A lot of the time, I still feel like I’m pretending at being a grown-up. I’m so easily distracted in the mornings that I rely on a checklist to get out the door, one that’s probably very similar to the one my dad put on posterboard for me in kindergarten (you wouldn’t think that I’d need to check off that I have my glasses, but there it is). I used to think adulthood was having a bed with room on either side (so one person doesn’t have to clamber over the other in the middle of the night to pee, or leave awkwardly in the morning without having to pretend that you’re actually going to brunch, if you get me). Now I think you must surely reach adulthood when you get to wash your pants whenever you want, without battling for a rusty drier at Bubble Up. But even with a daily checklist, even without the freedom to launder pants on my own schedule, I’ve managed to put into place a few decidedly grown-up life systems that serve me decently well.
The APW staff was talking about these various measures of growth the other day. One email led to another, boiling down to one conclusion: we have varying levels of success when it comes to ironing out the complicated stuff like managing money, joint vs. separate finances, wills, insurance, and all the other health-and-life-and-death-related stuff. And since we are always better together than on our own when trying to figuring this stuff out, lo, a new series was born: Tiny Steps to Adulthood, where each month we’ll tackle these complicated topics. Where better to raise questions, figure out what works for you, and get our collective acts together than the APW community? Let’s wade through the morass together.
money: facing it, holding onto it, and otherwise managing it
My revelation that I needed to Do Something about money started during my Saturn Return. I don’t really put much stock in astrology but I totally believe in Saturn Returning, when I experienced the highest highs and lowest lows and came out on the other side of thirty. That was when I finally opened the credit card statements and realized, to my utter surprise, that not looking at them and pretending they didn’t exist wasn’t actually a viable strategy.
My credit card debt and ensuing crummy credit score were squarely my fault. I did not understand how to manage money, and was embarrassed that a simple concept like “stick to budget” didn’t make sense to me. I hadn’t ever found a money system that worked for me. I tried putting cash in envelopes labeled with different categories and tried budgeting and tried saving for important things “in my head,” and nothing worked because I didn’t completely get how to manage money, was reluctant to ask for help, and am very persuasive. Of course you can take money from the Food/Groceries envelope if you are going out for Food/Entertainment with your friends because you need to be nourished, obviously. By the time I finally sat down at my stepmom’s table with a calculator, and totaled up all the bills, a wretched number was staring back at me. I cried. But then I called all of the companies to figure out what should happen next.
That was one of the first times I felt like an actual adult, like someone who really did not want to deal with a problem, but who was doing it anyway. One by one I talked with surprisingly sympathetic agents who all told me the same thing: I’d need to shut down my cards, which would show up on my credit score. But once the accounts were closed, they could set up zero-interest plans with payments that were actually realistic for me, and I could get out from behind the crazy interest rates. My score was being ruined by my avoidance and balance transfers and late payments anyway, so I went with this plan. Four years later, I made the final payment on the last account and cried again. The relief at being out from under that debt was unreal, but I was still scrambling to make rent, even though it seemed like I should have had enough for my little studio in the hinterlands of Brooklyn. Then I met K, and once a respectable amount of time had passed, we started talking about money, and she helped me set up a system that became our joint system sometime on the road to getting married. I’m going to share it with you so that even if it doesn’t work for you, you have the opportunity to evaluate your own income flow and figure out what does.
How We Do It
We share three accounts—Household Business, Household Flex, and Household Savings—and then we both have our own Allowance accounts. HH Business contains exactly the amount of money necessary to pay our monthly bills and nothing else. HH Flex is for things we share, like groceries. Household Savings is where we’re working on our emergency fund and long-term goals, and one’s Allowance is the amount of money one spends on oneself.
