Sunday, March 1, 2020

Marriage Tax

I've been married since August 4th, 2012. I am very opinionated and can be very strong/wrong headed about my spending and my wife is also very opinionated. One thing we've been reasonably able to avoid arguing about over the last 7+ years is money.

We discuss it often and as in any household it can be the source of concern and anxiety but those feelings are derived from our collective positions. In terms of me spending money on computer parts or her on skin care products, those are private to the individual and the approach we've used for this is what we call a 'marriage tax'.

It's been in place from day 1 of our marriage and it became more formal in May 2013 when we started sending 'joint emails'. A monthly email from one spouse to the other logging any transactions that were spent from joint so we could refer back to them later if there was any confusion.

The systems works like this:

  • We agreed a percentage that would be transferred from our salaries once a month to our joint bank account. A marriage tax
  • The percentage is based on net salaries after pre-tax deductions.
  • The percentage can be moved up or down on mutual agreement.
  • Purchases over a certain dollar figure, it used to be $50 BBD but largely anything expected to come out of the joint account is mentioned now.
  • Salary bonuses are not subject to the tax. 
It's fairly simple, the other factor is what can be purchased with joint, these are all pretty obvious:
  • Rent
  • Groceries (with a few exceptions)
  • Childcare 
  • Family outings
  • etc.
We chose to use a percentage because if one of our salaries went up or down the contribution to joint would change accordingly. The spirit of it being if one person does better the household does better so we both benefit but whoever got the increase still benefits the most because their disposable income in real dollars has increased.

What it means in practicality is that a portion of money goes to an account and it pays for expenses that arise from living in a shared space. This means the remaining money can be spent effectively however that person wants to. As a result we budget as a couple and then as individuals. I have an entertainment bucket in my budget app for things I'll purchase like tickets to a TFC games and when I do so it's, at least financially,  up to me. 

Given 'Joint' isn't a person and isn't eligible for things like a credit score etc. We spend money on behalf of joint, and somewhat like business expenses they are claimed out of the joint fund. This system is not perfect and joint has had both surpluses and short falls. Ultimately the greatest benefit is simplicity of budgeting for a family while respecting the individuality of both spouses and when salaries increase or decrease, the amount going into joint does and lifestyles adjust accordingly.


Joy said...

Very interesting perspective, Walcotts. Blessings!

Anderson B said...

I remember when I first heard of this process. I thought it was brilliant then and it’s still brilliant. Definitely worth a share!!!