5.25.2012

Guest Post! One and a Half Incomes: How I've Managed Money After Marriage

Happy Friday everyone! I've been doing a lot of guest posting lately and they've been popping up this week, so if you get a chance - please stop by Nick's blog Step Away From the Mall and check out my post The Fine Line Between Being Generous and An Idiot.

Today I have Edward talking about the unique way he manages finances with his wife, and how they avoid financial conflicts. I really enjoyed reading about the way they do their "budgeting" and how it works for them. All couples are different, so it's nice to see how people manage to avoid arguments over finances. I also like how he is so open with us!

We're participating in a blog swap, courtesy of the Yakezie forums (hosted by Newlyweds on a Budget) and we're all talking about the same topic today, so check out my posHow to Overcome Financial Conflicts with Your Partner on his blog if you're interested! :)

Edward is a construction worker, blogger, tinkerer (love that!), and a house-husband. He uses his experiences to create a unique viewpoint on life and money. Be sure to stop by his blog and say hello!

Fifty percent of all marriages end in divorce, and the leading cause of those divorces is money. There was a point early in my marriage where I thought I was headed for that statistic. I was out of work and we were broke. Even after I found work, it's only been temporary jobs and I make half as much as she does. I tell people that we live on one and a half incomes. Over time, we worked out a system to deal with my low pay and unsteady checks. Here is our system.

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I Let Her Do It

At first, I did the budget. It seemed like the sensible thing- let the guy with the Physics degree juggle the numbers. But there was one little word that kept tripping us up. That word was “no.” I have a pathological inability to say the word. I could write a whole other blog post about that. But whenever my wife wanted to buy something extra, or go out, she would ask if we could afford it and I would figure something out. Needless to say, we weren't getting ahead.

When we figured out that I was letting her buy things we couldn't afford, we switched. She controls the budget. If she wants to buy something, she checks the budget first. If I ask and we can't do it, she has no problem saying no. We still discuss big purchases, like the tv we got ourselves as a house-warming gift for our first house. But dinner? A night out? No need to get into a fight the day later because we couldn't afford it.

There is No Budget

My dirty little secret:
We don't actually have a budget.

At least, we don't have anything that most people would recognize as a budget. Instead, we have an ongoing cash-flow projection. We originally did this for a very pragmatic reason: to make sure that when a bill was going to be due mid month, there was actually going to be enough money in our checking account.

In most people's budgets, blowing the entire entertainment section in the first week simply means no more entertainment spending for the rest of the month. Back then, it could potentially mean the rent check bouncing. So we projected our account balance on a daily basis for three months at at time. As things changed, or included items were spent, we updated the spreadsheet.

Things aren't that tight anymore. We always make sure we have extra money in the checking account these days. But we still project our cash flow instead of using a more traditional budget.

The $1,000 Buffer

A I mentioned, we keep extra money in the checking account these days. $1,000.  Part of the reason is step 1 of Dave Ramsey's Total Money Makeover plan – have an emergency fund of at least $1,000.
It also gives us peace of mind, just in case there is a math error lurking somewhere, or some charge that we completely forgot about. This happened to me before I got married. I wrote a check for some fund-raiser and it took them 6 months to cash it. I went out for a friend's birthday and spent $100 that I thought I had, but actually was already spent.

That day, the fund-raiser finally cashed the check and I had 9 different debit card transactions over-draft. I spent an entire pay check on over-draft fees. I vowed never again.

And now we have a mechanism to make sure it doesn't.

Do you have any financial planning quirks that you've worked out for your relationship?

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