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Money-family-finances are right up there in the top six issues in family
relationships. How to manage money and structure the family's spending is extremely important because money embodies power in a relationship.
Every individual brings to the relationship
his or her own history about and with spending. How the family managed their money and
who had the power regarding money, how money was spent and/or saved....all of these
factors create a legacy that gets carried forward and into a new marriage or committed
relationship. And, money is almost as hard to talk about as sex! Each couple who
embarks on the voyage of committed love has to fund it. Each partner makes assumptions
based on their definition of the "right" way to manage the money, and eventually,
often very soon, conflicts arise.
The model below is only one plan for how to manage money-family-finances in a relationship. There really is no "right" way
to structure the couple's finances. But, in order to avoid power struggles and control
issues, the following model works pretty well.
It prioritizes the money to fund the family budget
first, but it also allows for individual automony within the structure. It is based on a
two income family, but can be modified for the single income family.
Money-Family-Finances: Dave and Sandy
Here's how it works for Dave and Sandy. Dave owns his own landscaping business and Sandy
is employed at a bank. Sandy gets paid biweekly, and Dave's income fluctuates according
to when his customers pay. They own their own home and have two children. Sandy's complaint
is that Dave gets what he wants when he wants it and sometimes they cannot pay their household
bills. She also has been after Dave to help make a household budget and stick to it. Dave's
complaint is that Sandy is constantly reminding him about his spending and, when
push comes to shove, he's the one who is expected to come up with money for emergecies, trips,
etc. He hasn't wanted to do a budget because he feels that's Sandy's way of trying to
control him. Sandy pays the bills and balances the checkbook. So, it's time for
Sandy and Bill to deal with their money-family-finances.
Step 1. Dave and Sandy sit down with all of their bills. They include any bills that
fund the money-family-finances for the family lifestyle. This would include mortgage payment, heat and electric, food,
daycare for the kids, clothing for the kids, trash pickup, cable TV, school supplies for
the kids, karate lessons and dance class, repairs and maintenance for the home, and any
other bills that are family related. Because they had to refinance their home recently, Dave
would like to make double payments on their mortgage. Sandy isn't sure they can do that, but
will keep that open for consideration.
Step 2. Dave and Sandy decide which bills are personal or individual bills and they
decide that each of their cars and any expenses associated with that, insurance, maintenance,
and gas will not be household expenses. They are refinancing their home to take care of
their credit card debt. Dave doesn't want to use credit cards anymore and Sandy says she
needs to for trips out of town to her specialist, emergencies for the kids, etc. The couple
agree that Sandy will have one credit card. She will not go over a $500.00 outstanding
balance on that card at any given time. Dave will not use the credit card, and Sandy will
count her payments as a personal expense.
Step 3. Both Dave and Sandy state their incomes. This is easy for Sandy as she
has a predictable biweekly paycheck. Dave takes his income over a 12 month period and
averages his monthly income. Now they both know what they take home per month.
Step 4. The monthly household expenses come to $3500. Sandy brings in $1500 a month,
and Dave brings in $4500 a month. They also have decided to create a joint savings account and contribute $100 a month to that account for emergencies. When they open the account, they
will deposit $1000.00 taken from the cash they will get from their refinance. They have
decided that if the savings account increases, they will use the money for vacation or
trips, but will always leave $1000 in for emergencies.
Step 5. Sandy and Dave open a joint checking account. Their deposits will be prorated based on their incomes. Once they were able to get a picture of their
expenses and income, Sandy agreed that they could make double payments on the mortgage.
This raised the household expenses to $4200. Since Dave makes considerably more than Sandy, he contributes
accordingly. Sandy deposits $800 to the joint account, $400 each time she
gets paid. Dave contributes $3400 per month, but he doesn't have a predictable cash
flow. He acknowledges that he will need to deposit $3400 sometime between the lst and
20th of a particular month. The couple agrees that NO MATTER WHAT, the deposits will be
in the joint checking account to cover the
money-family-finances monthly bills. There should be no need for reminders or
questions. They both have access to the checking account and can check it at any
Step 6. They can now see how much money-family-finances they each have for their personal
expenses each month. Sandy has $700.00 and Dave has $1100. (The one with the larger income
contributes more but always has more personal money left over as well.) Dave offered to
contribute $200 a month to the emergency fund, which left him with $900. Sandy agreed
that was a fair arrangement. They would now have a joint household checking and savings
account. Each of them would have their own personal checking account. In this way, they
are committed to supporting their family-finances first, and then will have the freedom to make
their own personal money decisions without having to account for it to their
Money-Family-Finances: Communication Tools