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?
I like to create a bare-bones budget whenever I get a new job or my living situation changes. It helps me understand how much I’ll need to live off of should I ever lose my job (which happened in 2014 when the company I worked for laid off almost half its staff). Since I’ve had my job (and my new home) for almost two months now, I figured it was the perfect time to re-evaluate my financial situation – especially since the last time I created a bare-bones budget was back in February 2014.
So over the weekend, I took a look at my current financial situation. And after calculating how much it would cost me per month, I’m extremely happy to see that Employment Insurance (about $524/week) would be enough to cover all of my bare-bones budget expenses – without having to touch my Emergency Fund.
You can see I was able to eliminate over $500 from my monthly budget without much effort, and I know that if needed, I could cut that number down even further. Plus, if for some unfortunate circumstance, I had tapped out my EI resources and Emergency Fund, I could rely on RD to help out if absolutely necessary.
Anyway, at some point in 2016, I’ll be testing out this new bare-bones budget for a month – just to make sure I can still do it. I’m confident that I can, but the food budget will be a tough one. It’s been about 4 years since I last tried (and succeeded) at a $100/month grocery budget, but it’s a really good exercise to do every couple of years. :)
Is your bare-bones budget up-to-date?
I mentioned in a previous post that my housing situation has changed dramatically. In the summer I hinted at the idea of selling my house and moving into Vancouver to be closer to work, my friends, and where I spend most of my life. So back in August, I put my townhouse on the market just to see what would happen. There was a lot of interest, and finally I accepted an offer earlier this month. :)
That means I’m moving! But I’m not just moving into an apartment… I’m going to live out my small space living fantasy by renting out a laneway house in Vancouver. For those that are not from the Vancouver area and might be unfamiliar with laneway houses, these homes are typically built on a pre-existing lot (usually someone’s backyard). They are usually detached from the main house and open onto the back lane. My laneway house is a two-storey, two-bedroom house that measures about 685 sq.ft. It’s extremely cute, and I can’t begin to tell you how excited I am to live just a 10 min. drive to work, and within a few blocks of my favourite neighbourhood in Vancouver.
I had a short introduction into small space living in 2012, when I lived in a 215 sq.ft. apartment with a boyfriend for a year in Germany I don’t think I would want to live in a space that small long-term with another person (at least not that specific space – it did not function very well and there was no storage), but it definitely showed me that I can do with a lot less than what I have and still be completely happy. So now that there’s 685 sq.ft. for two people, it seems really doable.
With my new job, I will also be getting a modest bump in salary, which will increase my monthly saving amount. But I want to get right to the fun stuff – and that’s creating a new budget for a new living situation. :)
This is what my initial thoughts are for my new budget:
A few things to note:
- This is not a fair representation of home ownership vs. renting as I’m also going from living alone to living with somebody else. Creating this mock budget for the first time really made me realize how much more I was spending over the last 5 years living solo. Back in the summer, I did create another mock budget to see how much I’d save if I went from owning to renting as a single person ($400/month). So while this isn’t a truly fair representation, it doesn’t result in a *massive* difference in my budget living with someone vs. living solo.
- My townhouse had rental restrictions. A lot of people suggested that I rent out my townhouse and move into the city. However, my building did not allow for rentals, so this just wasn’t an option for me.
- Monthly rent on this house is $1,650. For a two bedroom in an extremely desirable area in Vancouver, this is quite reasonable, but definitely not the cheapest option out there.
- We will be splitting the cost of utilities and internet. Electricity will go up a bit as we are heating a whole house, but that increase is offset by the fact that it’s now a shared expense. Renter’s insurance has been quoted at $30 per month.
- I anticipate my monthly grocery budget will go down a little bit as I’ll have more time to prepare more meals from scratch.
- Car insurance is not accurate – it will likely cost a bit more now that I live in Vancouver.
- The cost of gas is cut in half now that my daily commute to work is 10 minutes instead of 45-60 minutes. :)
Related: Single? It’s costing you more than you think.)
As you can see, I *think* I’ll be able to slash over $700 from my budget each month without changing my lifestyle through variable expenses. Unless I’ve made some glaring error. This is a significant amount, and I am really excited about it. If you add to that my modest pay raise, and if I am vigilant in saving my savings, I could potentially put away an additional $1,000+ each month.