So how did we figure out what went where? Like so many other things, we started with a shared google doc (you might have Mint or Quicken do this for you, but something about writing everything down really clicked for me). We looked at the bills from the previous month to figure out our bare minimum monthly set expenses. These are the non-negotiable expenses, and will differ for everyone, but our general ones are rent, phone bills, cat health insurance, student loans, and so on. They’re paid from HH Business, since they are essential to the business of running our lives. From there, we worked backwards to determine how much we’d allot into the other three accounts.
As is obvious from this piece, we are joint-finance people. Share the wealth, share the risk, you know? Even though K makes more money than I do, she’s not getting more Allowance than I am—we both agreed from the outset that we’d each get the same amount of personal spending, however small that might be. Her extra cash goes to our monthly expenses, and savings. She’s not working harder than I am; and it wouldn’t be fair to me to scrape everything I’ve got into the Business account with nothing leftover while she lives like a relative king. That seems a puzzling and complicated power dynamic.
So we played around with the numbers for a bit, and tested a few scenarios until we found the right balance between our shared Flex account, our shared Savings account, and our personal Allowances. We use the HH Flex account for discretionary stuff we do together, or buy for the household (like toilet paper, groceries, and the occasional dinner out). And we both automatically transfer money to our Savings account on a specific date, just like any other bill, and treat it as no more optional than rent. That leaves Allowance, my favorite account.
From the outset we agreed that there would be no judgment about the other’s Allowance. That has been one of the saving graces of our relationship. If I want to spend it all on peanut butter malt balls from the new Gowanus Whole Foods, fine. And I don’t care in the least about what K does with her Allowance. That’s her money, not mine or ours, and when she spends it on a peculiar-sounding book called Becoming A Supple Leopard, I only have mild curiosity that she’s into Big Cats. I don’t feel like she’s taking away funds that were intended for something more illustrious (anyway, I’m too busy eating my Allowance’s worth of peanut butter malt balls).
Relationship serenity aside, though, having this Allowance account separate from essential expenses has been a great teaching tool for me to better understand my cash flow. Here is where I practice keeping my spending in check without the fear of making a mistake that will end up in a late rent payment; it’s a debit card so I can’t get myself in trouble. I will always want to spend more money, even if I don’t have it. Someone needs to wear all of the sailor shirts, you know? But I’ve set this account so that I don’t have overdraft protection and those horrible $30 surcharges for overdraws, which means that if I don’t have the money, then the card doesn’t work until the next paycheck. This means I have the opportunity to practice prioritizing wants instead of wants and rent. If I get the sailor shirts, I don’t get the Dar Williams tickets. Many of you might have figured this out two decades ago, but it was damn near revolutionary to me.
This financial system means that we’re able to deal with money rationally, not emotionally. No one is resentful of anyone’s new Leopard book because we both have our own money. And our HH Flex account means that when we go out to dinner, we’re fairly splitting the cost and we’re also not choosing dinner instead of rent. There isn’t a ton of money in the HH Flex account, and dinners out are infrequent these days, because we’re trying to save a lot of bucks for potential gay babies, who are both theoretical and expensive, but also because we make choices about how to spend that shared money. Case in point: for the price of two dinners out, we can have a terrific collective cleaning service come once every six weeks. This means that the amount of energy I spend being infuriated with K for not loading the dishwasher properly is cut in half, which means we have the energy to be sexy with each other instead of ruminating on why she didn’t line up the mugs with handles facing out again. When I frame it that way, not going out to dinner for two meals is completely worth it to us. It may not be for you.
That’s where this month’s homework comes in
- If you’re not looking at your credit cards, open the bills.
- If you’re not sure how much debt you have, total it up.
- Look back at last month’s bills to see what you might divide between required expenses and flexible ones, like groceries, dinners out, and clothing, to see if you are actually living within your means.
I’m curious to know how many of you have joint finances or separate ones, and why. Ultimately, it is your responsibility to talk about that shit, to ask for help, and to figure out how money makes sense for you and for your relationship. Because this tiresome stereotype about women being bad at math isn’t going to rewrite itself.