Relationship Hacks: An Allowance System for Adults
I'm setting a goal for myself to finish my half-finished book relationshiphacks.com this year. In an attempt to make that happen (and because the recent podcast with my wife was wildly popular) I'm going to try to blog some guiding principles. Then I'll attempt to collect the feedback and comments, improve the posts, then move them into the book.
I got a Nintendo Switch yesterday. Bought it with cash, brought it home, set it up, and - with neither shame nor regret - showed my non-gamer spouse.
"That's cool," she said. "Is that the new Nintendo 64 they were talking about on the radio?"
No judgment. Not a comment about the $300 price tag. Nothing was said like "do we really need another game?" or "what credit card did you buy that with?"
How is this possible? No fight (not even a lowercase F fight) and no tension.
My wife and I give each other an allowance. In cash.
Every two weeks when our paychecks are deposited, we each get an allowance. It's a $100 a week (yes, for some that's a lot, for others, it's not. It works for us.) and it's the same for each of us. We put all our money in one account, give ourselves the allowance, pay the bills, then if there is anything left over it goes it savings.
Let me back up. We used to a bicker and judge each other for our purchases. If you'd log into our bank you'd see something like:
- Car Note
- $5 Starbucks
- $3 Subway
- $8 Chipotle
- $60 GameStop
- $70 Nordstrom
HOLD UP. What is that GameStop? Well, what's this Nordstrom? Did you need to be getting that [widget?]
You get the idea. We needed to remove all that noise at the bottom of the ledger as it was distracting us from the larger goals.
Then my wife had the idea that we just needed to pay ourselves first. We can spend that money however we like - with promised zero judgment from the other spouse. That's crucial, otherwise the system doesn't work.
The allowance for anything that isn't "necessarily living stuff." So it's not for toothpaste, but it IS for eating out when we don't need to eat out.
I could have eaten at Chipotle each day this week, but that would come out of my allowance. Instead, I chose to eat at home all month and save my allowance for a Nintendo Switch.
This works - of course - both ways. My wife has hobbies and social stuff that she does, and she uses her allowance for that.
If you made it this far, perhaps you're thinking, "wow, you're a wimp" or "gee, he/she has you in their pocket." Wait.
Step back and absorb. We are grown-ass people. This system works because we designed it for us. All arguments around "frivolous" spending are gone.
This allows us the best of all worlds.
- It keeps credit card spending to an absolute minimum.
- We are empowered and we empower each other with this system.
- There's a certain sense of power in carrying cash. You know exactly how much you have and exactly when you have to stop spending.
- We can decide if we want $200 shoes or a $100 meal or a $50 game. One spouse comes home excited about their purchase while the other greets them without resentment. The fixed allowance amount handles that.
- Additional spending is discussed on a case-by-case basis. But we've picked an amount that is large enough that I could buy something crazy like a Vive - if I am willing to forgo movies, excessive eating out, etc.
- It sets a good example for the kids as they watch us weigh the pros and cons of a purchase. Money is spent when it's in-hand and not on credit.
My wife and I are in a mixed marriage. It's not that I'm White and she's Black, is that I'm a techie/geek/nerd and she's fairly normal. ;) Of course, this kind of mix isn't gender or race specific. I know lots of couples of varying combos and flavors that bump up against issues in their relationships because of budding resentment, missed or poorly set expectations, divergent points of view around problem solving, and more.
I'd love to hear YOUR story of your partner and your "mix" and how you (mostly) solved it with a simple Relationship Hack like this. Sound off in the comments.
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Scott Hanselman is a former professor, former Chief Architect in finance, now speaker, consultant, father, diabetic, and Microsoft employee. He is a failed stand-up comic, a cornrower, and a book author.
He's catastrophically terrible with money. Like so bad that it is obviously either a total block or a straight up disability. Because of that, he leaves everything up to me. Which I actually don't like because I don't want to bear 100% of the responsibility of when things go wrong. But what I've done is I've figured out exactly how much we need to contribute to a joint account for bills and regular contributions to savings. The rest we keep for ourselves and can spend however we want to. Sometimes we go over with big purchases like a vacation or a new bike. But luckily we both tend towards hedonism and so extra spending like that is regarded as good from both of us. We've never been the couple to bicker over spending. Now, if you have a relationship hack for how to cope with a mother-in-law that is missing the gene for listening, I'd love to hear that!!!!
