the money. Otherwise the money would be gone and I would feel I missed out. Needless to say this didn’t do good things for my saving habits. And I’m sure that she felt very frustrated that I was ruining her plans to pay ahead on our bills. It wasn’t a good time for either of us. Voices were raised, feelings were hurt, and tears were shed. Something had to change.
We sat down and talked it all out. We needed to agree about what we were going to budget (including accelerated paying off of debt). And we needed to each have money that we weren’t accountable for to the other. After our talk, I sat down and drew up a budget. I figured up everything we had agreed on, and compared it to what we made in a year. Hooray! We had disposable income left over. Now we just had to divvy it up fairly.
Here’s where it can get touchy. It is unlikely that both individuals will make the same amount of money. So what do you do? If you split up the discretionary money 50-50 then the person that has a higher income can feel that they are paying a disproportionately higher amount of the budget. On the other hand if you split the budget 50-50 and have each person keep what they have left over after they pay their half, the person with the smaller paycheck might walk away with nothing! That dog won’t hunt, Monsignor.
So I decided the fairest way to share expenses and bills was to have each of us contribute the same percentage of our income towards the budget. If I got to keep 25% of my income, then she kept 25% of her income. The amounts were different, but we were each contributing the same % of our work effort to our joint expenses. We each deposited the agreed upon amount into the joint account each time we got paid and the rest went into each of our personal accounts. And we didn’t have to get buy-in from each other for whatever we spent out of our personal accounts. Once I wasn’t afraid it would disappear, I started actually saving money up for bigger things I wanted in the future instead of spending it on crap.We both thought that the plan was fair. And for the rest of the time we were together we didn’t have any issues with money.
At the time, I was very proud of myself for coming up with this grand scheme – especially after it worked out so well for us. In my defense, I did come up with the idea of each putting in the same percentage of our income independently. But I know now that all I did was re-invent the same wheel that had already been invented many times over (and to my chagrin I also found a sizeable chuck of it in the comments from May’s “Married 3 Years & Still Haven’t Combined Finances”). Hey, if you actually come up with something new under the sun in this day and age you’re a phenomena. So if you think that this method might help you out, here are all the steps:
5 Steps to sharing this couples budgeting method:
- Make up a budget of agreed expenses/investment that is less than your income.
- Calculate the % of your income that must go to your budget. (divide total budget by total income)
- Every time you get paid, deposit that percentage into a joint account that you will pay bills out of.
- Deposit the remainder into each individual’s personal account.
- Live happily ever after – Lather, Rinse, and repeat.
This plan isn’t the right one for everyone, but it worked great for us for many years. I hope that a few couples might find it useful without having to go through the pain we did to figure out the solution.
There are more ways than one to skin a cat. As long as you can come to an agreement you both approve of everyone can be happy (with the possible exception of the cat). No one approach is right or wrong for every couple. The right approach is the one that works for you.
So, how do you share with your mate? Does it work all the time or do problems come up? How do you handle them?
Guest post by Gene Roberts – a 40 year old machinery technician working in the semiconductor industry (BUM, , , bum, BUM, bum, BUM) and lives in Chandler, AZ. His net worth is about $280k and its growth has been conforming with the get rich slowly method all too well.
(Minimalist photo by MinimalistPhotography101.com)
PS: Some of my favorite tools:
|Personal Capital (FREE) -- If you’re looking for a robust financial tracker, Personal Capital is the way to go! They’re like Mint, but on steroids and have much better tools for investment and net worth tracking. // Full review|
|Digit (FREE) -- A super easy (and automated) way to save. Every day Digit analyzes your income and expenses and will push money aside for you any time it sees extra sitting there. I've saved over $4,000 myself using them so far! // Full review|
|Acorns -- Having trouble finding money to invest? Check out Acorns – they round up all your transactions to the nearest $1.00 and drops the difference into an investment portfolio for you. Easy way to start investing! // Full review|