plonkee money an english-er's thoughts on personal finance

September 29, 2009

communist, capitalist or socialist joint finances

Filed under: relationship — Tags: , , — plonkee @ 12:00 pm

Over at Ask.Metafilter, there’s a question on how best to organise joint finances for a newly co-habiting couple. As always, there are basically only three options, but I particularly like the way that ohio states them:

When we were talking about this we came up with three basic financial options, which we called communist, socialist, and capitalist, for convenience.

1- Cuban option: all money except retirement and savings go into one account, from which all expenses are paid. This eliminates having to figure out who pays how much when one party earns more than the other. This is only for people who really trust each other (both financially and otherwise) and who are willing to have very little privacy. I think of this as more appropriate for people who are already married, own property together, have kids, etc.

2- French option: create one account from which all shared expenses will be paid, like rent, insurance, gas, cable, car expenses if you share a car, etc. Figure out how much needs to go into that account to cover monthly expenses, and then contribute from your respective salaries in the proportion you think is most fair. We chose this option, and we are contributing roughly in proportion to our respective salaries. If you make $60k and he makes $30k, you contribute 2/3 and he contributes 1/3. Then you keep separate accounts for everything else. We liked this option because we could have some autonomy with our money and we could buy gifts or take each other out with our separate money. At the same time, we are learning how to run a household together and we have to trust each other enough to have a shared account.

3- US option: no shared account. Put the bills in both names and you each pay whatever is fair from that. You pay electricity, he pays gas, you pay rent and he gives you half, etc. If you are early in the relationship this is likely the best choice. More like roommates than potential lifetime mates.

Although I’ve never had the fortune/misfortune to share a home with a significant other, I tend to have opinions on everything anyway. I couldn’t easily do the first option – I’m too independent, and I like a bit of financial privacy. Either of the other two could be fair game though.

I know we’ve talked about this before, but am I right that these are the only options? I think that amongst people I know there’s a fair split amongst them, what’s your experience.

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