Budgeting with a Partner with Separate Finances

Super sorry in advance for the long post, just trying to make sure you all understand where I am in order to help me. My fiancé (M) and I (J) began using YNAB this January, we fully intend to keep using it and it’s already positively impacted how we spend and prioritize. I primarily handle the budgeting, he prefers to be hands off when it comes to actually inputting things in the app, but he hands me all receipts and sticks to spending within the budgeted amounts. We’re completely transparent with our finances but we have separate checking and savings accounts (and one joint savings) and will not be changing this anytime soon (I actually have no desire to at all though he doesn’t care either way); I realize YNAB prescribes to a joint accounts & joint budget method but our individual incomes largely take care of our individual financial responsibilities so I don’t see the point of putting all of our money in one pot when we don’t contribute to paying each other’s expenses/debts (outside of a few shared responsibilities and goals). When I started using YNAB this year, I did not realize I could create multiple budgets within YNAB (new budget with its own name), I just created Groups for each of us within the same Budget (e.g. M’s Immediate Obligations (his monthly bills & household bills he takes care of), M’s True Expenses; J’s Immediate Obligations, J’s True Expenses; Shared Immediate and True Expenses). For example, M pays his own credit card debts, auto and student loans; annual subscriptions, medical insurance for his children from a previous marriage (my bonus babies), payoff agreement for a loan he shared with his ex-wife, etc; likewise I pay my own credit card debt, mortgage, monthly bills, etc. We live together and do have some shared responsibilities so we both add to Shared Categories for things like groceries; X-mas gifts, school clothes, activities and allowance for the kids; vacation; home maintenance; and joint savings. Finally to the problems I’m having: 1) when I first started using YNAB I used January more to just track our spending rather than budget (so many categories were left unbudgeted, putting some categories in red as though we overspent and I never fixed them) ($ was sitting in TBB but it wasn’t allocated to categories down to $0). So I’m sure the TBB has always been off since then because I only recently learned that as you move into the next month, can’t just budget based off your new income, the TBB reflects deductions from where you overspent in the previous month(s). 2) Our TBB is convoluted because in order for the TBB to accurately reflect what EACH of us actually has available to budget for our individual responsibilities, I have to completely budget my 1st paycheck for the month down to $0, otherwise, when he gets paid a few days later, some of my $ is still showing in TBB so as I start to budget for his categories, I can easily get into allocating some of my money in his categories where it doesn’t belong and (vice versa) if I don’t remember the “unbudgeted” amount I had left before his income arrived. Paycheck #2 hits by mid-month adding to the problem. Not so bad to fix if I had wrapped my head around this after month 1 but we’re now on month 3 and the light bulb has finally come on for me; ‘budget each of your paychecks down to $0 before the next person gets paid or else you’re always going to have to go back searching for what you had leftover or what he had leftover.’ 1) Would you handle this by doing a Fresh Start? (I didn’t want to do this because I thought you’d lose everything but I read a blog recently that said your old budget just gets archived); or 2) because of how we use YNAB (mostly for individual budgeting but with some shared responsibilities) just create a separate Budget for him and link only his checking and individual savings accounts to it? With this option, just let go of the mistakes I made during the learning curve and put him on his own Budget beginning next month (April)? 3) In doing this, can I keep the original budget for myself, remove his individual categories and have it linked to only my checking/savings/joint savings or would this be impossible because of past transactions (like I won’t be able to delete his accounts because past transactions are tied to them so I’ll have to do a Fresh Start regardless)? Virtual hugs to anyone willing to read this extremely long post and offer advice! Thank you!

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    In our household, we actually run three budgets.  I have one, my wife has one, and we have one for household expenses.  Because of that, my initial bias is towards having separate budgets, and then you can each run your categories as you see fit.

    (backstory, is that my wife really doesn't want to budget, so having my personal, and a shared budget kept me sane, while my wife could do whatever she was doing over there with her money, and I didn't have to stress out about it, because I knew it wasn't going to break my, or the household finances.  She's now expense tracking, but not actually budgeting, but thinks she's budgeting, and I'm really not sure what to think about it.  Sorry, went further off topic there than I planned to.)

