YNAB You Need A Budget

[Mr. Blue Tape]

Hi,

I'm currently evaluating YNAB to see if it's a right fit for our household (aka asking the future wife for permission to spend the money. I learn quickly.). We're getting married in three weeks, and I was wondering how best to structure our finances.

She's starting medical school and I'm in grad school. I have $20,000 in student loan debt (Stafford loans) from my undergraduate degree, but my graduate school is paid for through my research. She currently has zero debt, but will have $40,000 per year for four years starting two weeks after we are married. This debt takes the form of government education loans in various forms. As far as I know, none of the loans are from for-profit institutions. Neither of us have any credit card debt as we go out of our way to make sure everything is paid down each month. I had a huge sum of money saved up, largely for the wedding, so I've been able to pay for it all without adding an debt and largely without any help from our parents (unfortunately -- it makes me quite sick that I could of written a check to pay of my student debt in full instead of paying for a wedding...)

Our expenses are generally limited to the essentials rent (715/month), internet (65$/month), food (???), utilities (???) and gas (???). Our parents pay for our cars, and our schooling provides insurance.

Income is pretty bleak since we are both students. She has virtually zero income, but her loans are providing about $10,000 a year to cover her living expenses. We're not sure how much of this 10,000$ she should take at around 10% interest. I get paid about $1500 a month for my research on top of my tuition. There maybe the possibility we live entirely off my income, if we budget it extremely tight, allowing her to reduce her base loans by 40,000 over four years.

Currently, she has about $200 that isn't set aside for her CC. I think that after the wedding and honeymoon is over, I'll have about $1000 in cash with all bills paid for the month of August. (Assuming somebody doesn't give us money as a wedding gift.) I also have $1800 in savings bonds for extreme emergencies, and $500 in common stock that I'll never touch. Long term, I usually make good money as a contractor in the summer, but this summer's income is eaten entirely by wedding costs.

1.) Do you think YNAB fits us? (I think yes, or I wouldn't bother asking here.)
2.) How should we structure our financial accounts? Currently we both have our seperate accounts, but this seems silly as my income will be paying for everything in the next four years. Should we have a joint account?

[CaptainCupcake]

Hi and welcome!

First off, as my mum always said to me as a kid: "You need a budget". Imagine the chuckle I had when I found YNAB.

Whether or not YNAB suits you for this purpose is up to you. Suits me just fine, but my mum, who offered that piece of sage advice above, isn't too keen on it. She budgets using a hand-drawn table of averaged income and expenses.

But the need for some form of budget stands. Even someone pulling in a million plus per year would be wise to budget.

There was a recent topic in the rules section regarding budgeting for two. In the given scenario there, one member of the couple wanted to budget and the other didn't. Here it is: http://www.youneedabudget.com/forum/the-rules-f1/buffer-spends-t7732.html

The general consensus I took from that discussion (others will have a different interpretation) was:

1. A personal account for each of you, where you transfer your budgeted 'fun' money. Personally, I'd mark it as spent in YNAB as soon as the transfer is made, so that you don't have to track it further. Others here have different opinions.

2. A joint account where the rest of the money sits while waiting to do it's appointed 'jobs'. Strictly speaking, this could take the form of multiple accounts. After all, you may want to be earning some better interest on the portion designated as 'savings' or 'emergency fund'.

3. Establish an agreement with your partner about the purpose of these accounts, and that any money transferred from the joint account (whether to a personal account, or spent via a debit card or whatnot) MUST be accounted for in the budget. To not do so defeats the purpose of the budget, whichever form it takes.

To add my own thoughts to this; be prepared to discuss the progress of your budget with your partner. Be prepared to amend it where necessary. It's a "living document". Consider it the economic portion of your marriage/partnership's "Constitution" - with discussion and agreement it can and should be altered to suit the circumstances of the day.

It's so worth doing this. The clarity of thought your budget can provide has a value that is simply immeasurable.

Happy for any other YNABers out there to chime in with their thoughts.

[glenndon]

Captaincupcake gives great advice. How he said it, 2 accounts, a joint account for bills, is exactly how my wife and I do it. Even to the point of the fun money transfer coming right off the budget as an expense.

My only advice is to make sure you talk to your future wife, and both be on the same page with everything money. Some couples do not completely share each others income, some do, some do different percentages, etc... I'm not saying what is right for you, just make sure both you and your new wife are on the same page money wise, and life will be good on that front.

Good luck and enjoy life! It goes by waaaay too fast.