In our particular implementation, we (figuratively) both put all income into a common pool and distribute from there. Some part of the money goes to a bank account dedicated for recurring stuff like mortgage, insurance, etc. Another part goes to a bank account for regular consumption, such as groceries and gas; we both have a debit card for that account. The rest of the money we split evenly into our personal bank accounts. Once in a while, because none of us are really big spenders, we'll both have excess funds and we'll just coordinate to move so-and-so-much to our savings account.
I did buy the Switch and could easily do so from my discretionary spending but I still had to debate whether to buy it.
Perhaps this allowance system would work for me too.
I don't game, but I do LEGO :) So I agree, it's great to be able to bring a new toy/thing home without having to try and justify the cost. Then your partner can get excited for your excitement.
Any big expenses we discuss, e.g. travel, home improvements, tools, appliances this has lead to some occasions where I'm shopping for an appliance (for example) find one I like and say to the sales person "cool, I'll discuss it with my wife and get back to you" This has resulted in the sales person making a comment about being under her thumb... not a good way to attempt to close the sale.
* car nightmare - audi needs $2300 fix
* wife turns 50. Wants a $7K - 170 people bday bash.
* new tesla "only" $35K? I want it.
* new pc for the geek - $2200
I no longer feel guilty about bringing home new bike parts (and occasionally new bikes), and she doesn't feel guilty about buying new things for the house (mainly because I usually don't notice them, unless I have to install them)
Maybe your system is simpler because you don't have to calculate the amount you need on the common account, you just fix what you keep. But my wife prefers because I use less money than she does so I can increase my saving for our next apprtement :)
Anyway, you have to have a system where you feel free and still responsible
What's left over is divided equally between us and is ours to do with what we want.
The great thing is that this is based more or less only off my income, for a while my wife was a stay-at-home mum (something looked upon as an oddity nowadays) and during that time we made our finances work. Now she is back to work part time, and her income becomes our family treat account, as we don't want to rely on it to make ends meet.
Call it an allowance, call it pocket money, call it whatever you want. Whether you're in a relationship or not it's so vital to budget your finances and give yourself a stable cash flow. Make sure the bills are paid, make sure you're putting away money for savings and from what's left, give yourself a reasonable budget for incidental expenses, fun stuff, etc.
I'd even go so far as to say that's a vital part of budgeting, otherwise it's far too easy to justify dipping into savings (or worse...) for that one time and minor expense.
I genuinely believe that about 90% of issues, whether they're relationship issues or workflow issues with colleagues, come down to poor or a lack of communication. How many sitcoms and films have we seen where the entire plot could have been resolved by two people just talking to each other? The same is true for real life. Half the time, it's not even about you having to talk to your colleague/partner, but just listening to them - and I mean really listening.
Great post, Scott. I've been eagerly awaiting that book for ages now, fingers crossed you guys can finish it this year!
So when i got my paycheck I transfer obligated amount into "Our Budget" and remaining to "My budget" and my spouse does the same. This way we are able to decide to buy smth for our house together. If we want a new washing machine then we increase the amount of transfers to "Our Budget" proportional to our salaries in previous months.
This way, everyone in this system is free to spend his/her money after deduction of general living costs proportionally. Say that i earn 1500 and she earns 1000 viceversa, if "our budget" requires 1200 each month, then participation to "Our Budget" is 720 to 480 viceversa. Where 720 is the proportion of personal salary to total income, in this case (1500 / (1000+1500)) * 1200 = 720
If you want to save some common money too (i.e going to a couple hobby courses etc), just increase the amount of "Our Budget" timely to afford the activity.
This way, i am restricted by the common budget participation however free as the personal budget surplus where i/she can spend as without any questions.
Geeks like you and me tend to have more difficulties with relationships. Gottman's books help me a lot.
We have a joint account for everything household and child related. This includes big purchases and holidays as well as groceries and school stuff. It also has budget lines for fun stuff we do together like cinema, eating out etc. We use YNAB (thanks Omar) for budgeting of this account. From the budget we can work out how much we need to contribute each month.
The remainder we can spend or save into our own accounts.
When we want to buy something for ourselves if its over the notify limit we have to discuss it. Otherwise no problem. The limit is set at a figure equating to a fair few of Scott's allowance months so I guess its the same effect.
We were both married later in life, me at 40 and her at 32 and used to having good jobs with our own money. The benefit of having a joint account for all those little purchases has been huge for us. No more bickering about who's buying dinner, takeout, groceries, booze and all the bills that come during the month. I mentioned this system to younger friends of ours that just got married and they love it too.