    Here are a few different solutions I see to your situation, and I'll let you go from there:

    1. Create separate budgets for yourself and your fiance.  Personally, if I did this, I'd start both of them from scratch and leave your Jan-March budget just sitting there for reference if you want to see it, but don't try to turn it into either one of your budgets.  You certainly could hide all the categories that don't apply any more, but then if you actually do need to reference any of that information, it's now hidden and you have to un-hide it to find the info, then hide it again, and it just feels cumbersome to me.  The only time this gets cumbersome is when I need to give my wife money for whatever reason,  because then we have to both transfer the money to her, and create separate transactions in both budgets, just for me giving her money to go do something fun that I want to give her, or because she's been the only one stopping  by the grocery store recently, and I want to be contributing to the groceries, or because the dog needs to go to the vet, and while we've both been putting money aside for it, we're pretty sure she's going to need both the money I've saved and the money she's saved to cover it  (actually we did a single transfer for all three of those last weekend - Yay split transactions!)

    2. Create a "M's Income" and a "J's Income" category and tag your income as inflows into those categories, instead of into TBB.  This would let your money land in a place-holder category until you are at a point where you want to sit down and assign the funds to categories.  When you want to divvy money out, you negative-budget "J's Income" to 0, then you assign it to your various categories.  If you have leftover money, you put it back in J's Income until you're ready to distribute more later on.  If you forget to put it back, it'll stay in TBB, but when M gets paid, it won't immediately be co-mingled in TBB, it'll be sitting in M's Income, waiting for you to pull that money out to TBB, and hopefully you'll notice that you never put your money back into J's Income, and you'll have another chance to keep things straight.  This solution will screw up your income/expense reports if you use them, so it may not be a good idea for your situation.

    3. Get a joint account, close your personal accounts, and just deal with combined finances.  Given what you said above, I think this is the worst available solution for your situation.  You don't want it, M doesn't care, and there are at least two other perfectly viable options available.

    Upon further reflection, I think #2 might be the best solution for your situation, as it will require the least adjustment from your current workflow, and the need for budget separation isn't very great when you're both on board with budgeting and sticking to categories.  I need the separation for my sanity with a wife who never considers her budget when making purchases doesn't appear to decide not to buy something because of a lack of funds in a category.

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      • pling
      • Lavender_Cobra.2
      • 2 yrs ago
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      If I were in your (the OP's) situation I'd do #2 from this post but with one minor change - if you categorise the incomes as inflows into a specific category then it'll mess up your reports - nothing will show up in income in the income/expenses report for instance.  So I'd still have it arrive in TBB but then very first thing move it all into the placeholder category of J or M income (which shouldn't be too much administrative overhead) and then as TheTabby suggests when you want to actually sit down and allocate funds either move it all into TBB and work through to zero (or to when you're done for today and put the rest back in its category) or move it directly from the placeholder category to its new home as you budget.

      Like 4
    • TheTabby I cannot thank you enough! #2 definitely sounds like the way to go. You're awesome! 

    • pling Thank you! I'm definitely going with option 2 with your minor tweak. 

  • I'm not sure I understand why you need separate budgets if you do have transparency in your finances? 

    I realize YNAB prescribes to a joint accounts

    Does it? I am kind of new to YNAB, but I have never seen that. In fact, I have always been told the accounts themselves are kind of meaningless. Its the budget that is fed by the money in those accounts that matters.

    For our family , we have probably about 8 different accounts with funds in some form or another.  We have a joint account that is linked to our mortgage, but we also still have separate individual current accounts where we receive our salaries and actually pay our expenses out of. On top of that, we have separate savings accounts, plus separate credit card accounts. I do the budgeting and honestly don't care about the differences between these. They all feed up to the same family budget where those dollars get assigned. There we have some shared categories, but we also have some individual categories where we can budget for individual expenses (e.g. my Spotify subscription or her book budget) .

    In truth, it would be a bit less work for me if we consolidated down those accounts in to 1 or 2 joint account (less accounts to import & reconcile), but it doesn't add that much work, and it would add headache in other areas for me (i.e. would add additional complexity to my taxes as an expat living abroad). I can't imagine having to run separate budgets for her, myself and our shared expenses. Aside from being more work, I fear it would lead me to making a lot of mistakes.

