On Instagram I asked people what they would like to know and I would right a number of blog posts about the questions I receive. One Topic that came up a lot was Finances.
Before I get into it I just need to make sure people understand, the way we work with finances steams from how we've always operated as a couple from back when we were dating to now. We worked and still work as a team. My husband and I are very ambitious people and so we always knew each other's goals and worked to help each other achieve them. As things progressed in our relationship we then started talking more long term about the things we wanted as a unit and we started planning and saving together. Separate accounts (I didn't have my ring yet and my father always taught me to be extremely cautious with my mulla) but still saving together and checking in to make sure we were continually working towards to what we had agreed.
The Question... Family Finances, How do you split it fairly if one makes more. What about when kids come?
There is no one way to manage finances in marriage and it’s really about what works for you both as a couple. Us personally, like with a lot of things, we move as a unit. There is no 'my money and his money', it’s our money. We made a life long decision to become one and so that goes for our money as well. Things have changed a few times whilst married, initially he made more money than me, then for a time I made more money and now we’re about the same. No matter what, things got paid, money got saved and investments got made.
At the end of the year we normally have conversations around goals for the next year. What our joint goal for our family is and how our individual goals are going to feed into that. This then forms the basis of what we want our monthly budget to look like. We always pool our money together then money gets separated to different accounts accordingly. For our day to day we have 2 Joint accounts, 4 Savings accounts and our Personal accounts. (Investment account's won't really be mentioned in this post but they should be something you definitely think about and aim for when you've got your day to day sorted!). We budget like crazy because we’re not trying get caught out and struggle for money! In no particular order, here is how we like to make use of some of the accounts at the moment:
Joint account 1: Fixed costs
rent, nursery, car insurance, life insurances, debt, etc...
Any monthly costs that cannot be immediately changed.
Joint account 2: Flexible costs
grocery, gas, electricity, petrol, investments, etc...
Monthly costs that can vary. With this account we use an online bank that allows for us to use the round up feature. When we spend, money get's rounded up to the nearest pound and we put the difference into a 'pot'. That amount can then be added to any of the savings at the end of the month.
Personal accounts: whatever the heck you want. Whether you choose to spend that money or invest the money in your self, it's completely up to the individual to decide.
Savings 1: Ivy
From birth, Ivy has had her own account and any money she gets as gifts goes into her account. We opted for an index fund as it’s more of a long term investment essentially and that's our way of insuring we don’t touch her money. We also add to it every other month if possible.
sidenote: I also have my own personal savings account for her just because. If I don't spend my 'just for me money' I tend to add to her account or pay off debts.
Savings 2: Holiday
Everybody needs a break! This is not something we put money aside for before but we incorporated this into our budget so we can have money ready should we want to have a weekend in London or a week in Spain for example. We both have recognised the need for us to have time away be it as a family or just mom & dad and so we‘ve now incorporated money for this into our monthly budget.
Savings 3: House - (actually 2 different ones but we class them as one)
We been saving for this one lol.. we have 2 separate help to buy isa accounts and try to put money away each month. We stopped for a while when Ivy was born as we didn’t factor in childcare costs when budgeting for her arrival (you can read about that here) and another time for personal reasons but we back baby!
Savings 4: Other (Rainy Day)
That pot for if things go sideways. My husband lost his job not to long ago and had no work for 3 months. This little bad boy pot really helped at this time. You honestly never know what can happen so a rainy day and other pot is so important.
I like to know exactly what is going in and coming out to the penny and this makes things easier for me to track as the person who takes lead on tracking the finances. Now for some people this may be too much or not enough but for us this is what is working right now. That’s not to say it will always stay this way, we re-evaluate every year or more depending on goals and where we’re at. It’s something that is always going to change and evolve as we grow and achieve more.
I created a yearly budget tracker for those that feel they may benefit from using this and that can be accessed here. I use a much simpler version for our family as I already know the details of where things should go, but I put more detail in this one so it's easier for everyone to use and understand .
The Tracker will auto-calculate your spending, highlight how much you have left each month and carry over whatever money is left to the following month. It also gives you an overview of your year's income and spending. I believe it's so important to be on top this as an individual and even more so when you get married. How will you ever meet your financial and personal goals if you aren't?
My personal tips on managing finances in marriage:
1. However you decide to manage your money, make sure you come to that final decision together.
Don’t assume the other person will be okay with your decision, talk! Whatever financial decisions are made should be made together as ultimately they will impact the family whether negatively or positively. And yes, the two of you are still a family even if you don't have kids.
Communication is key. A lot of marriages end because of failure to communicate and work together. We struggled in the beginning because money was for some reason an uncomfortable topic for my husband (I now know why). We had to get over it pretty quickly and start talking openly about what we wanted for our family so there is no tension at the end of the month and no possibility that we both have different ideas about where money should go. You both need to be on the same page and in agreement otherwise it’s always going to be a fight (we had a few).
2. Whoever is better with budgets, managing accounts/money should take the lead on making sure things are on target.
My husband and I make all decisions together in regards to our money allocations then I keep track of things so we can see where we are slacking and where we are doing well as a family. I’m better at it than he is I guess because of how my father was with me. Spreadsheets are very much a part of my childhood memories.
3. When budgeting make sure you always have your ’date night’ budget and also your personal amounts as part of the budget.
Date night is so important but may not seem like it in the beginning for some. It can get left behind if you are like us and constantly working towards certain goals. It has happened to us and it started to cause a bit of strain in our relationship because I felt like we didn’t have time for ’us’ anymore. Now the excuse of 'we don’t have the money' can’t be used by either of us and it's down to us to make the effort for each other. Your personal budget is purely for you to do what you want with that money, that’s also very important so you have that sense of you and don’t feel like you have go to anyone for 'permission' to spend on yourself - that’s long. It may not be the same amount as when you were single (not married) because of increased responsibility, but you both have to sit down and look at what amount works for both of you once everything else has been considered.
4. Personally, I would say remove the “my money, your money” mentality when you get married.
I believe when you get married, everything you do is to the benefit or the detriment of your family. So why would there be a divide in anything when you’re meant to be working as a team? When you’re still dating it’s totally different, but once marriage is in the picture (even when you’ve both made a decision that that’s where you guys are heading pretty soon), there needs to be openness, communication and an understanding of where you’re heading together financially otherwise it’s just going to be a constant problem. In business, when there is a joint venture, there is transparency in accounts and an understanding that both parties are now working to a common goal. Why would it be different in marriage? If you can't trust your partner to be open about this and vice versa then should you be getting married? (Read this)
Again, there is no one way of doing things! If you have a different way you like to manage the finances or if you have any tips, let's talk about it and help each other out! Drop a comment, like and share the post.