Marriage and Finances

[James81]

Originally Posted by The Big D

Ahh yes, you can defend your position if you imagine another pile of money outside the example that just happens to be big enough to handle the unexpected joint expenses without impacting your precious sunglasses. I love having to deal with absurd and poorly though out arguments. Perhaps you need to re-read my first post, where I clearly state that this scheme breaks down when a LARGE family expense looms. If the expense is small enough that it can just be absorbed without affecting everyone's fun money, that's great but it's not the situation I'm talking about.

It's a fact of life that family expenses have to be prioritized against individual expenses, and the size, timing and criticality of those family expenses can't be predicted in advance. As such, there is ALWAYS a tradeoff between those expenses and individual ones, even if you try to pretend that there isn't by arbitrarily splitting the money up into separate accounts. The philosophy you're expounding is in large part why so many marriages fail when one of the big unexpected expenses (or a loss of income) occurs.

But if you save 3 to 6 months salary, very few expenses are going to arise that will destroy all of that in one swoop.

Anyway, it's a moot point anyway because you're defending your view based on the exception rather than the rule.

[Gene]

Originally Posted by spirit4711

However the partners in that marriage decide. How else?

I agree with your post. I was about to say the same thing.

[Aybee]

Originally Posted by ssandra

The way we do it, we don´t have to discuss every purchase as well. I can go to the sauna, or out to diner with friends or buy something nice, he can buy as many video games as he wants.. as long as we stay under the limit.

I am going to discuss with him if I want to spend over 200 euros on a shopping spree. Not to ask permission, but just to see if he thinks this is a good idea.

Ok. In that case I think we are more alike than not, even though you put everything together, and we have "yours, mine, ours". I discuss large purchases with my husband, even if I have the money to take it out of my personal savings, and he does the same with me.

Originally Posted by The Big D

If you're not adult enough to handle joint finances, you probably shouldn't have gotten married in the first place.

The separate accounts works for me and my husband, I wouldn't say that we're not adults because of it. We're adult enough to make financial decisions that are best for each of us individually, and for our family as a whole.

Originally Posted by The Big D

separate accounts are a head in the sand approach.

My husband and I have 1 year's salary saved up now, and still growing. Most unexpected things that have come up, we have been able to take care of as a family due to the planning that we've done with respect to our finances. Now, if some big emergency came up (i.e. VERY EXTREME health bills, loss of income of one of us, etc) obviously things would change, but they would change whether or not we had everything together or everything separate.

Originally Posted by SmartAlx

One of my ex-girlfriend's parents have this problem. Her dad makes a very good living but he has not saved much for retirement. He blows the money as it comes in. Don't ask me what he spends it on. Her mother on the other hand (who makes even more than her husband) is much more sensible. She has her retirement plan in order and has said quite clearly that her husband will be on his own when he retires. When they do retire I don't know what they are going to do if he doesn't have any savings. Probably get a divorce.

That's sad. Luckily myself and my husband have the same vision for our finances and our future.

[The Big D]

Originally Posted by James81

But if you save 3 to 6 months salary, very few expenses are going to arise that will destroy all of that in one swoop.

This is silly. Let's get some sensible definitions and premises:

1) Divide expenses up in two ways. The first split is personal (ie. benefiting one member of the family) vs. family (benefiting more than one). Do this division rationally ie. fixing the car that one family member uses to get to work benefits everyone. In my example, sunglasses were personal, the car was family.

The second split is planned vs. unplanned. In my example sunglasses were planned, the car repair was unplanned.

2) Assume the sum of desired planned expenses (personal and family) is greater than available money - that is, if you had more money, you would spend more. Obviously the way family finances are managed only matters when this is the case since if there was more money than the family could figure out how to spend then any vaguely functional accounting system would work equally well and without strife.

I believe these are reasonable to the point of being axiomatic.

