Get More Bank Accounts! (How Kari and I Bank)
Let me start off by saying that this may not be the absolute right way to manage your money, but it's definitely the best way for us; it's simple, it keeps us happy, and it keeps us responsible... so I wanted to share it. Hopefully it'll work for someone else.
Everyone knows that money management can be a real stressful thing for any couple (and single person, I guess). In fact, Kari and I's marriage counselor, Dr. Don Gilbert, told us 3 years ago, that the 3 most common things that break up marriages are money, sex, and communication. And not that any of you care, but we got the second two on lock.
So Dr. Gilbert gave us all sorts of amazing money tips. Most were pretty straight forward; there were some stories about buying only used cars, tips on which debt to pay off first, etc. Information about that kind of stuff is all over the place. But there was one thing that really stood out to me. It's rather simple and may sound a bit odd, but that thing is have a lot of accounts.
You spend your money on several kinds of things, right? Why lump all of your earnings and expenditures into 1 big pot? It becomes confusing and easy to lose track - especially when 2 people are diving in and using it for various things like bills, going out, etc.
I ignored our counselor's "multiple account" advice for almost 3 years and during those 3 years Kari and I had some rough money issues. It was stupid and primarily because we weren't managing our money well.
Finally, I decided to listen to his advice and give it a shot. ...So here's how we do. These 3 things together make our life awesome.
1. One person handles the bills. If you're married, figure out who's better at accounting - which hopefully doesn't start a-whole-nother fight, haha. Kari hates accounting and she admits flaw in that department. I, on the other hand, am sort of anal about it... so it's a good job for me. I pay our bills and Kari trusts me to do so. It's great.
2. Billify everything that's billable (I just made a word up). If you drive cars, get yourself a set of gas cards. If you get groceries, get yourself a set of grocery cards. Turn any monthly expenditures into bills. ...and pay them off every month!
I got us a Chase VISA BP card. It gets us like 5% back when we get gas at BP but it also works at any other gas station in case we can't find a BP nearby.
I also set up a credit card with our bank (Wells Fargo) strictly for use on groceries. This card lets us get groceries anywhere we want and it also gets us reward points for every dollar we spend. Win-win!
Having these monthly expenditures turned into bills makes it sooo much simpler to budget and see where your money's going.
3. Finally, have 4 accounts (If you're single, have 3). This is the part I really ignored, but this is also the part that is seeming to be the most important. A lot of married couples share all their money in a single joint checking account. And while sharing with your spouse is an important thing, it's also important to have your own money - separate from each other, and separate from your bills.
Here's how you split it up. You have a joint savings account, a joint checking account, and you each have your own checking account. Also, feel free to make your spouse a secondary account holder on your personal checking account if you want. It comes in handy if you ever need each other to deposit a check, etc.
The joint checking account is strictly for bills - mortgage, groceries, utilities, cell phones, gas, etc. Also, try to dump a set amount of money into savings from this account. And with your leftovers? Throw them into savings too! Or keep them around and use them to buy gifts, travel, pay off some debt next month, etc.
Here's how money gets distributed into this joint "bills" account...
Each time Kari and I get paid, we transfer 70% of our check into our bills account. The other 30% stays in our personal checking accounts and is ours to spend however we like - basically, it's an allowance. Sure, I get paid a bit more money than Kari, so I put a little more into our bills account, but I also have a little more to spend. This means sometimes I take Kari out for dinner. And sometimes Kari has some leftovers and she'll take me out to dinner. It's really quite nice. It's like dating all over again!
No matter how you look at it, we are each responsible for our own "allowance." Just like a kid. And managing your own allowance is much, much easier than juggling your spending money, with your spouse's spending money, with your bills. As long as we put our 70% in every paycheck, bills are always covered.
So that may all sound like a lot of work, but it's actually crazy simple once you get started. Trust me when I say that it's nowhere near as complicated as having to constantly worry about who's paying which bill and who's spending which money.
