I’ll call this Option I – as in I pay for everything.

Works really well for us, but we haven’t heard of anyone else doing the same.

My husband and I (no kids)- earn approx. the same amount (some years I earn more, some years he does- but it is usually within 10% of each other).

We each pay for different bills so that it works out to paying 50/50. Then we make a big picture budget (i.e. if our goal is to make extra mortgage payments of 25,000 that year and also to put aside 15,000 for a renovation or travel etc, we build up those accounts based on who has the money first in their account after expenses & RRSP/investment contributions are paid – we both get paid a base salary plus commission and bonuses -paid out at different times of the year which is why we have the first paid, first to contribute rule in our “goal acount” – the goal account doesn’t always work out to be 50/50 in terms of what we each put into it every year but we don’t care since it is a financial goal – not a bill).

We pay ourselves first so whatever is left once the bills & savings & “goal” funds are paid, is up to us to spend. We do not go over each other’s spending habits.

We have 1 joint VISA. I pay for what I spend on the Visa and he pays for what he spends (if it was a joint purchase, then we split it).

We have 2 joint chequing accounts. I am the leader of 1 of the accounts (the one that has my pay cheque going into it) and he leads the other (his pay cheque goes into it). We can both see what the other is spending (so it prevents me from going on a crazy shopping spree- I need the accountability to him- it is not that he doesn’t trust me- he has never questioned my account).

Another reason we keep the accounts separate is because I personally feel rewarded by sticking to a budget- (as you may have noticed, i was not always good at budgeting and would spend more than I earned), now I know that I have self control.

We have said that this is a temporary solution. In another year, we are going to only have 1 joint account- it was more about teaching myself control & responsibility. I feel that I am on my way of mastering my finances.

We are each responsible for investing in our RRSPs- we each use the ETF couch potato strategy so there is no confusion over what to buy in our portfolios or when to buy either.

I’d like to comment on Option F: the Dictator System. My friends work on a modified Dictator system. In this situation, his salary is substantially lower ($55K to her $95K), and he controls all the money. Rather than have even an allowance, she is admonished not to spend a penny (!). As you say, this leads to deep resentment and she understandably has occasional spending fits where she’ll spend enormous amounts on their children as a proxy to herself. In turn, this leads to enormous levels of disparity: he has a growing collection of high-tech toys; she dresses at Superstore; her daughter at Aritzia.

I am told that this setup is her way of compensating for being more successful.

Thanks for the article – well-written and enjoyable.

The above is in past tense because things changed when I proposed last September. As Gates pointed out, it is really a system that needs to evolve. Holding individual credit cards and bank accounts starts becoming a pain, as is keeping up the spreadsheet every month. Our first step was to apply for a new joint credit card. By combining all our spending on one card, we can accumulate points much faster. But the real benefit is expense tracking – all our purchases tracked in one place, thus providing a budgeting alternative to the spreadsheet. We only use cash or debit when absolutely neccessary, so that we know where our money is going. So far we’ve just been alternating paying the credit card bill, which obviously isn’t fair but we plan to merge our bank accounts anyway so it doesn’t matter.

Right now we’re still in transition, making sure our old credit cards don’t get any new charges, and still maintaining separate bank accounts. The goal is to eventually end up in option D. Even though I’m a saver and she’s a spender, reviewing the credit card statement together keeps her from blowing too much on frivilous things like a new purse every month. Yes, every purchase is scrutinized (for both of us), but this is not “a nightmare”, it is just a way to ensure we stay on budget. The key is to avoid criticism and blame – and don’t force your partner to justify every little thing! As long as a guilty conscience can keep her spending under control, I don’t think we will need to resort to option E.

Re post # 38, I think you mean T1213. The T3012 is for something else entirely.

Every year you can add $5000 (adjusted with inflation to the nearest $500) to your existing account, plus any amount you’ve taken out in the past.

An example: If you put in 5000 now, and take it all out in August, you get to put in 10000 in January. If you don’t take any out, you can still add 5000 new.

A follow up to amit. The house is in both of our names. The car and about half of our RSP is in her name through spousal contributions. She also has a small non-registered dividend paying investment account and is in the process of opening a TFSA.

Wealth Manager: I have also contributed $2500 per year to RESP for 2008 & 2009. That government grant of 20% for each year is great. We both have our RSP’s with discount online brokerages (Credential Direct) and I have a maxed TFSA (ING) which I use as a combined emergency fund/savings account. My mortgage is up for renewal in July and I’m considering starting the Smith Manoeuver (I’ve read the book) for a non-registered investment account but haven’t completely made up my mind yet.

I have a question about TFSA’s if anyone can help me. Does the maximum amount of $5000 accumulate yearly?

