Living Together? Combine Budgets.
Scour the internet and you'll find thousands of articles for potential brides and grooms on combining finances, sharing accounts, etc. in preparation for married life.
Side note: For whatever reason, "cohabitation" remains a taboo idea. "Living together" always makes me think of Dr. Laura (the radio "doctor") my grandmother loved to listen to in the car. Dr. Laura would swear that "shacking up" was the source of all evil and would lead to impending relationship doom. Is this true? Hmm, why not ask the majority of American couples who lived together before marriage?!
I'm not here to help you decide whether you should or shouldn't live together. I'm addressing those of you who already are living together before marriage. I've been in your situation now for four years (nuptials are imminent, I'll write more on that later).
I, Miss Thrifty, lived blissfully together with Mr. Spendy for four years before even thinking to ask him about his number (credit score), emergency savings, etc. Ignorance was bliss. I erroneously assumed that Mr. Spendy was leading the same frugal life as me, after all, we lived under the same roof! (To be clear, Mr. Spendy wasn't hiding any huge skeletons in his money closet or a mountain of debt, he just had some silly saving strategies)
Well, it wasn't until combining finances, in a purely virtual way, that I saw the whole picture.
Here's how we do finances together:
1) We split all shared household bills in half.
We make around the same amount of money and this is the simplest way to do things without opening a shared account. We are both loyal customers of Chase, a bank with a great and swift person-to-person payment system, QuickPay. (If your salaries are not in the same ballpark, see Money Musings' explanation of Suze Orman's advice on splitting bills when one partner makes more than the other)
I handle bills for which a check must be cut (to avoid monthly convenience fees for using an online payment system): the rent ($700) and the water bill (~$20). I, of us two, am the one who can be trusted to always have enough in my checking account to cover those bills without bouncing a check. Plus, I love the anachronistic appeal of physically writing a check and signing in sloppy cursive.
Mr. Spendy handles bills for which online payment must be set up (but only the systems where the bill payer is not penalized for making an online payment -- unlike the rent and water). I get easily annoyed with online payment systems and always worry that automatic payment will somehow fail and I'll get reported as delinquent to the credit agencies and my life will be over.... Okay, dramatic rendition of purely hypothetical and unlikely events, but this is how the mind of a tightly-wound wallet control freak works! All of that to say that Mr. Spendy pays the electric bill (~$65) and the internet bill (~$60).
As you can see, I pay a bigger share of the bills as the rent is 10x more than any other monthly combined payments we must make. How do I remedy this? The second that I write the rent check, I log into my Chase app on my phone and request half of the rent ($700 / 2 = $350) from Mr. Spendy. Mr. Spendy does the same with half of the electric and internet bill, requesting half of those amounts from me.
Sound complicated? It's really not when you get the hang of it. Plus, it allows for each of us to better monitor individual budget categories than if Mr. Spendy were to send me some amount of money vaguely labeled "my portion of bills" each month. In addition, it's transparency at its finest as both parties are aware of the bill due date and amount. For the forgetful types (sorry for throwing you under the bus again, Mr. Spendy), it's a person reminding you of an upcoming bill, not a computer generated email reminder.
Will we do this forever? Maybe. I am too pragmatic a lady to get a shared checking account with a man to whom I am not yet married. Perhaps once we're married and have a handle on the predictability of the bills, we'll open a shared account and each deposit an amount equal to our half of the bills to a communal pot. But for now, and for the last four years, the system we have is working for us.
2) We split all shared meals in half
A few months ago, we went to a burger place for dinner with some of Mr. Spendy's friends. The time for the bill came and we split it all so that Mr. Spendy's friends each got their own bill for the burgers they ordered whereas Mr. Spendy and I shared a check. Mr. Spendy and I each slipped our credit card into the top of the restaurant bill holder.
Mr. Spendy's friend: Whoa, wait a second... Is that two cards in there?
Miss Thrifty and Mr. Spendy: Yeah?
Mr. Spendy's friend: Mr. Spendy, you don't just pay for the check? I mean you two are splitting it?
Miss Thrifty: [feminist feathers ruffled] We always just do it that way, it seems the fairest way to do it. Sometimes I get a Diet Coke and he just gets water. Or, he gets steak and I get pasta. It all ends up even in the end.
