MONEYtalks: Joint Finances

via blog.moneyaisle.com

When it comes to joining finances with a significant other, I really don't think there's one right or wrong way. People may say their way is the right way but just as each relationship is different, so I believe may each financial arrangement.

So instead of telling you what to do, I'm just going to tell you how we do it. Hope this helps you find your own "right" way or if not, hope this was an interesting read for you. I'll admit, I'm curious about these things myself!

C and I rented an apartment together while we were dating. During most of that time, we kept our finances separate. Each month, he would pay the bills, calculate my half, and I would transfer the funds to his account form mine. As for discretionary expenses like collective trips, dinners out, etc. we usually took turns paying. We didn't track who paid last or how much it was for. We just ballparked it. One of us might also offer to pay if we wanted to do something but the other was short on cash and/or wasn't 100% on board.

So what worked and what didn't?

▲ We had the freedom to manage our own accounts. As long as we paid our half of collective bills, the rest was our own to do what we wished with.

▲ Should something happen to either one of us or we parted ways, separate accounts are much easier to deal with since legally we weren't married, didn't have a child together, nor large debt such as mortgage.

▼ Even though our accounts were separate, our finances did affect each other. There were times when one wanted to do something (go out for dinner, a trip, etc.) and the other was short on cash so it was either pay for both or not at all.

▼ Splitting bills and calculating who owes want was a hassle. To avoid that, sometimes we would take turns paying. But that meant twice the amount up front. Simple enough for a quick fast-food meal but bigger expenditures did put a good dent in one's account.

After we got engaged, we decided to merge our finances because with marriage and a house in the future, our collective expenses were going to increase and our assets would be combined in the eyes of the law anyway. But the question was...how should we do it?

We considered 3 options:

1) Pool everything
2) Combine a set amount per paycheck
3) Combine a set percentage per paycheck

We ended up going with option 3. Here's the how and why:

HOW:Our company allows us to deposit pay into two bank accounts. We each put 80% into a joint bank account for which we each have a debit card for. We put 20% into our own accounts as "spending money". Anything that is a collective or neccessary expense is jointly paid. Discretionary expenses come from our own accounts unless the other person explicitly says it's okay to debit the joint.

WHY:We didn't go with option 1 as we wanted to still keep some financial independence. We didn't go with option 2 because we felt proportionate was more equitable. Right now we earn about the same but what if in the future one of us earns twice the other? The same dollar amount was mean a much bigger piece of one person's pie so to speak. As for why we did 80/20? We did a rough calculation of how much we needed for joint expenses and what would be a sufficient amount for discretionary spending.

So what works and what doesn't?

▲ It's so much easier to pay from a joint account than transferring money back and forth or split bills.

▲ It's also much easier to track payments for bills and other past expenditures.

▲ We can pay for larger expenses without crippling one person's account.

▲ We get the ease of a joint account while still maintaining some of our financial independence.

▲ There's no pressure on one person to pay up or forgo something or pressure on the other to do something they even when they're feeling crunched some the cost is beared by both.

▼ Only our bank account is joined so some purchases that have to go on credit card are on one person's credit card. Also, we don't get to take advantage of cash backs or points because the vast majority of expenses are via debit (cash).

We've talked about increasing our joint amount now that our collective expenses are higher but we may wait until fall, after our big trip and things have quieted down financially.

I just consolidated two credit cards with the same provider and turned it into a cashback card instead. We may make that one a joint card so we can make more collective purchases via credit card and enjoy the card benefits cash wouldn't give us.

I'm not going to say everything is perfect and we never have arguments over money. But this was definitely the right choice for us and works much better than our previous arrangement.

So readers...what about your experiences when it comes to money and your significant other? Any hardships or success stories? What are your thoughts about combining finances or keeping them separate? I'd love to hear all your thoughts on this (often touchy) subject.

10 Lessons from Sara Blakely, Youngest Billionaire

On March 26 of this year, Forbes released their 25th anniversary issue of Billionaires. Each year, a feature Billionaire graces the cover. But unlike previous years' cover models, this one actually looks like one.

Her name is Sara Blakey and at the age of 41, she is the youngest self-made billionaire. Her business? SPANX.

If you haven't heard of SPANX already (and I'd be really surprised if not!) it is an now an extensive line of shapewear for women and men. The product offering may have expanded in recent years but its first and still best-selling product is the slimming footless stocking. It's the perfect solution for unforgiving white dress pants that look so perfect on models but lumping and totally unflattering on the average woman. It's a product that make you go, "why didn't I think of that!" and after you try it, "how did I live without it?!"



SPANX products are sold in over 40 countries worldwide and the company is valued at approx. $1 billion dollars. Doesn't sound like much in the grand scheme of things but this might make the numbers a little more impressive: The startup funding was $5000 and the company has spent zero dollars on advertising.

