The Big Bad Budget Talk
My husband and I work out the details of our joint account.
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On a recent afternoon I spent 15 minutes talking to my friendly Time Warner Cable representative, canceling our landline and several superfluous cable channels. This phone call was a direct result of the budget talk I had with my husband on a rainy Saturday. I was the one who insisted on having the landline installed when we first moved in together. Back then I used it for reporting calls because I worked from home and our cell reception was shoddy. But that was a job and an apartment ago. Now that we're going to be paying for our cable package with a joint account, it's time to cut the things we don't use.
This kind of negotiation is all part of the process of becoming Sometime Sharers—couples who have a combination of joint and separate bank accounts. We started our cohabitating life as Independent Operators (couples who had entirely separate bank accounts) and discovered we weren't yet interested in being Common Potters (couples who have only shared accounts). When Mike and I decided to be Sometime Sharers, I worried that it would be difficult to decide what constituted a joint expense and what qualified as an individual expense. But in fact, it took us only about 20 minutes to figure it out.
Just by calmly sitting down together to discuss our budget, we were following the wise counsel of several readers. Last week, I asked Slate readers for the one piece of financial advice they would give a newlywed couple. Almost 200 commenters weighed in, and I received about 50 e-mails on the matter. One piece of advice that popped up over and over was that a couple should make a budget and stick to it—that was first on our financial to-do list. By blocking out an afternoon to focus on finance, we were following another piece of advice, courtesy of reader Lauren Bowman: "Schedule a time to discuss money, do not let the subject come up randomly when making purchases in a store or in the middle of a heated discussion."
I opened my Mint.com account to show Mike how much I had spent on groceries, utilities, dinners out, and entertainment in the month of January. He showed me his accounting for the same time period. Then we then added our after-tax salaries together. After a slightly tetchy back and forth (me: "Do we really need to spend that much on entertainment?" Mike: "Do you really want to stop buying so many books?"), we decided on the following budget. Our salaries are almost identical, so we are contributing the same amount to our joint account.
Our biggest expense is rent, which takes out 35 percent of our budget. This figure seemed like a lot. But as this Washington Post budget worksheet assured me, experts recommend spending between 25 and 40 percent of your salaries on rent/mortgage. Since we live in New York, the least affordable major metro area in the country, 35 percent on rent isn't unreasonable. For groceries, we've set aside 10 percent. We almost always eat breakfast at home, and make our own lunches about half the time. Dinners at home fluctuate somewhere between three and six times a week: Mike works in the film industry, so he frequently has work functions in the evening, and we both like to see friends on weeknights.
Speaking of those noncooking nights, we set aside 12 percent of our budget for going out. This also includes bars and taxis home. Mike and I padded this part of our expenses a bit because we're following commenter Ngstockard's advice: "Know your pain points—the things on which you each tend to spend carelessly." We know that we eat out more than we should—but at the end of a long work week, we like to treat ourselves to a moderately fancy dinner, and we're budgeting for that accordingly.
We also like to see movies at the theater, even though we have a fairly extensive cable package. So we put aside 3 percent of our budget for entertainment, which also includes my book habit (yes, I still buy the paper kind, and we share them). We decided that his DVD purchases would be part of the joint account, too, since I enjoy watching those special features on Zodiac as much as he does. Cable, Internet, and utilities make up 4 percent of our budget.
We're lucky to have no debt, so our final shared expense is savings. Currently we've decided to set aside 8 percent of our salaries each month to put into a joint savings account, in addition to the portion of our pretax salaries that we're putting in our respective 401(k)s. This is lower than most of the recommendations I've seen in my reading on this subject: The most common advice is to save between 10 and 20 percent of your after-tax salaries. Many commenters advocate an even more cautious savings plan—reader Jason Wetzel recommends living on one person's salary and banking the rest—but that doesn't seem feasible for us right now.
That said, this savings plan is just an opening gambit—Mike and I are leaving a lot of leeway in our shared budget on purpose, erring on the side of overestimating our joint expenses so that we won't be overdrawing the shared account. As I noted in a previous piece, overly restrictive budgets are as impossible to adhere to as overly restrictive diets. Whatever we have left over each month, we'll put into our savings account as well.
That leaves 14 percent for each of us to put in our individual accounts and spend as we please. Clothing is still considered an individual expense. I'll also pay for lunch and dinner out with my friends from my own account. Still, this is a nice chunk of money, and I hope that I will not spend all of it each month. Already, I'm finding myself cutting down on unnecessary expenses. For instance, my friends were all cooing about this amazing sample sale with marked-down Isabel Marant and bargains on my beloved Rachel Comey. Normally I would have scurried on over to Fort Greene to check it out, but this time I stayed away—I don't really need any new clothes right now, and putting a down payment on a house feels like a tangible thing to save for instead. By avoiding the clothing bonanza, I am following commenter Ingber's sage counsel: "Find something that really motivates you to curb your spending."
Full disclosure: Neither Mike nor I loved working out this budget, even though we agreed on most things without much fuss. I've resigned myself to the fact that talking about money is never going to be sunshine and lollipops for us. However, I felt a great sense of relief once we had drawn some actionable conclusions. Even though we didn't follow the advice of every reader (which would have been impossible), I am confident that we made the right decisions for ourselves, for now. In this way we are listening to the advice of reader Melissa, who says, "Swim against the stream and follow your gut."
There was lots of great advice from readers that didn't necessarily apply to Mike and me, so I wanted to give you a chance to vote on what you think is the best piece of financial wisdom for newly married couples. Check out the poll below and vote! I'll write up the results next week.