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.