Relationship Hack: “Independent Money Management, Common Money Pool” - How to Make it Work

I mentioned some time back that I have started to hang out quite a bit these days in the forums on Steve Pavlina’s site. Recently, one of the participants in the forum asked folks to share their views on"The Family Budget and Your Spouse". I left a rather long comment, and since it is something that works for me and the better half, I thought I would share with y’all as well. Maybe some of these tricks will work for some of you too. Any suggestions for improvement, or your personal “relationship & money” hacks, are most welcome.

Set common goals, not common means to get there
Both the better half and I have very different idea on how money should be managed, budgeted etc. So one day we sat down and decided on some common goals that we both agreed upon. We could not however agree on what was the best way to get there. We agreed to disagree.

Do not try to impose personal will on the other
We are both "smart" people. While we agree that the other person's idea is great, we just don’t see why it is better than our own. So we decided not to impose one person's will on the other. Each person is free to follow his/her own choice. We just have to find a way to make this work, so we can each be independent and yet work towards a common goal.

Set clear expectations, but don’t let it "divide" us
To make this work, we decided to agree on what each person’s responsibilities are. So we sat down and decided which bills each one takes care of, how much each of us will contribute towards the long term goals etc. We do not however want it to "divide" us. So, when some "unexpected" expenses come up, we do not argue over whose responsibility the new bill is - one of us volunteers for it, the other person accepts it gracefully and steps up when something else comes up. Ultimately, we are both on the same team. We try to remember that the boundaries we have created are not about the money, but how to manage the money . Also, for large expenses (in our case anything > $100), we always talk to the other person first. It helps remind that, while the decision to spend the money is independent, it is still common money.

Don't Micromanage Each Other's Accounts
Finally, the most important one. At least for us. Since we have clear boundaries, we respect the boundaries. Each of us is free to spend/save our own money as we see fit. We do not micromanage (i.e., meddle in) each others accounts. We share ideas and we discuss what each of us is doing, but don't dictate what the other person should be doing.

That said, I have to admit, it wasn’t easy to get here - especially since both of us are fairly strong personalities. Like everything else in a relationship (and life itself), this needed some hard work, some adjustment on each of our parts, and some ad-hoc learning as things progressed. But now we are at a stage where things work smoothly (most of the time anyway :) ). One nice side-effect is that we have an unspoken competition of who can take on the most responsibilities and yet save more than the established commitment to our long term goals. Some healthy competition is good for a relationship :)

While I am at it, I want to highlight a part of Steve’s reply to the post -

Erin and I used to maintain a family budget. It got tedious after a while, and we soon abandoned it. Niggling over a few bucks here and there was pointless, and we soon saw the futility of it. We learned it was far better to focus our energy on boosting our income to the point where keeping a family budget wasn't even necessary.

I have mentioned before – I am very impressed with some of the things Steve has to say, but not so much with some of the other things :) In the comment above, I think the part about “focusing energy on boosting the income” is great! But the part about “reaching a point where a budget wasn’t necessary” was not all that good. Budgeting to me does not necessarily mean keeping track of every penny you spend, but having a clear enough understanding about where the money is at and what it is spent on, in addition to having some basic guidelines of how much can be spent, how much should be saved etc. So no matter how much the income grows, I still think it is necessary to have some kind of budget in place.

Well, that’s just me. What do y’all do to stay sane (and independent) in a relationship while managing the money towards a common goal? What do y’all think of Steve’s comments?

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Brett McKay said...

Great post, ISPF. My wife and I decided to maintain a common account. It's worked out well for us so far. I admit that I can get a little overzealous in my frugalness, but my wife lets me know and I back off. The key is communication. I think its a great idea if couples sit down once a week to go over the finances together.

ispf said...

Brett: Yeah, the key is to have good communication. Even if couples can't agree on one common method for handling the money, as long as it is clear what the common goal is and how each one will contribute towards the common goal, maintaining peace and growing the nest egg is quite easy.