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Joint Banking, Budgets, and Savings

By: Green Panda | Date posted: April 22, 2009 (7:05 am) | Write a Comment (9 Comments)

joint-account-financial-chart

Joint budgeting has been a topic for the past few weeks on some personal finances sites. Several bloggers have been posting their financial maps. Personal Finance Hour had a great show on couples and finances with Jim and J.D sharing their differing opinions on how they handle their family’s finances.

I decided to update on how we handle our finances since I started my new job a few weeks ago. On the chart above, I have  big picture view of how our finances are organized. I’ll attempt to clarify it with some explanation on how we budget our family’s finances.

Our Joint and Individual Bank Accounts

  • Joint Checking: This is our main account and a big chunk of our paychecks is directed towards it. It’s an online bank account (we used to have a Bank of America account) that we use to pay our bills like rent, groceries, cable, light, Internet, doctor visits, and car insurance . My paychecks come in on a weekly basis and my husband deposits twice a month. The majority of our bills are scheduled and automated.
  • Joint Savings: We  use this to keep our emergency fund and our house down payment. With interest rates going down, we’re not earning as much as we did before, but it’s still more than the local bank options right now.
  • Individual Accounts: We have our individual accounts at Wachovia. These individual accounts are for splurges such as lunches out, gifts, gadgets, and gasoline. These are minor accounts money-wise. In case of an emergency, we can access each other’s account.

All of our accounts have no maintenance fees. Our joint accounts also earn some interest.

We have our paychecks come into the brick and mortar bank more based on feeling as like to have the option to walk up to a local branch to get something settled than reflection of ING Direct’s customer service, which as been great. We know a couple of Wachovia’s account managers personally, so that also helps if something comes up. We may change this arrangement in the future though.

How We Budget and Plan:

We use a Google Spreadsheet for our joint budgeting. It’s free and easy to use. It lists our deposits and expenses for the month. We also add a buffer in case we go over what we plan. Using Google for our joint budgeting spreadsheet is great as we share the spreadsheet and it notifies the other person of changes. We review our  spreadsheet on an as needed basis such as when we went down to one income.

I also use Mint to keep an eye on our spending habits and set have alerts sent if we’re getting close to reaching one of our spending limits, such as eating out. We keep each other in the loop with balances before we had out to go shopping.

How We Handle Paying Bills

We’re currently using proportional budgeting to determine how much each of us puts into the joint account. Basically the deposit is based on the ratio of our income to the family’s total income.

Here’s an example :

Family Income

  • Person 1: $2100/month
  • Person 2: $1400/month
  • Total Income:  $3500

Family Expenses

  • Bills: $2800/month
  • Person 1 brings in 60% of the income.
  • Person 2 brings in 40% of the income.
  • So here are the deposits:

Family Deposits

  • Person 1 deposits $1080. That’s just multiplying the bills by 60%
  • Person 2 deposits $720. “”

How We Set Our Online Bill Pay

It took an hour to set up most of the accounts on Bill Pay and we only need around 20 minutes a month to pay bills. It’s very easy to maintain. We took copies of our bills and set them in a pile.

I entered the bill names, addresses, due dates, account numbers, and bill amounts with our bank.  We set some of the bills up to be recurring, such as electric and cable. You can also set up your quarterly bills, like rental insurance. If the bill’s changes from month to month, I can just login and change the amount in a minute or two.

If there’s a mistake with a paycheck, such as the wrong amount was deposited, I could just sign into the bank’s site and fix it quickly.

Why Our Budget Works For Us

We feel like proportional deposits are a more fair way to handle the bills for us personally. We both have some leftover available after paying bills and saving. We’re saving for our goals and working together on this.

It also helps that we discussed finances before we got married. Honestly, it took time to adjust from the ‘you and I’ to ‘us’ as we went from single to engaged to being married. We’re both involved with financial decisions and do our best to work on our goals.

Other Perspectives on Joint Accounts and Budgeting

I find it interesting to see how other handle their finances as a couple.

I’d  like to know how you handle finances as a couple.