In my example, I showed the inherent tradeoff between a planned individual expense and a surprise family expense. Now, I will agree that if you have "enough" savings, you can handle all surprise expenses en passant and never have it conflict with previous personal expenditures. Almost no one operates this way in my experience because the required savings for something like a big uncovered medical bill are much more than 3-6 months, but it is in theory possible.

However, no matter how much you save, you can never alleviate the issue raised by 2). So there is always a tradeoff between the desire for planned personal expenses and the desire for planned family expenses. If you manage this tradeoff by means of separate accounting, you create exactly the same inefficiencies I described in my example when lower priority personal expenses edge out higher priority family expense, or vice versa. Only this time they can't be alleviated by savings since savings must be retained for unplanned expenses [and no, you can't have arbitrary amounts of "extra" savings for planned expenses without violating 2)].

The point is that this tradeoff never goes away, and separate accounts are a bad way to manage it.

[James81]

And again, I say, you are creating a highly unlikely, uncommon exception to try and prove your point.

And I say, that number 2 is an exception that the couple can deal with as it arises. Do you do this with other things in your life? Base your entire life around uncommon occurances?

[The Big D]

Originally Posted by James81

And again, I say, you are creating a highly unlikely, uncommon exception to try and prove your point.

And I say, that number 2 is an exception that the couple can deal with as it arises. Do you do this with other things in your life? Base your entire life around uncommon occurances?

No, I'm sorry, having somewhat limited finances such that you would spend more money if you had more money is not unlikely or uncommon in any way. It's a basic reality that 99%+ of the population has to deal with and thus is a perfectly reasonable premise for discussing how a family should structure their finance.

I have no idea what you're trying to accomplish by making such absurd and contrary to fact assertions, but it seems to be divorced from reality.

[James81]

Originally Posted by The Big D

No, I'm sorry, having somewhat limited finances such that you would spend more money if you had more money is not unlikely or uncommon in any way. It's a basic reality that 99%+ of the population has to deal with and thus is a perfectly reasonable premise for discussing how a family should structure their finance.

I have no idea what you're trying to accomplish by making such absurd and contrary to fact assertions, but it seems to be divorced from reality.

No, I'm talking about the situation that you have fabricated.

You even used the word "unexpected" to describe it and offered examples such as "car repair" and "medical."

[The Big D]

Originally Posted by James81

No, I'm talking about the situation that you have fabricated.

You even used the word "unexpected" to describe it and offered examples such as "car repair" and "medical."

You need to re-read what I actually posted, because I've already talked about the fact that exact same conflict exists even if the expenses in question are not planned. To make sure you don't miss it:

Originally Posted by myself

However, no matter how much you save, you can never alleviate the issue raised by 2). So there is always a tradeoff between the desire for planned personal expenses and the desire for planned family expenses. If you manage this tradeoff by means of separate accounting, you create exactly the same inefficiencies I described in my example when lower priority personal expenses edge out higher priority family expenses, or vice versa. Only this time they can't be alleviated by savings since savings must be retained for unplanned expenses [and no, you can't have arbitrary amounts of "extra" savings for planned expenses without violating 2)].

[James81]

Originally Posted by The Big D

You need to re-read what I actually posted, because I've already talked about the fact that exact same conflict exists even if the expenses in question are not planned. To make sure you don't miss it:

What you don't seem to be getting is that UNPLANNED family expenses are the EXCEPTION rather than the rule. They happen at totally random times, and, at least in my experience, maybe once or twice a year. And, what I'm saying, is that it's crazy to base your entire financial situation on the thing that happens the least.

When it comes to PLANNED family expenses, there's another word for that and they are called "bills" and I already talked about how a couple handles bills in a separate finance household.

[The Big D]

Originally Posted by James81

What you don't seem to be getting is that UNPLANNED family expenses are the EXCEPTION rather than the rule.

Is this candid camera or something? The part of my previous post I quoted you was about planned expenses, not unplanned. My argument stands even if you assume no unplanned expenses whatsoever. You're totally confused and need to re-read what has already been said slowly, and focus on comprehension.

