Making a married budget

Last week, we sat down and hammered it out: our married budget. The decision was made, it just made the most sense all around to fully combine our finances. Josh’s job will be coming to a close at the end of the year, and it makes more sense to combine now so it won’t feel so much like a loss of a job as much as a reduction in salary, when the time comes (in terms of the budget, at least). It also means that changes in W4 withholdings and health insurance won’t have to be resolved “fairly” through each separate paycheck. Just combine it all before everything changes and get used to the way it turns out as a whole instead.

The major hurdle in combining our money and making our monthly budget was different pay dates. As I mentioned in a previous post, I get paid twice a month on consistent dates, and Josh gets paid twice a month on totally unknown dates anywhere from a week to 13 days after me. This makes allocating the checks problematic, and the obvious solution was to simply allocate each check individually, right?

Wrong. Then we wouldn’t have a married budget – we would have 2 separate budgets that both people happen to look at. We had to plan it as though each of our checks came at the same time, and simply kept on the way we each had previously, allocating each twice-monthly check to the budgeted items.

Well, the first thing I thought was “wow – we’re rich!”. But that pretty much happens anytime you suddenly tack on an entire other salary. Really we just took a look at each of our previous budgets, adjusted for bills that we hadn’t been budgeting evenly (nice…), and tried to make our savings goals match as closely to our previous separate budgets combined (though we both come out with less money each check now that we’re married and get to pay the marriage penalty – a post for another time).

One thing this meant was adding a debt payment back into my (now “our”) budget :( We both ended college with a hefty amount of student loans. We had both decided that our debts would be our individual responsibilities, back in the day. I paid off my student loans last year, 2 years after starting repayment. Josh paid his down by half, but understandably could not pay them off entirely (I make the higher salary in our household). Combining all of our finances meant that I would assume responsibility for his debt (yes, I know that legally I assumed that responsibility when we said I Do since California is a common law state, but that really only comes into play if it goes into collections and/or we were to separate).

And then my first thought? Let’s get this thing off of the budget again!!! So really, I was happy to be able to contribute some of my salary to his debt. I mean, I could have always done that anyway…but probably would not have unless he asked for help. I was not willing to put our savings goals on hold in order to really pay it off ASAP, but I’m hoping it will be paid off in less time than it would have been without combined finances.

Today was our first combined budget paycheck (mine)! Things didn’t go exactly as planned…even though I had sent my updated W4 in on the 2nd of the month, it was not processed in time for this paycheck, which meant I still had single withholdings which are all kinds of wrong now (and by “now”, I mean for all of 2010, since the filing status affects the entire year and not just the portion of the year you are married – annoying for some [me], beneficial to others [supposedly this is true]). Sooo this meant it was bigger than we expected, which is nice…but it means we probably won’t have enough withheld, and we also have to wait another month to get a good grasp of what our married salaries will look like net.

I also encountered the “how do I allocate the full budget when I only have 1 check so far” problem. My solution was to simply allocate the entire budget, and put in a negative line item in my super-massive-black-hole-bank-breakdown spreadsheet to hold the amounts we were waiting on from Josh’s first check of the month (which won’t come until Monday – and I don’t mean the Monday in 3 days!!!). I’m not sure how much I liked this solution. I mean… it kind of worked…but it’s totally inaccurate with regard to what we have available, which is bothersome. But there doesn’t seem to really be a better way. I’ll see if I come up with anything better as we continue.

This entry was posted on Friday, August 13th, 2010 at 10:58 PM and is filed under Marriage. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

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