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9 Comments
  1. Comment by the weakonomist — April 22, 2009 @ 7:21 am

    This is a great summary, I always appreciate it when a blogger goes into so much detail about their personal lives, especially since I do not.

    Hopefully the economy will recover and interest rates can rise again, I miss 5% returns at ING.

  2. Comment by Baker @ ManVsDebt — April 22, 2009 @ 8:02 am

    Very nice post!

    It sounds like our finances (apart from having the small separate accounts) are very similar. We budget in a spreadsheet and pay 95% of regularly scheduled bills online.

    Appreciate getting your perspective on this issue! Thanks so much for the link-love, as well. This has been fun reading for me to see how everyone handles their finances!

  3. Comment by The Happy Rock — April 22, 2009 @ 9:21 am

    That is one detailed post GP.

    The Rockette and I have completely merged finance. Both names on everything and one Electric Orange checking account for all expenses even personal spending. We still have a joint Wachovia account in case we need branch services which we haven’t in years and one rewards credit card.

    I am the finance nerd, but we have lots of open discussions on money when needed and to be honest they aren’t really needed and there really isn’t any fighting at all. While we were digging out of 70k in debt in 4 years, we both pulled together and changed our financial habits. We don’t even budget(anymore) other than a monthly round up meeting to review expenses and look at the next month. I will say that being debt free except for the mortgage changed our financial lives as did working hard to get on the same page with money. We also did pre-marital workbooks that made us tackle some of these issues ahead of time.

  4. Comment by Matt Jabs — April 22, 2009 @ 10:31 am

    Excellent & thorough post on the matter Laura, thanks for this.

    I too have witnessed the popularity of these maps around the PF crowd as of late & will be working on mine as well.

    I followed you & subscribed to your RSS & look forward to future articles!

    Matt Jabs aka DebtFREEk!

  5. Comment by Alan @ Saving For Serenity — April 22, 2009 @ 9:48 am

    Great post!

    My fiancee and I are getting married in less than 4 months, and we’ve already begun the process of combining our finances. This post was helpful to see how someone else is handling their finances a few years down the road. I totally agree that it is going to take some time to move from the “me” and “you” to the “we” or “our”. My fiancee isn’t having as much trouble with it as I am.

    One question though – why do you do proportional bill pay? Is “the rest” of the money that doesn’t go toward the bills your individual spending money? I think that in our relationship, all our money will just go into a pot, and we’ll pay the bills out of the pot, and then just budget us each some money for the month for individual expenses.

  6. Comment by Green Panda — April 22, 2009 @ 6:12 pm

    Thanks everyone for your support. It’s amazing how relationships money work in different situations.

    @Alan: Between paying bills, setting aside retirement money, and building savings for our emergency fund and house down payment, leftovers are relatively small in the individual accounts. Since paychecks flow from brick and mortar to the online accounts, the leftover money is pseudo-allocated. If we had paycheck deposited into the online banks first, then we’d probably do as you do.

    @Matt Jabs: Thank you for the follow. I’m now following you on Twitter, maybe we can chat sometime.

  7. Comment by MoneyEnergy — May 1, 2009 @ 6:02 pm

    I need to learn how to not pay any “account fees” at my own brick and mortar banks. Best I can get it seems is the “student plan” for about $4/month. Would love to hear tips on not paying checking/savings account fees!

  8. Comment by Matt Jabs — May 1, 2009 @ 11:01 pm

    @MoneyEnergy

    I banked brick & mortar for 15 years now & never found a way to completely avoid fees, so I switched to ING and haven’t had a fee since.

  9. Comment by Blue Panda — May 4, 2009 @ 1:55 pm

    @Alan,
    As Green Panda said, the money flows from our individual, brick and mortar accounts to our joint online accounts. So the leftover money in our accounts is more or less guilt-free individual spending money.

    For example: With the bills and savings accounted for in another account, I know how much I have left if there’s something I want to buy at any given point in time. And we don’t have to consult with each other as much when pulling from our individual accounts as we would with the joint accounts.

    But the line is pretty blurry; we use our individual accounts on each other all the time.

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