My wife and I started living together back in junior year of college, before we were married (oh don’t worry, her father is a minister and even he was fine with it). We soon began to discover our different approaches to money. My father, a divorce lawyer, claims that money is the number one reasons he sees couples split, so I was a bit concerned about how this would play out in our relationship.

Seven years later, and I can say that besides the occasional squabble about video games (me) or shoes (her), we both have nearly the same approach to money. So that’s never been the problem. Figuring out exactly how to handle the money, though, has proven to be a bit more challenging.

See, I like paying bills. Actually, I love it. I look forward to the end of the month because, in part, I get to pay all my bills. I usually load up Quicken at least once a day, hit the update button, and anxiously await news on my finances. I have never, in my life, paid a bill late, so I also trust myself more than anyone to get the bills paid on time.

Of course, things would be a bit unbalanced if I paid all of the bills with us both pulling in bi-weekly paychecks. So what we’ve done in the past is listed all our shared expenses, subtracted that from our combined net income, and ended up with a “spending” amount both of us could have at the end of the month. My wife would then transfer over a certain amount of money to my account which would result in us both having the same amount of money.

Or at least, that was the plan. Unfortunately, our bills varied quite a bit month to month. No sooner would I adjust for higher heating costs in the winter, before we would then start paying higher gas bills for vacations in the summer.

Another big problem was differentiating necessary expenses from … not so necessary expenses. I always liked to keep a float of $2000 in my account, so I never really knew how much an effect buying Call of Duty or those nice Calvin Klein pants had, as it was all lumped together on the same credit card as our electricity bill and grocery shopping.

So, inspired by a comment on another personal finance site, we decided on another approach to splitting our finances. We currently have three checking accounts and one savings account, all at HSBC Direct (with two local checking as well for the necessity of paper checks).

Without further ado: the flowchart please!

Throughout the month, we both will be using the same credit card to make our necessary expenditures, such as groceries and gas. Any personal spending, such as clothes, restaurants, movies, etc, will be done instead with our individual credit cards. We put together a spreadsheet listing what we consider to be necessary expenses, along with their costs, so that only those end up on that card. Every two weeks, our paychecks will be directly deposited into our main checking account, the expense account.

At the end of the month, I will begin by paying our bills, as well as the expense credit card. Next, I will send my monthly check to my father for my college loan ($14k and counting, by the way, which I am looking at having paid off in less than two years!). After that, I will transfer a set amount into savings. And lastly, I will transfer a set amount into our individual checking accounts.

From our individual, “spending” accounts we will each pay our credit card. Depending on how much we have in our accounts, we can move money into savings.

We’re both excited about this new approach to handling our finances. I think that paying our expenses from our combined incomes will make us both feel better, instead of my wife feeling like she was paying me. I am also really looking forward to having necessary expenses and voluntary expenditures clearly delineated, so I can keep track of whether I’m going overboard buying Xbox 360 games.

It will require a bit more bookkeeping, but hey, I like doing that anyway. Having to use different credit cards will take some getting used to, but it will also have the side benefit of getting more cash back deals, since I always max those out on my main card.

What is everyone else’s experience with splitting finances?

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