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.

January 29, 2009

ending relationships and personal finance

Filed under: relationship — Tags: , , , — plonkee @ 8:39 pm

So far 2009 doesn’t look like it’s going to be a great year for relationships. One of my friends has split up with her partner, and another has indicated that he and his partner will probably go their separate ways sooner rather than later. Coincidentally, both are almost exactly the same age (to within a fortnight) and are in their early thirties, the time when most people seem to be either in the process of settling down or have already done so – usually, but not always, prompted by the idea of children.

As far as I’m concerned, couples splitting up is just one of those things that happen. People do not get along forever, nor does every couple make it until one of them dies. No blame or judgement should be attached, and friends are supposed to rally round and pick up the pieces rather than recriminate. Since I consider myself to be on the young side, previously this rallying round has solely consisted of providing relevant emotional support where possible, and generally helping them find their feet in single life.

splitting up in your thirties

The latest lot are a little different. Neither couple was married / civil partnered, but they lived together. In one case my friend moved rented out her house and moved to a village 30 miles away to live with her partner just under a year ago. Now that they have split up, she has moved temporarily in with her parents while she looks for a flat to rent (it would take at least 3 months to get her great tenants out of her house). This is costing her time, and effort, and she’s slightly annoyed by the truth that she has had to do a lot of upheaval, including packing up and moving 3 times, whilst her former partner has experienced relatively little hassle.

My other friend and his partner have been together for around 10 years, and lived together for most of that time. They own two houses, and have joint everything. They haven’t decided to separate, but if they do it will require some effort to untangle their finances, potentially involving selling one or two houses, legal costs to split the tenancies on the houses if necessary, new bank accounts, etc, etc.

divorce is probably harder

Naturally, if either couple were married / civil partnered the practical difficulties of separating would be compounded by the need to legally dissolve the partnership / marriage. Similarly, it is fairly lucky that in both couples each party earned very roughly similar amounts, and that there are no children involved. Still, much of the practical detail in splitting up, especially the initial bit, is probably the same, and dealing with hassle whilst you are miserable is not exactly going to improve your mood.

what do you think?

Since I’m single and I’ve never had the fortune / misfortune to live with someone as anything other than roommates, I’m not sure what’s involved. Does anyone have any tips, ideas or suggestions for amicably extricating your finances from a now defunct relationship?