Who handles your family finances? Is it just one person or is it a joint effort? When it comes to the personal financial plan for a family, there are many ways to approach managing the budget. How you keep track of your family finances often depends on whether your finances are joint or separate. Some families have successful marriages with separate finances, while others share everything, including the responsibility of paying the bills. Some writers may argue for one system over another, but the important thing is to have a system in place.
Separate Family Finances
As I mentioned, some couples have a great marriage with separate finances. Growing up, my parents had joint everything. You can imagine my surprise when I heard that there were couples who kept separate savings accounts. While I am not the expert on this system (for obvious reasons), there are many ways that this works for families. Typically in these situations, both partners are employed. As far as I can imagine, having one stay at home parent would not be a recipe for financial success. With both spouses working, each keeps separate bank accounts and they split the bills. Some may split the finances equally, while others agree to pay for certain things.
While the logistics are different for each family that chooses this route, this can offer a lot of security to each partner. No matter what happens, each partner is thinking about their finances. This means that they are more likely to plan and save for retirement. If something horrible happened, each would be able to survive without too much difficulty.
Shared Family Finances
Other families, like the one I grew up in, have shared finances. All income and expenses are shared. Some families have both partners working, but it is also possible that one will stay at home to raise children and avoid daycare expenses if there are little ones running around. Sharing your finances usually requires clear communication between partners. If communication is not a priority, one partner could spend too much money.
Having joint finances often (but not always) means that one person is in charge of the finances. If they are on a budget, this person is the one who monitors spending. This has advantages and disadvantages. It is often easier for one person to manage all of the finances because there is a clear line of responsibility. The odds that a bill is left unpaid or forgotten are low. However, this also means that it takes clear communication for the one “in charge” of the finances to share the results of the budget – where they overspent, where they were under their budgeted amount, etc. Otherwise, it can lead to an unhealthy relationship. One partner may be trying to personal financial plan for the future while the other spends away all of the money. A recipe for disaster!
My Family’s Finances
Since both of our parents shared their finances, my wife and I followed suit. We have one joint bank account where our checks are deposited. From this joint account, we pay all of our monthly bills. Since I am a personal finance blogger, you may be able to guess who is responsible for keeping track of our finances. For over two years, I have been the one to create the budget and keep track of expenses. This responsibility was not forced on me, but I chose it willingly. Every month I get really excited to see how our spending matched up with our budget! Imagine the excitement a child gets when opening presents at Christmas. Yes, it’s that kind of anticipation.
As we have been setting financial goals and celebrating our financial achievements, my wife has taken an increased interest in the budget. The past two months she has helped me add up our expenses when we determine how we compared to our budget. Because we are thinking towards the future, she is now partnering with me. This is a huge change. It used to be that she could care less about sitting down and budgeting. Now, I can see the excitement in her eye when the end of the month comes.
Granted, when I told her I was writing this post, she denied her interest. She said something to the effect that she is just trying to be supportive of my interests. While it ultimately doesn’t matter too much if she takes as much interest as me in our finances, it is nice to see that she that she is excited about our finances. (No matter what she says, I know she is interested) Her interest in budgeting reminds me of the importance of celebrating your success. If you do that, I think anyone can come to love finances.
How does your family manage the family finances?
This is an article written by Corey at 20’s Finances. He writes about cutting costs, managing your finances, and saving for the future.