His & Her Money

Spurred by this discussion over on the YNAB Facebook page, I thought I’d elaborate on this His/Her money concept.

Why Have His & Her Money?

It gives each partner in the relationship some breathing room (see my podcast on slowly suffocating under a budget). You don’t need a lot.

When Julie and I first married, things were tight.  We didn’t have the his/her money concept going at all. I felt like I couldn’t buy anything.  It was awful. It made me want to not budget at all (this was before YNAB was YNAB. At that time, it was just “the budget” on our computer).

So I approached Julie, we decided to give each other $5 per month, and it saved the day.

The key is that there’s something, even just a little bit, that does not need to be answered for to your partner.

How Much Money Should We Allocate Toward His/Her Fun Money?

As much as needed.  You’ll see in that facebook discussion that the amounts vary. Julie and I do $50 each per month, other people do $400 each per month.  The kicker is…

What Spending Belongs in His/Her Money?

Whatever you decide. Julie and I use it for anything we want (as an individual) that isn’t budgeted for elsewhere. So if I want a new pair of shoes, and Shoes for Dad isn’t in the budget this month, then it’s coming out of my His money. If Julie wants a new ratchet set, and we didn’t budget for Julie’s Ratchet Set, then it’s coming out of the Her money.

So during our monthly budget meeting, we try and remember what we need. If Julie wants to budget for the Ratchet set under Home Repairs, and that fits in the budget, then we do that. If I need new shoes, we could budget for that under Clothing.

Many in the discussion don’t allow that. They have specific items that are part of the His/Her Universe. A common thread was eating out, but I also saw hair care, and clothing.

There is no category that is scrutinized as much as Julie’s Her category. She knows every outflow.  She watches it like a hawk. She always, always has more than I do. Bless her frugality.

How Do You Handle His/Her Money in YNAB?

Your call honestly. Julie and I leave it in the budget, and just categorize those purchases as His or Hers.  Other people take cash out of the bank and each has their own cash in purse/wallet to be used on whatever they like. That is one step further removed from accountability, and I like the simplicity of that.  We’ll likely stick with our way only because I treat cash in my wallet as pure slush.  It’s one of those things where I don’t know how it ended up in my wallet, and I won’t be able to tell you how it left either.

(We don’t track our cash in YNAB. It’s too small to be of consequence.)

His/Her Takeaways

In the end, do what works for you. Experiment. There’s no wrong way to implement this. The important points are that the other person does not have to answer for their spending of their money, and that it should be an amount that will make a difference.  It’s surprising what a difference just a small amount makes.

12 Responses to “His & Her Money”

  1. Renee McGrath McGrath

    Really glad you wrote about this. My husband and I have been doing this for as long as we’ve used YNAB, but I’m still not sure if we’re tracking it correctly. We move our his/her discretionary spending money ( which for us is only $20/month) into separate, off-budget accounts (he has an external checking account, I prefer cash). Since we set aside money each month for his/her spending, we also track it in the budget as “discretionary spending.” is this the right way to approach it?

    • Britton Gregory

      That’s almost exactly the way my wife and I do it, though we have a separate category for each of us. It works quite well.

  2. Mindy

    Do you have information on what to discuss in the monthly budget meeting. I realize it’s probably straightforward, but it’d be nice to hear what others have found works. Why try and reinvent the wheel.

    • jesse

      I’ve debated about recording mine and Julie’s budget meeting at some point. It’s pretty boring. I go through all the standard stuff that doesn’t change, then she comes in and we talk over specifics surrounding stuff that does change, and maybe a vacation we’re planning for the summer.

    • Britton Gregory

      We’ve found that a good starting is to pull up YNAB and go through each category for last month and next month. For last month, we compare our spending with what we expect, and if there are any surprises/weirdnesses, we figure out what’s going on and address it. For next month, we check to see if there are any changes we need to make (e.g. as Jesse says, a summer vacation).

      Also, every six months (every year would probably be OK) we have a “supermeeting”, where we talk about long-term goals: retirement, college, emergency fund, replacement cars, etc. in addition to the normal budget items.

      As Jesse says, it’s pretty boring if you’re not a finance geek, but as parents of small children, we get enough excitement in our lives. Having a monthly meeting means that there’s at least *one* area of our lives that’s relatively stress-and-surprise free. ;)

  3. Dave

    We handle his/her fun $ using an idea I picked up from the comments of a similiar post a number of years ago. Every month, I go to the bank and withdraw 600 in ten’s. We have 2 sets of 30 envelopes setup at home. We each put one 10 in each envelope for each day of the month.

    So, when I leave for work I grab a 10 out of that day’s envelope and roll out. It becomes like a game as we individually try and eat leftovers for lunch, have home brew coffee, etc so we can stay “up a few 10’s”. We try and get big his/her purchases approved into the main budget like Jesse’s system. Otherwise, you gotta save up your fun money!

  4. Mari

    Before I found YNAB, I read in some financial advice column somewhere, that one approach to couple’s financing was to keep your individual accounts that you had when you were single, and create a third account for the home, where both partners would put money into this account that would pay for mortgage, utilities, etc. Which is kind of like your approach to his/her money, except we have his/her accounts. This method has worked wonderfully for us. When I found YNAB, to keep with our system, we have 3 YNAB files, his, mine, and home. In our individual accounts we have an outflow category titled “home”, and in our home file we have income coming from him and from me. I would love to be able to “transfer” between files automatically. So if I have an outflow from my personal acocunt, I don’t have to separately enter an inflow to the home account. Not only would this work for our system, but I’m also starting a small business, which I will create another YNAB file for, and would like to be able to transfer from my personal file to my business file. Is anything like this in the works? (Sorry for the long comment)

  5. Andreas

    Slightly off-topic:
    Regarding the statement “We don’t track our cash in YNAB. It’s too small to be of consequence.”

    A warning to people starting with YNAB. Although this works for Jesse, it doesn’t necessarily mean that this is “the right way to do it.” Everyone’s situation is different.

    Take my family, for example: Although we tried to pay as much with debit card as we could, we spent 200 to 300 Euros of cash each month which we simply couldn’t account for. Tracking our cash transactions in YNAB enabled us to find the leaks (and plug a few of them).

    I guess the take-home message is: There’s no one way to do it that fits everyone. Experiment and try to find out how fine-grained your detail has to be so that it works best for you.

    My spouse and me maintain 3 separate budgets: Her budget, my budget and the “together” budget. Each of us has categories in their budget for personal necessities, hobbies, clothes, retirement savings, etc. The “together” budget contains all expenses having todo with housing, living together, vacation, going out, mobility, and so forth.

  6. jayna

    I’m a new reader. I think your posts are really insightful and show a fresh perspective in comparison to other budget blogs I’ve been reading. So thank you for what you’re doing!
    With that said, I wonder if you might consider using language that is friendly to same-sex couples. Not that I have an ideal alternative to his/her (maybe partner-allocated?), but I value equality and thought I’d mention it in case it is something you hadn’t considered

  7. SkinnyBudget

    Hi Jesse, I was on the hunt for a blog post regarding his & her money as my fiance and I are looking at giving ourselves ‘adult pocket money’ in our budget as of next month and I am currently writing a post myself on the subject, I wasn’t sure whether we were one of few couples that did his and her money, as I haven’t come across too many people that actually budget for such thing. I’m so glad I came across your blog!

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