On the Money is a new monthly advice column written by Nicole Dieker, a personal finance expert who’s been writing about money for over a decade. For Vox’s Money Talks interview column, she’s written stories about couples who run small businesses, navigate different relationships with spending, handle health insurance, and more. If you want advice on spending, saving, or investing — or any of the complicated emotions that may come up as you prepare to make big financial decisions — you can submit your question here. Here, we answer two questions asked by Vox readers, which have been edited and condensed.
How do you deal with income when you marry late in life? Do you combine it, or keep things separate?
When my partner and I set up house together, we also set up a joint checking account for shared household expenses. This allowed both of us to contribute to the costs of maintaining our home — the weekly groceries, the monthly utility bills, the upgraded HVAC system that our technician assured us would last a good 15 years — while maintaining separate checking accounts for the kinds of purchases that we would prefer to make without consulting the other. (He just ordered a hummingbird feeder shaped like a double helix. I bought a pair of dangly ceramic earrings. That kind of thing.)
He and I are both self-employed, and although we do not make the same amount of money at present, we both contribute the same amount of money to our shared account. I’m in my prime earning years, which means that much of what I don’t contribute to our household goes into high-yield savings accounts and various retirement funds. He’s a bit older, so he’s already built up his savings to the point where he can ease up on the freelance work and begin the process of covering the daily costs of living through long-term asset management. We talked about doing proportional contributions, but transferring the same amount of money to the shared account every month made more sense mathematically.
It also felt better emotionally, which is the real point of my telling you this story. We dealt with our income by discussing it — and we continue to have these kinds of financial discussions, including near-term budgeting and longer-term forecasting, at least once a month.
How you and your spouse deal with income could look much the same, but it isn’t really about whether you set up an arrangement that matches ours. It’s about whether you have the kinds of conversations that allow you to create a financial partnership that feels right for both of you. This means talking about the tough stuff, from prenups to last wills. If you have financial responsibilities toward aging parents or growing children, you’ll also need to discuss how you’ll handle end-of-life care, college costs, and so on — and decide whether that money will come out of a shared household account or whether it will be something you pay for out of a personal account. It’s also worthwhile to become familiar with any state laws regarding community property, as that could change how you and your spouse decide to manage your shared assets.
That said, I predict that as you and your spouse continue to build your lives together, you’ll begin to think of nearly everything you earn, spend, and save as “ours.” It’s a natural trajectory, and one that I’ve experienced personally. Despite my occasional splurges on handcrafted jewelry and hardcover books, nearly all of my assets — including the money in my personal checking account — are meant to support the long-term financial stability of our household. My partner feels the same way, which is one of the reasons why our partnership continues to work.
I’m a newly divorced woman who is no longer combining her income with her partner’s — and it feels overwhelming and embarrassing to admit that I don’t know how to manage my own money. How do I get started with budgeting, saving, and investing?
There are all kinds of resources out there to help you budget, save, and invest. In most cases, I’d advise people to set up an account with You Need a Budget or check Your Money or Your Life out of the public library. (I can vouch for both the app and the book, by the way. When I was getting started with personal finance, YNAB and YMOYL showed me how to earn more money, get out of debt, and build long-term financial stability.)
However, I’m going to give you the same advice I gave the previous writer. It’s time to have a series of conversations with yourself about what you want this next stage of your life to look like — and how you can use your income, your assets, and your skills to help you achieve your goals.
Your first conversation might begin as follows: “I feel embarrassed. Why do I feel embarrassed? Is it simply because I feel like I should have learned how to manage money by now, or am I also embarrassed because there were times in my marriage that I allowed my former spouse to make financial decisions that I didn’t necessarily agree with?”
This is going to be a tough conversation, by the way. Get a journal, get a box of tissues, and consider getting a therapist if you don’t already have one. The more you learn about why you feel the way you do and how your choices might have affected your current situation, the less likely you are to find yourself in a similar situation in the future — and right now, understanding your emotions around money is even more important than understanding budgeting, saving, and investing.
That said, it’s also important to ensure that this process does not put you at the risk of increasing your debt burden. As you begin your difficult conversations with yourself, see if you can set up a simple system that allows you to track your purchases and make basic decisions about discretionary expenses. I’d recommend a budgeting app for this, except most budgeting apps are going to nudge you toward long-term financial planning and you are still dealing with a short-term emotional emergency. Try pen and paper instead. Write down everything you earn, write down everything you spend, and do the math. As you learn more about where your money goes, start asking yourself whether you like where it’s going. Ask yourself which purchases make you feel embarrassed and which purchases make you feel happy. Ask yourself what it feels like to save for the future, even when you don’t know what that future is going to look like.
You’re overwhelmed because of the idea that you have to have this entire financial problem solved, budgeting-saving-investing, every dollar going into the right place right now. It takes most people about a year to figure out how to create the kind of household budget that allows them to accurately predict their expenses. I’ve been tracking my finances since I graduated from college, and it still took me a full decade to clear out my debt, set up my savings and retirement accounts, and prepare to invest with confidence.
So start with the pen and paper, the journal and tissues and honest conversations. That’ll give you the confidence you need to make your next money move. A month from now, read Your Money or Your Life. Six months from now, download YNAB.