A couple other things I would also suggest.
1) Have a single person pay the bills. The only bill my wife pays is her own credit card. This ensures that all of the bills get paid in full and on time.
2) Maintain a spreadsheet of your net worth. At the start of the month I fill in the columns of the balances of various accounts, assets to track how we are doing. My wife emails me her account balances and I add those too. The spreadsheet is shared so we can both see how we are doing together. It's a nice win each month to see our nest egg growing and provides incentive going forward.
I currently spend mine on bass lessons, my wife likes to spend hers on things for the house or the kids. It works, and it does exactly like Scott said... none of those "why did you spend X at Y"...
Thanks for sharing!
Discretionary purchases have to come out of our allowance, much like you described in your post. However, basing the allowance on the money leftover at the end of the month rather than on a fixed amount forces us to try to minimize expenses across the board in order to maximize the allowance potential. :-)
I will say I like Aaron's approach of getting paid out of the excess at the end of the month.
My addition to the conversation is simply that the two of us spend money very differently. I have no problem purchasing a $300 game system or bike or doo-dad, assuming I can afford it, but she might have the cash in hand and wouldn't feel comfortable making purchase of that size. It's spurred on a lot of discussion about how we both grew up understanding money and handle it now. Allowances are certainly proving useful, and in our experience, it has been an evolving system.
Also: The podcast with Mo was so good! Thanks for inviting her!
I have tried a few times to talk her in to putting all money in to the joint first but she never felt comfortable about this.
We have compromised by putting the difference from our accounts in to the joint so we are left with roughly the same each. Seems to work.
It's wonderful, but I agree, it has to be tuned to each couple.
We have a spreadsheet we update each month for any money we have left over after all of our expenses. On the left we have our buckets, like emergency funds, new car savings, interior decor, and each of us has a line item for clothes and fun. Each bucket has a max monthly contribution amount and a max total amount, and each bucket is in priority order from top to bottom. For example, our new car savings bucket might be $20,000 and the max monthly contribution for it is $400. So, we contribute $400 to that until we get to $20,000.
Our fun money buckets are towards the bottom, so we only get fun money if we still have enough after our other savings goals.
It works pretty well for us because we usually have enough left over every month to hit our savings goals.
You're looking at a real-world return of about 2-2.5% if you're looking for cash or cash-equivalent rebates and the upside potential is even higher if you use it for travel.
Why not separate credit cards instead of cash? With $10,400 of annual fun money spending between the two of you, it's like getting a free Switch every year.
My wife and I view the money we make as our money, not my money and her money. With a combined account we can accomplish so much more that way. Our allowance is way lower than yours is, but we have the same general rule and it keeps us on budget while still allowing us to pursue things we enjoy that they other person may not be too keen on.
At the start of the month, my paycheck goes into the account and then all the bills (mortgage, car payment, student loans, credit cards) come out. We've never tried splitting the expenses - we figure it's all OUR money. We discuss before a major purchase (furniture, appliances, the Lego Ghostbusters Firehouse...) but otherwise just try to spend a reasonable amount. I don't need her input on which boardgames to pick up (unless there's one she wants, of course), and I don't need to know how much she spends to get her hair done.
We probably SHOULD try to stick to a budget, but when we overspend it's generally on things like eating out that we're doing together.
My wife and I are still in the early days of marriage (just 2 years out of college and 5 years into marriage). I've wanted to do this for a while but we have been prioritizing getting out of debt and saving up for big items like a car to support our growing family. Now that we are getting close to those goals I would love to start implementing this.
My question, Scott, is how do you handle online transactions? Cash works great for going to game stop, eating out, etc but when it comes to online purchases how do you translate the cash into the purchase or keep it from counting in the online bill like you showed (ex. $5 Starbucks...)?
Related, finish the book! I remember vividly learning about Leanpub from your podcast. I was mowing the lawn and could show you where I was standing. Inspired, I started my own book, published lots of updates, and have enjoyed the process and small extra income. So, thanks and get with it!
In other relationship hacks, like this one, as others have said, many just boil down to better communication. Or communicating once and turning what you learn into a system so you never have to talk (argue) about that thing ever again.
One of the things that comes to mind for us is dealing with hated chores. I hate doing dishes, but don't mind putting them away. Becky hates putting them away but doesn't mind washing. We discovered this in the early days of our marriage, and neither of us has had to do the chore we hate except in extremity for years. That is a handy parallel in our preferences, but the same can work for less-closely-aligned chores.