Individual paychecks into personal accounts (employer requirement; we both work for FI’s) and we keep $100/paycheck each for “whatever we want” and the remainder all goes into the joint account. The joint account covers food, mortgage, bills, clothing etc. The personal accounts get used mostly for gifts and personal items which we deem outside the norm for joint money use (have never had an argument about this last point in 8 years of marriage so far! Many cases we use a “top up” approach so only some personal money is used).

We each have individual credit cards for those gifts and personal items mentioned above while the joint credit card is used for virtually everything we can put on it (for the points, purchase security, and additional warranty) and pay out of the joint account (balance paid off monthly).

We also have individual investment accounts – primarily due to ease of transfer in/out of personal/joint accounts but also to make tax reporting a little easier (less of a headache than 60/40 splitting gains and such). As well as these, we have brokerage based RRSP accounts, TFSA accounts and a joint family RESP account for the children.

The only area we could improve upon is non-RRSP/non-TFSA investment account contributing. As my wife and I are roughly 60/40 in salary, the “higher income earner paying the bills” as noted above would be slightly more tax efficient. Then again, with the TFSA now being an option, this isn’t going to be that big of an issue since we really won’t have much at all left over for standard investment accounts after maxing RRSP’s, the RESP and TFSA’s!! Accomplishing all that is a feat in itself.

Excellent thread here – really enjoyed reading all of these.

At the end of the day, the law requires that 50% belongs to each party. So the joint account is that natural evolution of any married system. All long-term couples end up at (D), if not mentally then at least legally.

But look at it from the start to see the evolution.

The simplest method is (B), separation. “You take these, I take those”. But the method has no long-term staying power. The bills will change, needs against those bills will change. Plus, most couples move into a big purchase at some point, and this is not really “split-friendly”. “I pay the mortgage, you pay the car” doesn’t really scale when you need a second car or a big repair comes around. So it inevitably leads to…

(C), 50/50 split. Now, the couple simply have to agree on the bills and then they both dump money in the pot. This is easier, it’s not “my car” and “your groceries”. It’s “our” stuff. Of course, now that we’re both paying for “our” stuff together, it’s time for…

(E), joint and personal accounts. Now we can manage our own finances and let the partner help manage the “group finances”. Of course, the 50/50 split that we’re using to manage will inevitably break down. Stay together long enough and someone is going to get a bigger raise, lose a job, go back to school or have a kid. This inevitably leads to …

(A), percentage split.

Now, one of two things happens. By this point, the couple are typically married (or equivalent to married). Whether by common-law, child-bearing or actual marriage. (All of which basically imply that resources are now shared equally)

Once you’re into the equal sharing of resources, then the notion of (E) becomes kind of futile. So you slowly start drifting towards (D). You become joint on each other’s accounts, you close the extraneous accounts and you start moving money together.

The only real problem that remains is that you don’t like how your partner spends “your” money. Couples inevitably disagree on discretionary purchases. So that’s when you get to option…

(G) – Joint accounts and “Adult Allowances”.
It’s kind of like (D) because all of the money is shared.
It can technically be done without separate accounts (just cash). But really, post marriage, the “separate accounts” are nothing but a convenience, a personal piggy bank.

But AFAIK, this is the end of the line for partners.

Everything is still shared, but couples get to fund their own hobbies from their “personal spending”. It makes “taking out your partner” into something really special. B/c you’re actually sacrificing your money for the week.

Thanks for the great post. I would like to propose that (G) be added to the list :)

Whenever the bills exceed what is available in the joint account, (or there is a big purchase), we each transfer over an additional amount sufficient to handle it. Been doing this for 11 years now and it works pretty well for us.

I wish people take care of their finances by giving a sound thought about what’s going to happen should one of the couples die unexpectedly.

Every asset that we own is owned by both of us jointly – car, home, rental property. Both of us have life insurances – for me it’s a higher amount as she would need more to supplement my income.

Should she start earning more than me – could happen from this year due to our jointly owned business, this will change, and we will shift to being 100% option D and all expenses will come out of joint account, while all our savings accounts will be converted to joint accounts.

We have been happily married for 9.25 years.

Fortunately for me my wife is also good with her money so we kept our individual accounts from university and put all our money into the joint account and ‘paid’ ourselves an allownace no matter who made the most money.

The setup has worked great since although sometimes I need to be reminded to open up the purse strings because we can afford the things we want every once in a while.

I don’t understand this comment. Isn’t it just semantics? The lower income spouse can’t get their employer to stop taking off ALL taxes. How does it ensure more income is taxed in the lower income spouse’s hands? I mean, I can understand gains from the investments, but that’s not going to be much compared to the regular taxes.