I received an email not too long ago asking if I could write a blog post about how RD and I manage our household finances. As you may know, we keep our personal savings and retirement account separate and I’ll never blog about RD’s personal finances (so this post is really an incomplete picture of our overall financial management), but we do have joint accounts for managing our everyday spending. And that I can talk about. :)
Just a few notes about us if you’re new to this blog:
- We are in our mid-30’s with no debt other than our mortgage
- We make roughly the same amount of money
- This is obviously just what works for us, and is not necessarily going to work for every couple.
Before we combined our finances
When RD and I first moved in together, we kept our finances separate for the most part. RD would write out our monthly rent cheques, and we would put all of our joint expenses (groceries, household, travel, etc.) onto my credit card because of the rewards points. Then, at the end of every month, we’d reconcile all of our transactions, and one of us would transfer money to the other person depending on how the expenses came out that month. I liked it this way because I had a record of all of our everyday purchases so that I knew exactly how much we were spending. And RD liked this method because he wasn’t super interested in any of that information. :)
We kept our finances like this for the first 18 months we lived together. It was an easy system to work with, and also it gave us a sense of financial protection should our relationship not work out. Not that we were planning for the worst, but we both felt strongly about maintaining a level of financial independence, especially in a new relationship.
Related: We are home owners!
Creating our budget
When we decided to buy a condo together, that’s when we decided to open up a joint account for our shared expenses. I wanted to have a set amount of money that we deposited into this account bi-weekly – that would cover our mortgage, maintenance fees, property tax, insurance, groceries, household expenses, as well as a decent amount of buffer money that would also act as our joint household savings account. And because we had 18 months worth of data to draw from, I did what I do best, and created a spreadsheet. Ok, multiple spreadsheets. :) I averaged the last 18 months of our joint expenses, probable mortgage and housing costs, included a buffer, and came up with a magic number that we would each auto deposit into our joint account on payday.
Related: Why I don’t want to burn my mortgage
In the last 6 months, we’ve adjusted our magic number once – by just $20 – because our condo maintenance fees increased after our AGM, and we have another mouth to feed ever since we adopted our beautiful cat Zoey from the SPCA. :)
Who manages the money?
Me. This actually works out perfectly because you know I love budgeting and spreadsheets and numbers. Nothing makes me happier than burying my nose into a good spreadsheet or reconciling purchases and paying bills. It’s not because RD isn’t good at this type of stuff (he’s never had debt and he always pays his bills on time), but I like taking a more in depth look at our money. It was actually a huge step out of his comfort zone having me take on his part of our joint finances, and I appreciate that.
I also tend to take on any paperwork regarding our joint finances and negotiating any bills that need to be negotiated (like our internet), but only because I have a more traditional desk job and access to a phone on a more regular basis.
We do make sure to check in regularly with our finances, and he has access to our joint accounts so that he can see our balances and transactions whenever he wants.
Who spends the money?
Me, mostly. :) We have that joint credit card that he puts gas onto or if he buys anything for the home, but I do almost all of our joint household shopping for groceries, cleaning supplies, toiletries, pet stuff, etc. This falls into our division of chores, because I like shopping and comparing prices and products. I also feel a sense of satisfaction in having our pantry and linen closet stocked with essentials. I also pay our credit card balance every month, and any other random bills that might come in, but most of our household bills are automatically deducted from our joint account.
I’m curious – who manages and/or spends the money in your relationship, you or your partner?
Before RD goes off on his annual 5-week work trip at the end of this month, we wanted to budget for Portugal, and at least book our flights to Portugal. But since a big goal of ours this year is to save for a down payment, going off on a 3-week long European vacation seemed a bit extravagant. We can afford to go, but it doesn’t mean that we should go if it means sacrificing a bigger financial goal that we hope to achieve.
So after thinking about it for a while, we decided on a pretty good compromise – we’ll reduce our vacation from 3 weeks down to 2 weeks, and spend the additional week off as a staycation where we can get as much autumn hiking in as we can. It actually works perfectly because we still get to go to Portugal, but we’ll also get in a bunch of regional hiking in that we weren’t sure how we were going to fit into the summer months.