Mr. Spendy's friend: Huh. I'm not saying there's anything wrong with it, that's great actually. My husband has always just covered all of the restaurant checks since we were dating in high school.
I imagine this interaction and discovery was as bizarre for Mr. Spendy's friend as it was for me. Mr. Spendy's friend didn't even know that it was a possibility to split a check in half across two cards, let alone that people actually do it. I didn't even know that people didn't know that was a possibility! I just went through life assuming everyone does what we do.
All meals out together are split, within reason. A restaurant meal is almost always split in half down the middle, unless it's clear that one of us offered to take the other out as a special occasion. Fast food is split because we usually order and pay separately.
I often do the bulk of the grocery shopping and pay on my card. Sometimes I will request half of the grocery total from Mr. Spendy via QuickPay. However, Mr. Spendy is really good at picking up the little stuff we need, like when we run out of milk or need a can of tomato sauce for a meatloaf or are craving fresh French bread. At the end of the month, if I'm feeling slighted, I'll compare what I spent on groceries versus what Mr. Spendy spent on groceries. If I spent significantly more, I'll request an appropriate amount to make the grocery spending more even.
If I get fast food in the morning on the way to work, that's on me. If Mr. Spendy wants to go out to lunch with work friends, that's on him. That's where the idea of splitting shared meals comes into play.
3) We budget separately and together
I am a fan of Mint and have been using it religiously since 2012. Mr. Spendy was actually the one who told me about Mint, but he didn't use it as consistently.
In a moment of post-"he popped the question" clarity, we got serious about personal and couple financial health in January 2016.
We each have and manage individual Mint accounts using our personal email addresses. We have imported our personal banking accounts, assets, debts, etc. We each have goals (becoming fully funded for emergencies by stowing away 6 months of living expenses, buying my next car with cash, buying a home, paying off student loans, retiring, etc.).
However, after getting some inklings that Mr. Spendy might need some reform and after admitting that he'd like to be better with his money, he finally agreed to create a shared Mint account.
To do this, we used an email address not tied to our personal accounts and created a password that was secure but memorable enough for both of us.
We systematically added our accounts. The result? Miss Thrifty needs to pay off her student loans because that's the only debt we have. Mr. Spendy is cash poor but has a healthy 401k. Miss Thrifty needs to up her retirement game.
We proceeded to make an approximate combined budget based on our personal Mint accounts. Here's a screenshot of January 2016's budget. (We have made a few improvements since and our goal is to live on only half of what we make, or less)
Let's remember that this is all virtual though. So, when you look at it, it may seem unfair that Mr. Spendy be accountable for Miss Thrifty's cell phone bill or that Miss Thrifty should have to front some money for Mr. Spendy's doctor's visit because he hasn't hit his deductible yet. The glory of it all is that we maintain autonomous lives while getting a better idea of what we can accomplish together and areas where we both need to improve.
budgeting together on Mint : living together :: real shared banking accounts : marriage
Boom! I just hit you with some old school SAT prep analogy goodness.
Why do couples live together? Because we love each other, because we can't afford a wedding just yet, because rent is cheaper when divided by two... but originally -- Because it's a litmus test for long-term romantic compatibility.
Why should couples budget together on Mint? Because it's a litmus test for long-term financial compatibility. I'm pragmatic. I think a breakup would be devastating but downright unlivable if I had to go to a bank and explain my situation as some sort of horror story because we had prematurely opened a shared account.
The couple that Mints together stays together.*
*Mint should be a verb! I Mint, you Mint, we Mint!
We're now fully accountable for our actions. If one of us wants to eat out for dinner together instead of making something at home, we now realize how this impacts both our separate and combined budgets.
Have we fought since combining Mints? No, not as much as either of us thought we would. I think we are both making a concerted effort not to call out the other on expenses. Sure, I could fly off the handle at every work lunch Mr. Spendy has not brown-bagged, but I know that I have my own faults, like a weekly drive thru (it's so yummy!) habit.
Before combining budgets, I felt like I had a cycloptic perspective in the View-Master that was of our finances. I could only see what I was stacking away for my emergency fund, the money I was unloading to pay off my student loans.
You can't change what you refuse to confront.
If you and your significant other are serious or hear wedding bells even in your distant future, consider the transparency you could unveil by splitting household bills, splitting shared meals, and budgeting separately and together.