Another thing that's important is recognizing introvert/extrovert needs. I'm way more introverted (energized by alone time) than Becky is. Add in that she's retired and I'm still working. So when I get home she's ready to socialize. And I'm ready to hide. The hack here is awareness so she knows that she needs to let me come to her when I come through the door at the end of the day and if she forgets and chatters at me when I'm burned out she knows not to take it personally when I say I need to go for a walk or hide in my cave for a half hour. When we're both home for a long stretch, it's even handy to have a signal flag somewhere when you need a break from communication, like the ON AIR sign in a radio station, you know not to breeze into the studio when it's on.
Love the Mo episodes of the podcast. More, please!
This post is familiar in so many ways, especially the "wow, you're a wimp" part. I've had so many people in my life look at me like I'm some kind of idiot when I tell them I'm out of spending money. "Well just don't tell your wife" they say. That's when it's my turn to look at them the same way. I firmly believe that money disagreements are a huge factor in arguments and divorce. Figure it out from the beginning and you can immediately remove a huge blocker in marriages.
Thanks for sharing!
I have been with my wife for 15 years now and married for 3 years.
We tried separate accounts at first but real soon in the relationship, we opened a joint account. Then we had a similar system where we deposited 80% of our respective salaries in that joint account. We then moved on to deposit all our gains in the joint account and then get a 20% allowance from it. Later on, probably 5-6 years ago, we just decided to move on and spend whatever was necessary to spend as long as we could pay the credit card each month.
We both have the same plan to retire as early as possible. We put as much as possible into saving accounts to meet that goal. Once all common expenses are taken into account, we do as we please with the credit card.
No one gets upset with what the other spends. After all these years, we figured it didn't make a difference and that nothing the other person spent bothered us.
Of course all big expenses are discussed ahead of time! Communication, communication, communication!
In the end, does it evens out? No clue, don't care... :)
It used to be that she was paid weekly and I was paid monthly. Despite some disparity between our incomes, all wages went into the joint account and we'd each get £300 a month, allocated just after I was paid, to spend on personal stuff (games, shoes, gadgets, presents, etc). The rest was used for bills and any leftover was added to our savings.
Now that my wife has left work to be a full time Mum, we only have my wage coming in each month, so we've reduced the monthly allowance to £200 each. There's not much left after the bills are paid, so that savings are taking a hit, but that's a temporary situation until she goes back to work in a few years time. The system still works and we can spend/save our allowance as we see fit and without any judgement.
Would highly recommend this system to anyone.
Also, I would like to know your thoughts on how you decide what is considered a household expense vs a personal expense. I am thinking about cases where you need to get clothes. Do you set a budget for it and then if one of you goes above that budget pays the difference?
Knowing our budget and monthly expenses made it possible for me to become a SAHM, and not feel that I wasn't contributing to the household, or that I couldn't have some frivolous spend. Although our Fun Money categories aren't huge at the moment, they give us that little wiggle room and save us a lot of awkward discussions about spending.
All money that comes in is Our Money, and is distributed through the budget as agreed. Having a FFFF Meeting (Family, Food, Funds and Fun) once a week has also helped when we need to discuss anything that's coming up. The weekly meeting is usually all of 10 minutes, but know it's there means when there is something to discuss we have the time set aside.
I wanted to ask if you have similar agreement to time as you have to money. Since the time is even more precious, it would make sense to have "time allowance" as well :).
Do you try to balance time at work + household duties, etc.?
My wife doesn't partake of the allowance system herself. She's got control of the finances and knows what we have to spend and what we don't. She's the one who has to work us out of any problems she creates. I've offered (several times) to let her have something similar but she isn't interested.
Still this setup has worked well for us. We haven't overdrafted any account for fifteen years, our credit scores are almost maxxed, and I still get to freely spend money on Humble Bundles, GOG, Steam, and Amazon. With limits, but limits are part of being an adult IMO.
The way we handle it is by having separate accounts. This makes it clear when someone dips into the other account or a credit card.
This describes my wife and I to a tee. I hope to try something like that again soon. Last time we tried something like this it just didn't work out. But this was when money was more tight and we really didn't have extra money to spend on ourselves. Budgeting has always been a challenge when it comes down to daily spending on things such as eating out, clothing, grooming, etc. Scott you've inspired yet again.
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