Personal Finance 

Alternative Ways to Coupled Finances

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A few weeks ago I talked about how we handle our coupled finances but didn’t mention the alternatives that we decided against and why. In many instances we’re talking 1A and 1B, none of these alternatives are clearly or totally inferior to our system in any way, shape, or form; it’s merely that we decided to go with the system that we’re working with now. I’ll break down coupled finances as we did before, into the three systems of Where The Income Goes, How We Pay Bills, and How We Save and detail the alternatives that we didn’t go with.

Where The Income Goes

If you remember, I deposit my income into the account and my fiancée deposits it in another legacy account and then transfers it into our main account. Our plan is to have them both deposited into the main account but since she hasn’t talked to her HR yet, we’re in reality a hybrid between our plan and the alternative.

There are actually many alternatives but the concept is the same, you keep a main account where the bulk of the funds go and each person keeps a separate account for their own little slush fund. Whether you deposit your income into your separate account and transfer a set amount into the main account each month or you deposit your income into your main account and transfer a set amount into the separate account each month, the end result is the same. We opted against this option out of the need to keep things simple and reduce the number of accounts we had (plus the lag time between deposits).

There are benefits to having your own slush fund such as the ability to retain your independence and not feel the need to discuss every minute expenditure with your partner out of a feeling of obligation.

How We Pay Bills

We pay everything from the main account. For us, there weren’t really many alternatives since we only had one funding source. Responsibility fell upon whoever was listed as the account owner, so if it was my credit card then I’m responsible for paying the bill. For the mortgage bill, cable bill, water and electrical bill, that’s auto-debited so no one is actively paying something each month.

We didn’t really consider any alternatives to our one account system because there really aren’t any (if it can only come from one source, it can only come from one source) but there are several if you have individual accounts. In theory, if the purchase was for an individual and not the couple, payment for that item or service comes out of the slush fund. If it was for the couple, it comes out of the joint account. Mortgages and other household bills would be paid for from the joint account whereas the trip to the spa/barber/salon/bar/whatever would be paid for from the individual account.

How We Save

This particular category is the one least discussed about because it doesn’t really change as much when you become a couple, other than to make sure both individuals are on the same page. When discussing retirement, we make sure that we’re both contributing to our 401k’s at work, which gets deducted from our paychecks. We also discuss contributing to a Roth IRA, which is funded from our main account.

If you run with an alternative slush fund type account, you probably want to get a savings account as well that you can earmark for retirement savings such as a Roth IRA. Since the idea of the slush fund is to retain independence, if we were to roll with it we’d probably have independent savings accounts that received regular funding from the main account.

There it is, the alternatives we considered but didn’t go with. They aren’t bad alternatives, just ones we didn’t pick.

{ 2 comments, please add your thoughts now! }

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2 Responses to “Alternative Ways to Coupled Finances”

  1. Jack says:

    I have talked about having a Joint account for the main bill-pay, and separate accounts for each of us (me and the missus) with many people – and most of them say we are nuts to have so many accounts (we have joint checking & savings, and each have our own checking/savings). But we find it is the best solution for “fun” stuff and other day to day discretions – eating lunch at work, buying an occasional fun “toy”.
    And now that we have a kid, we have opened yet another savings account for him – and that is the best scenario, because while we feel free to transfer out of our savings to cover monthly expenses, taking from the kids account is emotionally a lot harder, it is “his” money, not “ours”.
    Overall I suggest the multiple accounts for couples who want to pool their resources but still have discretionary funds available besides a cash allowance. One thing though, make sure you can access all of the accounts from the same login – we kept my login private from her and vice versa, and after a while that gets really old.

  2. Adam Frazier says:

    Trying to purchase an engagement ring for my girlfriend. Was trying to see the options of having it deducted straight out of my paychecks.

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