Money has been known to destroy relationships. Some of the worst divorces are often the result of money issues and the stress that it can cause between two people. But you do not have to be married to know that money can come between people.
I’ve never been married, so I can only speak of my own experiences. But I’ve seen it first hand in my parents divorce. Money makes things complicated.
So when I moved in with my boyfriend in June, I knew that things would change. I just had no idea how much.
A Few, Minor Details…
In so many words, we were almost complete opposites about our spending habits.
He hates credit cards, pays for everything in cash, doesn’t keep his receipts, is a compulsive buyer, and as long as he has enough to pay his bills at the end of the month, he could care less about what else he buys. He has a loan on his truck, but pays for most other things in full, up-front. He doesn’t balance his checkbook (ever) and only periodically checks his bank balance. But ironically enough, he has more in savings than I do.
I use credit cards, occasionally pay in cash, keep all of my receipts, buy items after only doing my research, and make sure that my bills are paid, first. I own my car and take advantage of paying for other things over time. I balance my checkbook on a regular basis and constantly analyze my spending habits. However, I have very little savings and a bit of debt – which is all the more reason to keep track of every penny.
To me, his way of controlling his finances is haphazard and something that I would never do. To him, my way is too complicated and unnecessary.
Slightly Incompatible
Needless to say, we clashed on a few issues in the past. Especially when we were moving. He didn’t care how much we spent, just that he was comfortable. But I did. And that was a problem.
When the move was done, we burned through over $4,000 in the first month without him even realizing it. And that’s not counting how much went on my credit cards. I almost had a heart attack, while he didn’t bat an eyelid.
Getting on the Same Page
So to control our spending, we decided to open a joint account. As it turns out, it has worked well for the both of us. But it may not work for everyone. Opening a joint account requires a certain level of trust.
We decided that it was best to pay the bills out of the joint account by requiring ourselves to put in half of the total living expense each month. For example: we would both put in $500 each to cover our joint-bills for the month. Then the bills would be paid out of that account (on-time). Whatever we had left over, we were free to spend on our own.
Initially, it worked. And then we realized that we were making other purchases together, so how did we decide who paid for it? How did we keep track of how much we each spent towards buying furniture, food and entertainment? To start, we tried alternating the purchases, but quickly realized 1) we couldn’t remember who paid last, and 2) one of us was always spending more than the other, making it unfair. Solution: Split the costs in half, along with our living expenses.
Well, that didn’t work either. He has a habit of spending money without telling me. So I started forcing him to give me all of his receipts (claiming it was to help us analyze our spending and fix our budget). This worked. And it still does. But after two months, we stopped splitting everything.
An Epiphany
I came to realize that no matter how we split what we were buying, we were just shuffling money between us. Since we were living together, we were living off of our combined incomes. His money was my money and vice versa.
Not everyone can do this. When you first move in with someone, sometimes it is best to keep finances separate and split the bills. You just need to be consistent and make sure that money is put aside at the beginning of the month (or at least with your first paycheck).
Once you get to a certain level of trust in the relationship, you will have this epiphany too. It won’t be worth it to exchange money simply to show you paid your half.
Wedding Bells
When you said “I Do…” things will change. I know they will for Chris and I. Well, at least in terms of filing our taxes. People who get married also have to look forward to pre-nuptial agreements (drama that comes into play when one spouse makes more money than the other, or a business is involved), misc. tax issues, joint medical care expenses… and even kids (a big investment that I plan on deferring for a few years, at least!).
I’ve only been living with Chris since June (even though we’ve been together for almost a year and a half), so I am sure that we will come across some other financial roadblocks in the future. Already, we’ve tried to discuss how I am going to finance a new car or the boutique that I plan on starting next year. He wants to help. I want to do it on my own. I don’t have a win-win solution yet, but when I come across one or other issues like this, I’ll be sure to post an anecdote about it.
As an aside, I came across this short compatibility quiz from Carmen at On the Money, CNBC. I wish I had found it earlier. They’re good questions to consider before you move in with someone. And at the very least, you can use it as a conversation starter between you and your other half.
Oh yes… if anyone has any suggestions, let me know! Even I can use some advice once in a while!
In closing, keep these things in mind when you move in with your significant other. It may save you a lot of aggravation in the long run.
~K
If you would like to make a comment, please fill out the form below.
You make some good points, Kristen. As a relative newlywed, I’m very happy that my husband and I have similar views regarding finances, saving, and spending. We both carry little debt, have automatic savings schedules, retirement plans, etc. But in terms of bank accounts and credit cards, for now, we prefer to keep our money separate. I sometimes wonder how many other married couples out there are like us, but for the two of us it works really well.
Thanks!
Actually, Chris and I maintain our own accounts (checking/savings & credit cards, etc), in addition to having a joint account. We use the joint account to pay our joint expenses.
I am curious to know how you and your husband have decided to pay your bills. Do you split the bills at the end of the month and just exchange cash? Or have you decided to handle it another way? You say it works well for the two of you, so maybe you can share the method that you use to give the readers another option.
~K
Well, our situation is probably a little different, since our utilities are included in our rent, so we write very few checks each month. Basically, what we do is I pay for some things while he pays for others. For example, I pay for the car insurance, but he pays for the phone/internet/cable bill. We write separate checks for the rent each month. For groceries, we each pay twice a month. It’s definitely not traditional, but we like it this way, at least for now. However, when we eventually purchase a home and have considerably more bills, we’ll probably get a shared account as well.
[...] friend of mine asked if I could compile a list out of a recent article that I wrote about Financial Compatibility. As we know, things change when you move in with someone. Sometimes more than we initially [...]