Right now we have a preliminary budget sketched out for our (now) 2 week trip:
- Flights (Vancouver-Azores, Azores-Lisbon, Lisbon-Vancouver) – $2,450
- Accommodation (14 nights) – $1,200
- Food – $1,000
- Car rental (7 days + gas) – $450
- Transportation – $100
- Miscellaneous – $200
Our budget came to $5,400 total. We have about $500 in travel rewards points to redeem, so I’m thinking we can do this trip for under $2,500 per person.
For our itinerary, we plan on spending 1 week in the Azores (split between Faial and Pico), and 1 week on the mainland in the Lisbon area. I’ve been to Lisbon, Sintra, and Faro before, but RD hasn’t been to Portugal at all. So it will be interesting to see if it’s as amazing as I remember it being. :)
In order to save money, we’ll be trying to book AirBnB for most of our stay so we’ll have access to a kitchen. Our trend when traveling is to cook most of our meals in our rental anyway, but I’ve added a bit of padding because I’m sure we’ll go out for food more often than usual in Portugal. We also decided to forego renting a car for the mainland portion of the trip. Instead, we’ll just take a train from Lisbon to Porto, and save our car rental for the Azores.
Any suggestions to this budget are more than welcome!
I’ve always kept my finances separate from my significant other. This was in part because my past relationships just never got to the point where we needed (or wanted) to combine our money, but it also has to do with the fact that over the last 10 years, I’ve become fiercely independent when it comes to my finances.
Ten years ago, I was in a lot of debt. It was stressful and gave me a feeling of hopelessness – that I’d never be able to fend for myself because I was too much of a disaster – especially when I hit rock bottom and realized that I had to rely on someone else (my boyfriend at the time) to help me with bus fare. BUS FARE. I didn’t have money (in cash or credit) to get to work. I cringe just thinking about how horrible that was.
When I eventually started paying attention to my money, I promised myself that I’d never be back in that situation again. I worked hard at my finances, saved up enough money for a down payment on a townhouse, and built up a modest retirement portfolio. I also wanted to be seen as an equal financial contributor in every relationship I’ve been in, so I always insisted on paying for my fair share of everything, even if I made significantly less money than the person I was dating. I didn’t want to be seen as someone that a man has to take care of financially.
This mindset has had both positive and negative consequences, as you can imagine. The pros mostly stemmed from my own personal satisfaction that I’ve gotten to a stable place financially. It made me feel empowered! But some of the cons were that I never really considered someone as a long-term partner unless we were on somewhat similar financial terms, and I still have a hard time letting someone treat me to something as simple as dinner – I always have to make sure that I take care of the bill next time. So that it’s fair.
Earlier this week, RD and I got pre-approved for a mortgage (!). We aren’t actively looking, but we wanted to be ready just in case something amazing comes up. But one of the items that our mortgage broker wanted was a void cheque from the account we wanted our mortgage payments to come out of. So all of a sudden, this kinda–far-into-the-future-conversation of combining at least a portion of our finances was something we had to talk about now.
When we first moved in together, we were keeping track of our shared expenses and totaling them up at the end of the month. Then to make up the difference, an e-transfer would be made to the person who spent the most. It was a bit of a clumsy system because it meant we were each combing through a months’ worth of expenses to try and remember what was shared and what was personal. So for the past 3 or 4 months we’ve been using a joint (travel rewards) credit card. That has really helped because I just total up the expenses at the end of the month, and RD sends over his portion of the rent plus his half of the monthly expenses.
Over the past few months, we’ve gotten good at figuring out what expenses are shared and what are personal, so the next step is opening up a joint chequing account (which we did yesterday through Tangerine!) and linking our existing individual chequing accounts to it. We’ll still keep our own accounts because we both agree that maintaining financial independence is important, and will just transfer in a TBD amount of money into the shared account every time we get paid. :)
It’s both scary and exciting to incorporate shared finances into our relationship, and I imagine some tweaking to our system will happen along the way. For readers who also incorporate some sort of shared finances with their significant other, did you have any hiccups and modifications to make when you first started out?