    EDIT: Having re-read your post, I realize now some of my comments are a bit off-topic. I will leave them in case they are helpful, but realize they may not answer what you were actually asking. I will also add though , part of the problem you have is that you have transparency in your financials, but you have not merged them. I am not trying to advocate for one or the other as I realize everyone is different, but I will say that once we stopped thinking about things in term of her money & my money, life got a lot easier. What forced this was A) the birth of our kid and B) when we started started working to build a house. Suddenly, it did not matter which side of the relationship the funds came from. Either way, it was our money and was going to fund our life. This makes budgeting a lot easier. I no longer to to work to fund "my" categories with "my" money, and "her" categories with "her" money. I just fund our categories with our money. If he dollars go to my Spotify subscription, then fine. Or if I fund her magazine budget, then fine as well.

    Like 3
    • Forest Green Stallion I understand what you're saying in terms of merging and I admit I have a problem with thinking in terms of "my" money and "his" money. I've never been married before and didn't enter this relationship with any past debt shared with an ex, my fiancé however does have shared debt with his ex-wife; while they are paying off that debt as agreed among them, that has nothing to do with me and I won't contribute to it. As far as the kids are concerned, I'll contribute to their needs without a problem because they are essentially my children too at this point, but debt they racked up together, nope! I don't know if that's the healthiest way of thinking but that's my stance. Once we're married and he's handled that debt (in full or in large part at least) we can always revisit the joint account option, or leaving the accounts separate as is and just allowing all income to go into TBB together and allocating it across the board without concern for "whose" categories it's funding. (This was essentially the reason for my post and what I needed help with, how to stop having both our incomes show up in TBB at the same time so that I could properly allocate his money to very specific things he takes care of (i.e. pre-Me debt) and knowing exactly how much he had to work with to do so, and vice versa). Once our lives are totally co-mingled and we have shared assets, I've no problem with funding all areas of our lives with one pot of money rather than his and hers pots. To answer your first question, all of the early tutorials and blogs I read when starting YNAB advocated for one account for ease of use (less accounts to import & reconcile), exactly as you said. Traditionally, many of us have used separate accounts as our electronic "envelope" method (1 checking and SEVERAL savings accounts to save for different goals), YNAB teaches there's no need for all of those accounts (no need for a Vacation savings account, Home Maintenance savings account, College Fund savings, etc), your categories become your "envelopes" so you don't need various accounts. In this sense, yes, that's exactly why the location  (accounts) of the money becomes meaningless, as long as the dollars are doing their jobs doesn't matter where the money "lives." Hope I explained that well. Once we're married and fully merged, I think I'll be able to let go of my issues surrounding the location of the money.

      Like 3
    • Forest Green Stallion It sounds like yall have a great solution to work with. That wouldn't work in my relationship because currently my BF is still managing debt that is his responsibility. I also don't want to have to keep up with whose TBB needs to go to what categories.

      It's different strokes for different folks.

  • Alice Blue Rain  I also immediately thought of pling 's take on TheTabby 's idea. You don't need to undo or start anything over. Just add a holding category for each of you and when you're ready to budget out your pot of money, either use the Move Money Tool or make sure TBB is zero and then take everything out of your holding category and go to town.

    My fiance and I are sort of like this, because for legal reasons we cannot have the appearance of being married and we have separate accounts so that if I got hit by a bus, he'd have access to a little bit of money to keep him going until he could get help (he has a TBI and can't manage his life 100% independently. Yet. I'm working on that with him. 😃). But he's learned by now that it doesn't matter what account the money comes from; what matters is if the money is budgeted and available in the appropriate category.

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    • bevocat Thanks for your input. You all gave such great insight and it makes perfect sense, I tend to overthink and I knew mulling over it without asking for help was going to have me going through another month of doing it "wrong." Wishing you all the best with managing the TBI.

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  • My boyfriend and I have separate accounts, and so I run separate budgets for it. We rarely pay for anything that the other should cover, and so it doesn't bother me to keep separate accounts.

    My thought process above is that you can create new budgets now, and use 2. That will straighten out your issues with the TBB being 'off' at the moment so that you'll be able to take care of all of it correctly from here forward.  You'll still have the old budget to reference, so you won't lose information, and this will give you a fresh start to make sure your TBB is where all of it belongs.
    Option 2 from the previous comment is one way to go, though I would prefer to keep things in different budgets only because I could easily manage to accidentally pay for something from an account that had enough funds for one thing but not something else. I've done this to myself in my own budget before by paying on a credit card after I added funds to a category, and then needing to write a check out of the account for something else. Oops. But that's also what happens when you are budgeting close to the wire and don't have wiggle room.

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