And planned expenses constitute far more than bills. For example, if my family wants to move to a new house, that's a desired planned expense that's not a bill. And that desired expense may very well conflict with personal expenditures if separate accounting is used.

[James81]

Originally Posted by The Big D

Is this candid camera or something? The part of my previous post I quoted you was about planned expenses, not unplanned. My argument stands even if you assume no unplanned expenses whatsoever. You're totally confused and need to re-read what has already been said slowly, and focus on comprehension.

And planned expenses constitute far more than bills. For example, if my family wants to move to a new house, that's a desired planned expense that's not a bill. And that desired expense may very well conflict with personal expenditures if separate accounting is used.

Yes, and I'm saying that Planned Expenses = Bills.

The decision to move to a new house is a decision for discussion in personal finances whether finances are combined or not.

And honestly, instead of coming back with a "reread what I wrote" maybe you should explain it further. There's a reason why I keep saying the same thing and that's because I keep understanding it the same way everytime I read it.

[The Big D]

Originally Posted by James81

Yes, and I'm saying that Planned Expenses = Bills.

Not in any conventional sense. A bill has a connotation of being mandatory or close to it - if I don't pay the water bill, they shut off the water. Something like moving to a bigger house or taking a family vacation is a planned expense that's not mandatory, and therefore really isn't like a bill at all.

That's where the issue of money scarcity comes in - there are tons of things that are planned expenses that a given family or person would like, or desire, to pay for but that aren't required. These desires pretty much always exceed the available money [which is assumption 2)]. That's where tradeoffs come in. Separate accounting fails to deal with these tradeoffs, because it prevents the family from rationally trading off between personal desires and family desires since they are paid for out of separate accounts.

[James81]

Originally Posted by The Big D

Not in any conventional sense. A bill has a connotation of being mandatory or close to it - if I don't pay the water bill, they shut off the water. Something like moving to a bigger house or taking a family vacation is a planned expense that's not mandatory, and therefore really isn't like a bill at all.

That's where the issue of money scarcity comes in - there are tons of things that are planned expenses that a given family or person would like, or desire, to pay for but that aren't required. These desires pretty much always exceed the available money [which is assumption 2)]. That's where tradeoffs come in. Separate accounting fails to deal with these tradeoffs, because it prevents the family from rationally trading off between personal desires and family desires since they are paid for out of separate accounts.

So yours is an issue of semantics.

If it makes you feel better:

Bills are to be paid out of a joint account
Planned expenses are to be paid out of a joint account
Whatever is leftover is divided in two equal parts and put into separate accounts for spending money.

[openeyes]

Though we're both good with money, we handle bills differently and find it much easier to keep separate accounts. She likes to track everything in detail via spread sheets and pays everything manually, while I simply focus on keeping important receipts, have bills paid automatically, and just check my accounts once or twice a month to make sure there haven't been any errors.

We buy most everything separately, with our own money, and only go in jointly on things on a case by case basis. It's fairly simple so far, and we're happy to keep it that way unless/until it makes sense to change to something else.

We rent, have insurance with a manageable deductible, don't maintain credit card balances, have enough savings to go several months without a job, and tend to live rather inexpensively. The main scenario in which I could see a major expense coming up that could surpass everything one might prepare for is litigation, but if someone gets sued, it's likely better that their finances are separate from their spouse's anyhow. Living in a less litigious society is another option though, and could also help with healthcare expenses :-)

[dream]

Funny, I have a good friend who started a blog recently. They would be great to answer this question or any questions on marriage issues. They are also well qualified. Live Ever After
It may help as issues on finances can be difficult.

[vartann]

ultimately depends on what YOU like
i personally favour the model common Family account / the remaining money if ever, we share equally, each of us perfectly free to spend on our own (which often ends up in frequently presenting gifts to each other by the way)

your handling your finances, like in ANY other area of your life, reflects who you are, your mindset - if you settle with a (wo-)man who shares/ accepts your mindset, then there is Harmony in your Finances TOO


Pace e Salute