Society Expects
This is another one of those aspects of life where we have challenged the ‘norms’ of society. We decided to forge our own way of doing things by keeping our finances separate.
The accepted norm for couples is to merge finances, particularly when you own a house together as we do. In our opinion this would have led to unnecessary conflicts between us. We are both naturally frugal and would have resented any spending by the other which we felt wasn’t necessary!
What We Decided To Do
Essentially, we decided to keep entirely separate finances. We both still have our separate current accounts which our income is paid into.
All of our shared costs are split 50/50. This includes mortgage, bills, weekly supermarket shop etc. They are all added into a spreadsheet. This helps us keep track as we both pay for different items.
We are then free to spend our own money on personal expenses such as sports activities, social time with friends or birthday presents for our own family members. Any remaining money goes into our individual FIRE funds, housed in our ISAs.
An approach we have seen some couples take is to split joint expenses proportional to income. Mr Way, as the higher earner, offered to do this. Having discussed pros and cons, we decided that 50/50 would work best for us.
We each have separate current accounts and tot up what we owe to each other at regular intervals (mortgage, bills, diesel etc). This approach gives us the freedom to have discretionary spending when necessary (not very often anyway!) without feeling guilty.
Why We Do This
The main reason we chose this approach is to ensure we both feel like we are ‘pulling our weight’ and contributing equally to the household. Others may not have this issue, but we both see it as a matter of personal pride. This is why we stick to the straight 50/50 split.
Our biggest expense to date has been our house. We felt that if one of us contributed more to the mortgage, for example, it would feel much less like we were a team.
This also avoids any disagreement caused by non-vital spending. If our finances were combined, we are sure this would lead to awkward situations.
Why have you bought that coffee?!
Mr Way
We all need to treat ourselves every now and then and being able to do this without feeling guilty is important to us!
It is fun to set a budget and try to keep to it – it feels like a game! We are a collaborative team making sure we use as little of our resources as possible towards our expenses so that we can help each other achieve FIRE more easily. It also helps to be accountable to each other. If we set a budget, we feel we need to keep to it so we don’t let the other person down.
FIRE Timelines
Another reason why this works for us is because of the difference in our FIRE timelines. Mr Way intends to fully stop work when he achieves FIRE status. Miss Way is always likely to continue some amount of work, therefore requires a much smaller FIRE fund to cover the difference. We covered these plans in more detail in Our Version of FIRE.
Having separate finances means we can each contribute as much as we like to our FIRE funds to achieve our own goals.
Having said that, we are both saving a high percentage of our incomes and enjoy the competition of who can contribute the most each month! Mr Way’s FIRE fund is ahead in total value due to starting earlier, but Miss Way is catching up with some big contributions recently!
Develop Your Own Way
While the system we have developed works for us, it won’t be optimal for everyone. You need to find a way of doing things that works for you. Think carefully about this because money issues can destroy relationships! A 2018 study by family law specialists Slater and Gordon found money issues to be the biggest problem facing married couples.
This is particularly relevant if you have a different money philosophy to your partner. That is the case for the Mad FIentist and his wife, Jill. They covered the topic in this great podcast episode.
If one of you is very frugal and the other isn’t, this could lead to regular disagreements! Separate finances are probably most sensible in that scenario, too.
On the other hand, some couples will enjoy the collaborative approach of pooling resources and attacking their spending and saving together.
Which approach do you follow? Has it caused any issues? We would love to hear your experiences!
Pingback: The Full English -HM Rev & Customs MVP – The FIRE Shrink
My partner and I have a joint account into which we pay money towards the mortgage and utility bills, but other than this our finances are separate. Like you we add up how much each of us has spent on food and other items and delight in exchanging emails about the monthly bill. For me this gives me the freedom spend my money on as little or as much as I want.