Glenn

[gregdo]

I just saw this post about your wedding and my comment is definitely off topic, but just today I read a blog post about the opportunity cost of money related to a wedding. I.E. What you can get if you have a big wedding compared to having a smaller wedding and saving/investing the difference. Anyway, it's an interesting read:
http://wheredoesallmymoneygo.com/the-opportunity-cost-of-a-big-wedding/

[brown685]

My wife and I do it a little differently.

We have separate accounts, but mine are all on budget. I have one for her in the budget, but it is not a real account. Her's is simply the on budget portion of her account, usually just her pay checks and the few joint expenses she pays for out of her account. Mine are on budget, because I am the budget geek and I budget my discretionary funds, just like the rest of the money.

We divide the money into several major pieces. We each get 10% discretionary income from the budget. Our 10% is used for our fun money and any bills that we agree is one person's responsibility. The rest is divided up to joint budget expenses. Bills that we agree are joint and just get paid: Savings goals. Charity, Bills, groceries, etc.

An example of individual bills would be our internet connection. While she uses it, I would be the one who would start screaming if she suggested getting rid of it. Like wise, she reads the newspaper every morning. After the 50% increase in delivery charge, I told her that we are moving it to her discretionary spending. With appropriate changes to her discretionary income to match. I did this because if they raise it by another 50%, I didn't want to have to tell her that we need to drop the paper expense. This way, she has to decide if it worth getting it 7 days a week, or if 4 are enough. or if the local free paper is good enough.

Other things in our 10% are our gas money, lunch money, hair cuts, clothes, entertainment, Christmas gifts, personal training, etc. The one rule is that the 10% is at the discretion of the individual, and not subject to question by the other unless asked. We can always choose to give some of it to the Joint budget, but to take money out of the joint budget has to be a joint decision. There are certain categories in the joint budget that each of us is responsible for. Groceries for instance are a joint expense, but she does most of the buying. Home and car repair are usually mine. However these are not at the discretion of the individual. I can't pay for my new Smart phone with the car repair money. I could choose to give up the internet for it. I would check with her about it first, but if I wanted to do it, I could.

We basically take the separate fun money one step further, and just call it discretionary spending.

My advice is whatever you do, talk to each other about it. And keep talking about it. That way if there are problems they don't remain hidden from the other person.

James

[Patzer]

1.) Do you think YNAB fits us? (I think yes, or I wouldn't bother asking here.)
2.) How should we structure our financial accounts? Currently we both have our seperate accounts, but this seems silly as my income will be paying for everything in the next four years. Should we have a joint account?

1. Jesse started developing YNAB when he was a married college student with bleak income. The system will work for that situation.

2. There are different opinions. Some people advocate having everything joint. Others advocate having his, hers, and household accounts/budgets. Still others work well with his and hers accounts, with different household expenses assigned to each spouse. What will work best for you depends on your relationship as a couple. Talk about it, and don't be disappointed if it takes you a while to figure out what the best fit for your relationship is.

Patzer

[momonga]

Hi,

Well, I dont know if you did purchase YNAB, but if you did, or if anyone wants to share his thought, how did you do the budget for your wife? I ask because I have the same situation as your wife, just 1 year in, and I am not sure how to set this up. For me, its all in the red no? (-10k and every month its getting redder for the next 3 years). If anyone would like to add his 2 cents, please feel free

Thanks

[WairereRose]

Is your wife with you on the budgeting?

[tallison]

1.) Do you think YNAB fits us? (I think yes, or I wouldn't bother asking here.)
2.) How should we structure our financial accounts? Currently we both have our seperate accounts, but this seems silly as my income will be paying for everything in the next four years. Should we have a joint account?

My first wife and I had one account for everything. After a few years it was pretty clear that she had no problem with a $500/month phone bill when I couldn't afford clothes for work. So much for the first wife.

My second wife and I have a different approach: We each have an allowance that is automatically transferred to separate accounts. From this we are expected to cover for gas and any social outing we might have one our own (work lunches, dinner with a friend). Everything else is done on a joint account, so we have three accounts.

Married for 13 years and doing great! This has provided a solution to having some money that we can use without any concern for impact on the household or the opinion of our S.O. We've bought some pretty stupid stuff, but when it's with our own money no one can complain.

[fleurfavs]

Me and My hubby are newly weds and we are certainly on different things. He spend, I spend.We have a separate account so we budget everything.Divided the expenses among us but we still combine our thoughts to make everything work for us.