I'm glad Dr. Gilbert gave us this idea... so hopefully this helps someone else.
Everyone knows that money management can be a real stressful thing for any couple (and single person, I guess). In fact, Kari and I's marriage counselor, Dr. Don Gilbert, told us 3 years ago, that the 3 most common things that break up marriages are money, sex, and communication. And not that any of you care, but we got the second two on lock.
So Dr. Gilbert gave us all sorts of amazing money tips. Most were pretty straight forward; there were some stories about buying only used cars, tips on which debt to pay off first, etc. Information about that kind of stuff is all over the place. But there was one thing that really stood out to me. It's rather simple and may sound a bit odd, but that thing is have a lot of accounts.
You spend your money on several kinds of things, right? Why lump all of your earnings and expenditures into 1 big pot? It becomes confusing and easy to lose track - especially when 2 people are diving in and using it for various things like bills, going out, etc.
I ignored our counselor's "multiple account" advice for almost 3 years and during those 3 years Kari and I had some rough money issues. It was stupid and primarily because we weren't managing our money well.
Finally, I decided to listen to his advice and give it a shot. ...So here's how we do. These 3 things together make our life awesome.
1. One person handles the bills. If you're married, figure out who's better at accounting - which hopefully doesn't start a-whole-nother fight, haha. Kari hates accounting and she admits flaw in that department. I, on the other hand, am sort of anal about it... so it's a good job for me. I pay our bills and Kari trusts me to do so. It's great.
2. Billify everything that's billable (I just made a word up). If you drive cars, get yourself a set of gas cards. If you get groceries, get yourself a set of grocery cards. Turn any monthly expenditures into bills. ...and pay them off every month!
I got us a Chase VISA BP card. It gets us like 5% back when we get gas at BP but it also works at any other gas station in case we can't find a BP nearby.
I also set up a credit card with our bank (Wells Fargo) strictly for use on groceries. This card lets us get groceries anywhere we want and it also gets us reward points for every dollar we spend. Win-win!
Having these monthly expenditures turned into bills makes it sooo much simpler to budget and see where your money's going.
3. Finally, have 4 accounts (If you're single, have 3). This is the part I really ignored, but this is also the part that is seeming to be the most important. A lot of married couples share all their money in a single joint checking account. And while sharing with your spouse is an important thing, it's also important to have your own money - separate from each other, and separate from your bills.
Here's how you split it up. You have a joint savings account, a joint checking account, and you each have your own checking account. Also, feel free to make your spouse a secondary account holder on your personal checking account if you want. It comes in handy if you ever need each other to deposit a check, etc.
The joint checking account is strictly for bills - mortgage, groceries, utilities, cell phones, gas, etc. Also, try to dump a set amount of money into savings from this account. And with your leftovers? Throw them into savings too! Or keep them around and use them to buy gifts, travel, pay off some debt next month, etc.
Here's how money gets distributed into this joint "bills" account...
Each time Kari and I get paid, we transfer 70% of our check into our bills account. The other 30% stays in our personal checking accounts and is ours to spend however we like - basically, it's an allowance. Sure, I get paid a bit more money than Kari, so I put a little more into our bills account, but I also have a little more to spend. This means sometimes I take Kari out for dinner. And sometimes Kari has some leftovers and she'll take me out to dinner. It's really quite nice. It's like dating all over again!
No matter how you look at it, we are each responsible for our own "allowance." Just like a kid. And managing your own allowance is much, much easier than juggling your spending money, with your spouse's spending money, with your bills. As long as we put our 70% in every paycheck, bills are always covered.
So that may all sound like a lot of work, but it's actually crazy simple once you get started. Trust me when I say that it's nowhere near as complicated as having to constantly worry about who's paying which bill and who's spending which money.
I'm glad Dr. Gilbert gave us this idea... so hopefully this helps someone else.