There are endless online articles about how couples should manage their money.
Shared accounts or separate?
One person should handle it all or is shared responsibility better?
How many accounts should you have?
What is the right savings percentage?
While all of these topics are intriguing to us, they’re not the topic of today’s post. Instead, we have a narrower focus in mind...
We want to help convince you to allocate at least a small amount of FM on a monthly basis for both partners in a relationship. We are big proponents of shared finances, so sending “Fun Money” (FM hereafter) to separate, non shared accounts allows us to spend without needing to answer for it.
First, let’s define fun money.
It only has one criteria: It must be spent on something that brings you joy. (We’re channeling our inner Marie Kondo here, okay? :) Notice that we did not say something that brings your children joy or brings your partner joy (although we have been known to use our fun accounts as a sneaky way to buy a small surprise for our other half). YOU.
What makes you smile?
What makes your day?
How do you enjoy spending a free hour or two?
A few examples of how you might spend your FM:
Golfing
Getting a manicure regularly
Buying the latest video game
Going to the movies
Assembling and painting model airplanes
Participating in a local running group
Collecting stamps
Meeting friends for coffee/adult beverages
Knitting
Hunting
Shopping for shoes
Playing tennis
Working on your car
Baking
Building computers
Let’s face it...most people work really hard and want to do everything they can to take good care of their families, their friends and themselves. They are occasionally stressed by work, relationships, bills, health issues, etc. Life is tough. Can’t we all agree that everyone deserves some down time just enjoying what they enjoy?
Setting up Fun Money Accounts
It’s simple enough to open fee-free checking accounts these days and that’s what we suggest for your FM. Then, set up a recurring transfer each month to your two separate FM accounts. [Note: It is probably more convenient to open the accounts at the same bank as your primary checking account for everyday use.]
How Much to Budget
You are the only one who knows the intimate details of your household’s budget and how much you can afford. It might be as little as $20 per month or as high as $1000.
The key is that you and your partner discuss it and agree on an amount with which you are both comfortable.
Remember...it will likely take a few months and a few adjustments to get to a number that feels right to both of you.
When we had two incomes, we were budgeting approximately 3% of our total combined monthly income to FM (or 1.5% for each of us). When we switched to a single part-time income during our year-long trip abroad, our monthly FM amount had to be lowered (but not eliminated entirely).
A Note on Income Inequality
You and your partner may make vastly different incomes.
In fact, you may only have one income between the two of you (in the case of a stay-at-home-parent).
We believe that while income and some other budget items may not be “equally” allocated,
FM is one area that you should seriously consider making 50/50. No matter your situation, both of you should be allowed to spend in equal amounts on the things that bring you joy.
We know there are extreme cases out there where this won’t work.
In the end, you and your partner need to discuss this and come to an agreeable amount.
Expensive vs. Inexpensive Hobbies
But what if your hobbies cost vastly different amounts?
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Let’s pick on golf for a minute. Golf is an expensive hobby. Between the tee times, cart rental, lost golf balls (for some of you out there), and that new club you just “had to have” it can really add up!
If one partner enjoys golf as a hobby while the other doesn’t (and gets to pay for it out of joint account money), it may seem like the golfer spends too much, leaving the other person feeling slighted.
Now imagine that you allocated the same amount of FM for each person each month. The non-golfer would likely feel less slighted. He or she would also probably find a lot of new ways to spend his or her FM! 1 round of golf = 4 manicures. Conclusion: “I’m rich!” Okay, maybe that’s a bit extreme but you get the idea.
It also may be true that one of you has an extremely expensive hobby. In this case, depending upon the monthly amount of FM your family can afford, you might have to save up in order to continue pursuing your hobby. Maybe it’s seasonal so this works out well. Or maybe you need to find ways to cut back on this particular hobby.
Having a separate account to which there is a regular transfer makes it predictable (so you can budget) and flexible (since you can either spend it immediately or save up for something special).
Trust
You may be of the opinion that separate bank accounts makes it possible (and perhaps more likely) to hide things from one another.
If you don’t have access to each other’s FM accounts, you won’t know every single thing your partner is spending money on. That is certainly true, but a very small percentage of your overall budget being allocated to FM isn’t going to allow either of you to gamble away the house.
Also, it should be noted that if you can’t trust your partner enough with a small amount of their own spending money, you probably have bigger issues to work out in the relationship.
Tracking
In our monthly money talk (which we've dubbed “Booze & Budget” where we pop open a bottle of wine and talk finances), we log the current balance of every account to our names, which includes both of our FM accounts.
Both balances are considered assets and should be included when looking at the big picture of your net worth as a couple.
Also, this is a great opportunity to discuss the need to adjust the amount of FM budgeted moving forward. Is one of you constantly running a low balance? Is there reason to increase the amount a bit?
A Note on Gifts
Do you have 100% shared accounts between you and your partner, but think it makes surprises difficult?
In direct contradiction with our definition of FM above, FM to the rescue!
Particularly if you enjoy giving gifts and/or your partner enjoys receiving them, spending some of your own personal FM on a surprise or small gift for him or her can make both of you feel good.
Here are a few Fun Money budgeting examples:
Simple, equal income setup:
Partner A monthly income: $5,000, FM A: $200
Partner B monthly income: $5,000; FM B: $200
Unequal income setup with equal FM:
(*Note that this what we recommend for most couples.*)
Partner A monthly income: $5,000; FM A: $100
Partner B monthly income: $ 1,000; FM B: $100
Unequal income setup with % based FM:
Partner A monthly income: $5,000; FM A: $142
Partner B monthly income: $2,000; FM B: $58
(In this scenario, partner A makes roughly 71% of the income. From a budgeting perspective, you only want to spend $200 total on FM between the two of you for a month so the total is split 71/29 accordingly.)
We hope that now you can see the benefits of...
...budgeting for fun money on a monthly basis
...maintaining separate FM accounts for you and your partner.
Everyone deserves some time (and money) to unwind and enjoy their hobbies.
We believe that by following the approach outlined in this post, we can help you prevent money from being a source of stress between you and your partner.
Cheers!
Eddie & Megan
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