It is often said that money doesn’t bring happiness. That’s true, but organizing the money you have certainly does bring happiness (and maintains your sanity). As humans, are are all possessive of the things we own. This is especially true when it comes to our raw finances which can make the difference between living comfortably and struggling to make ends meet. Unfortunately, the topic of basic finances and accounting is often left out of the high school and college curriculum.
Have no fear, this article is your substitute to missing all those lectures when you were younger! Just kidding, but you can at least take some of this advice and run with it if you so desire. Keep in mind that we are not licensed accounts, tax attorneys, or anything “official” relating to finances. We are, however, knowledgeable on the subject from our own anecdotal evidence. So, basically, buyer beware!
Honestly, this topic isn’t relevant unless you’re in a serious long-term relationship such as a domestic partnership or marriage. If you’re just dating someone casually or aren’t ready to commit to your significant other, feel free to pass on this article. But if you are on the long road ahead with someone at your side, trek onward!
Before you commit with someone, you probably have your own saving or checking accounts (at the very least). If you don’t have either, get one! Your paychecks might go into either account, your interest rates accrue some bonus money, and everything is fine with your finances. But, then comes along another person with their own accounts, goals, and money just asking to mess up your flow. Ugh, what a chore!
You’re OK with the situation though because you’re reading this article, and you’re ready to learn the best ways of handling the situation. After you’re married, joined by the state, or are in any way legally recognized, you should leave all your existing bank accounts alone. Instead, open a joint bank account between you and your partner with equal access rights between the two of you.
This is convenient because you can pay for your personal items and bills through your personal bank accounts and pay for joint items and bills through your joint account. Every now and then (or automatically if you want), you can both deposit amounts to your joint account and keep track of who deposited what amounts. This way, if there’s any trouble down the road, you have an audit trail of who deposited money and what was spent from the joint account.
Examples of some personal items from the personal account:
- Your own clothing
- Specialty food items for yourself
- Hobby items and gadgets (cars, computers, etc…)
- Gas for your own car
- Gifts for your own friends
Examples of some joint items from the joint account:
- Gifts to family members
- Utility bills if living together
- Mortgage or rent payments
- Groceries for each other
Separating your purchases into these separated accounts helps with sanity, understanding where you money has gone, who has contributed what to the joint accounts, and reduces certain legal risks if anything unfortunate should occur down the relationship road.
Just remember, it’s not a competition! While it’s nice to balance each other out in terms of contributing to joint finances, it is sometimes inevitable that one may be contributing more than the other due to the job situation.