Money is a very important issue that needs to be discussed when you’re getting married. Based on studies, money is one of the leading causes of divorce. John and I talked about how to handle our finances way before we even moved in together. We made sure we were on the same boat. We also made sure that all our debts are paid for before we got engaged.
There are three ways to handle your finances as a couple: joint, separate, and mixed (joint & separate). TheNest.com has an article that outlines the pros and cons of each method. John and I decided that the mixed method is the best one for us.
Whoah, our chart looks like a man (robot rather) with two heads! Anyway…
We have 7 accounts total:
- My existing checking account
- where my income is directly deposited
- My existing savings account
- where my extra money goes, leaving at least $200 in my checking account after all necessary expenses and contributions are made
- John’s existing checking account
- where his income is directly deposited
- John’s existing savings account
- where his extra money goes (I don’t know how he determines how much goes to this account)
- Joint checking account
- our contribution is based on ratio of each individual’s income to total combined income, then matched to total joint expenses and contributions (formula in chart)
- Joint savings
- part of our contributions that is spent on yearly expenses including vacations
- Joint long-term savings
- part of our contributions that is set aside for emergencies and future large purchases
- contribution to the joint long-term savings is based on the remaining income of the individual earning less after individual necessary expenses, joint expenses, contributions (joint savings), and $500 are deducted. The contribution of the individual earning more will be calculated based on the ratios of the incomes.
How do you handle your finances as a couple? Does your chart look like a man with two heads as well?