Staying on last weeks topic of budgeting, let’s talk about how couples go about budgeting and sharing their finances. From what I’ve seen/heard, in the majority of relationships one person tends to be better with money then the other. In some cases they are much better with money and in other cases both parties are not very good with money or both parties are really good with money.

Me and Eric were definitely at opposite ends of the spectrum when we first started dating but we’ve since re-alligned our priorities a bit and now we’re both pretty good at saving. When we lived together in between college we would split all our bills pretty much right down the middle. We made close to the same amount of money and so we’d just each pay half the rent and half the bills and then swap out who paid for groceries.

Last year when we lived together since we were both in school my parents were taking care of rent for us so I paid for the bills and he paid for all our food.

It’s worked well for us over the years but not without a few glitches. Since we are crazy grocery shoppers, we tended to spend a lot of money on food, which obviously wasn’t fair to Eric.

Anyways, I’ve seen around the interwebs bloggers raving about the Suze Orman method of budgeting. I thought this seemed really interesting so last night I decided to do some research.

According to the Suze Orman method, the way most couples split expenses is 50/50,  but she argues that doesn’t make sense at all and especially not if one spouses income is significantly higher then the other. Her formula is to split each spouses income by the total household income and that comes out with your percentage of how much each person should pay. There’s a very good explanation of all this here.

Now I’ve never tried this myself so I have no idea how well it would work; maybe some readers have some feedback?

She also doesn’t really talk about joint accounts vs. separate accounts. Me and Eric keep our money relatively separate. We have our own spending accounts and our own savings account. We also have one joint savings account where both of us need to be present in order to withdraw money. This is the account we used to save for Europe and it worked really well for us over the last few years.

That’s not to say that one day we might merge our finances even more, but I think no matter what I will always have my own money, too.

I know that lots of people were *shocked* when me and Eric signed up for our joint savings account. A few of my friends claimed they’d *never* share a bank account with a guy. Never say never

So, I’m curious to know how you and your spouse deal with money? Do you share money or have your own accounts? Do you split things 50/50 or use something more like the Suze Orman method? And, if you don’t have a spouse, what do you think you will do one day when you do?

Discuss! And don’t forget to check back for my replies to your comments.

Has anyone seen Til Debt Do Us Part? It’s basically about couples who are living far above their means and are in serious debt. In one case, if they had kept living the way they were living, this one couple would have been over $1 million in debt within three years.

Gail, is a financial analysis/hard-ass who comes to their homes, assesses how they’re living, and puts them on a strict cash budget. She separates their weekly budget into these little food cans and basically when the can is out of money for the week, their out of money for that one thing.

So, if the gas can runs out, guess their walkin until next week.

That’s Gail, and those are the cans she always uses, except obviously they usually say things like “Gas”, “Entertainment”, “Groceries” etc. on them.

{Source – also some really good budgetting advice here}

And, of course, they have to put a certain amount of money – as much as they can really – towards their ever-growing debt each month.

I’ve always found this a fascinating way to budget. I mean, it’s simple, if the money in the can runs out, your money is done for the week End of story.

But, for someone who makes a different amount of money each month (me!) that’s hard. Depending on how much freelance work I pick up in any given month my income can vary by as much as hundreds of dollars. So it’s hard to budget an exact amount for groceries, gas etc.

For now, I’m tracking my income and expenses in a spreadsheet that my mom created for me. It’s working out really well and I see that I don’t really spend a ton of money on things that aren’t necessary. I never shop for things like clothing. I think if anything, I could cut down on my “miscellaneous” expenses –  a starbucks coffee here, a dinner out there etc.

Another thing that I’m finding it difficult to plan for/deal with is unexpected expenses. For example, just the other day I had to take Webster in for his annual shots. I wasn’t anticipating them or the $120 cost. It’s not that I didn’t have the money to pay for them, it just kind of threw me for a loop, you know?

So, tell me, do you budget? And, if so, how do you go about doing it?