If you're interested in reading the Forbes article on Sara, click here. But what I really wanted to share with you is an article by Forbes contributor Kelly Caprino entitled 10 Lessons I Learned from Sara Blakely That You Won't Hear in Business School.

So here goes:

1. Fail Big – Sara’s beloved father followed Wayne Dyer’s guidance in teaching his children the power of failing big. Each day, her father would ask – “So, what did you fail at today.” And if there were no failures, Dad would be disappointed. Focusing on failing big allowed Sara to understand that failure is not an outcome, but involves a lack of trying — not stretching yourself far enough out of your comfort zone and attempting to be more than you were the day before. Failing big was a good thing.

2. Visualize it Sara is a big fan of “visualizing” your big goal, in specific, concrete ways. She saw herself clearly on the Oprah TV show 15 years before it happened. She simply knew it would happen. She’d see in her mind’s eye sitting on the couch with Oprah having an exciting conversation, and wondered, “What are we talking about?” The rest was just “filling in the blanks” to get there.

3. Don’t share your fragile idea with the world too soon. Sara kept her idea of making a fabulous new undergarment for women under wraps for an entire year while working on developing the prototype. Only after she was 100% committed to it and ready to launch, did she sit her friends down and explain her new direction. Sara explains that ideas are vulnerable, fragile things. Wait until you’re completely read to move forward before you share it with people. Meaning well, they’ll shoot it down, offering all the reasons why it won’t work. But when they do, you’ll be ready to deal with it.

4. Don’t take no for an answer. Sara reached out to slews of manufacturers and lawyers to help her patent her idea and create a successful prototype. In every conversation she had with potential manufacturers, she was asked three questions: 1) Who are you? 2) Who are you with? 3) and Who is backing you? When the answers to these three questions remained, “Sara Blakely,” no one wanted to take a chance on her, until one manufacturer called her back and said “OK.” Why? Because he had gone home and told his daughters about the idea, and they said, “It’s brilliant!”

5. Hire people you like and trust (even if they don’t know a great deal about what you need them to do). Sara hired a head of Product Development and a PR director who had been friends and supporters from the beginning. Neither knew anything about the functional areas they were hired to oversee, but Sara trusted they’d be fabulous at their new roles, and they were.

6. You don’t have to go in order. Sara’s passionate commitment to her new Spanx product was so fierce, she just tackled each task in the development and marketing journey as they came up, not necessarily in the best order for a smooth launch. She landed a Neiman Marcus deal involving placement of the product in seven stores, before figuring out how to mass produce “crotches” for the product. The Oprah show called to do a feature on her in a staff meeting in her “offices” before she had an office or a staff. She winged it, and it all went well.

7. You CAN figure it out – you have the ability. Sara knew absolutely nothing about women’s undergarments, patenting a new product, manufacturing, marketing, product development, website development, online commerce, and more. But that didn’t stop her. She researched what she needed to, hired out what she couldn’t do, and marched forward with undying commitment and energy. Don’t stop yourself from pursuing an idea because you don’t think you have what it takes.

8. You can build a billion dollar business starting with $5,000. Sara had only $5,000 in savings on that fateful day when she cut the feet off of her stockings in order to wear them under her white pants for a more flattering look (and thus, realized the world needed a new undergarment product that would be comfortable yet flattering to the female form). From that $5,000 she embarked on designing a prototype, securing a manufacturer, naming the product, legally protecting her product, and getting the word out to potential buyers. You don’t have to be rich to move forward with your fabulous new idea.

9. Don’t worry about the outer “stuff” until the time is right. Sara worked tirelessly from her apartment creating her product, avoiding investing in outside office space or other marketing and business tools until the product had taken off. She didn’t have a formal website until she made it on the Oprah show and needed one. Anything that wasn’t essential to building the product and getting the name out there simply wasn’t a priority.

Breaking the mold is a good thing. When Sara began to research undergarments for women and how they’d been made for the last 50 years, she was astonished. From the absurd sizing protocols (only one average waist measure was used on all the products, regardless of the size of the garment), to how products were tested (on manikins not real people), Sara saw that the undergarment industry needed a female perspective – insights from a real woman wearing these items to shape the product development direction so the products were useful, effective, and as comfortable as possible. She broke the mold, and developed a completely new approach to developing women’s undergarments.

Sara’s most important tip:

“Believe in your idea, trust your instincts, and don’t be afraid to fail. It took me two years from the time I had the idea for Spanx until the time I had a product in hand ready to sell into stores. I must have heard the word “no” a thousand times. If you believe in your idea 100%, don’t let anyone stop you! Not being afraid to fail is a key part of the success of Spanx.”

Click here for original article on Forbes.com.

Of course, for every Sarah Blakely there are countless stories of failures. But I prefer the mindset that if it can be done, it can be done again. So perhaps Sara's tips will help you towards your goals and dreams, whatever they may be.

Do you have any tips of your own towards achieving success in career, money, love or just life in general?