One of the absolutely best things my wife and I ever participated in was premarital counseling with our pastor. Among other things, he brought the topic of finances to the forefront for discussion and helped us put the right plan together.
Not unlike other families, our biggest issue was that I am a saver and my wife isn’t. She isn’t a big spender and doesn’t have expensive habits, but before marriage it just was not her nature to actively save and invest her discretionary income. The counseling enabled us to see potential pitfalls of our differing philosophies and led us to devise our own method of handling our money.
We were both committed heavily to preserving our family finances. However, we both also wanted the freedom to spend (or save/invest) a small portion the way we wanted. That led us to the model of one joint account for family finances, and 2 separate individual accounts to spend as we pleased. We decided on a mutually agreeable “allowance” (if that’s what you want to call it) that goes to our individual accounts. That amount is less than 5% of our net income which keeps the focus on the family financial picture.
The beauty of this is that we effectively eliminated the majority of discussions (arguments) related to discretionary spending. If I want to spend $300 on a golf outing with friends – no problem. If she wants to buy a Christmas gift for all her cousins, nieces, and nephews – so be it. I can save as much of my allowance as I want and she can spend as much of hers as she wants. One of the biggest benefits is neither of us questions the other’s spending because it doesn’t affect our family finances.
This is in complete contrast with our friends who only utilize a joint checking account. On more than one occasion, they have expressed their frustrations with each other pertaining to spending. For example, the wife wanted and purchased a new chair for the living room. To be quite frank, the chair wasn’t needed at all; she just saw a new one that she liked better than their existing one. The husband thought he should be entitled to spend the same amount of money, so he purchased several hundred dollars worth of video games and fishing equipment to “even out” the spending. Their expenditures tend to escalate as they both feel that they should be able to spend equal amounts of money and neither one of them controls the spending decisions.
Furthermore, they consistently criticize the purchases that each other makes for him/herself. The end result is that they spend considerably more on discretionary items than they would if they operated on the same checking model as us. Neither individual has an incentive to control the spending. In the long run, they will spend much more of their discretionary income than what I think either one of them realizes.
Every couple has their own philosophy when it comes to managing joint and individual finances. It’s important that everyone finds a system that works for them. However, some of those systems simply do not work as well as others and all couples should carefully consider the options. Those systems may play a big role in incentivizing either saving or spending.