When I started dating Tianna, we did what every couple does. We took each other on dates, bought each other flowers, and thanked each other for the gesture. As time went on and we got engaged, these rituals gave way to a new consciousness; we were nearing a place where our financial independence was more of a blurred line than a hard and fast rule. Soon we were finding out how much money the other made, what assets we had, what debts we would soon share. After discussing it and putting everything on the table, we decided about six months before we got married to combine everything we had. All of our bank accounts, credit cards, loan payments, utility bills, food expenses, you name it, would start coming out of "our money" and not from one or the other.
We partially made this decision because, well, one of my control-freak personality issues causes me to be extremely fastidious with money. This trait furthermore all but forces me to keep detailed records about our finances, as I had been doing for a while before Tianna and I met. Tianna confessed that she lacked this trait, so we decided that I would be the family accountant (and, ostensibly, the accountant for her business).
As a result, I know exactly where every penny comes in from, and where it goes to.
This is not for everyone, and there are many people that believe that they should not combine their finances because of marriage. That's fine. While I believe it makes for a more harmonious life, others might find that separate finances keeps them sane. For us, this seems to work.
I use a program called GnuCash to do it. It's an open-source accounting program, and you can get it at http://gnucash.org. If you've ever used Quicken or Microsoft Money and found them lacking, I encourage you to try GnuCash. It's the ultimate control-freak tool for tracking your books. It runs on Windows, Mac and Linux and is 100% free.
Here's a perfect example. If you've used something like Money, Quicken or even Mint.com, when you get your paycheck you mark the amount that hits your bank account as income, and that's it. But that's not it. As you no doubt know, all of those other columns on your pay stub are places where part of your income is being either redirected or subtracted from your pay. It might be health insurance premiums, Social Security tax, income tax or a number of other things.
When I get a paycheck, every single line of that pay stub is captured and explained. For instance, I can pull up a report right now that tells me how much federal income tax I paid in 2010 so far (which was really useful in 2009 when I had four separate employers). That's a pretty handy number to have, especially if I want to know if I'm going to be getting a refund this year or not. I can also see just how much of my pay is going out the door before it even hits my bank account. That's useful if you're elected in some benefits that you may not be using.
What's the result of all of this? Some of the key benefits are very useful. For one, I know almost three weeks in advance if there's going to be some sort of shortfall. I haven't had a checking account overdraft in years. I know how much Tianna and I have saved for retirement. I can very quickly see if we're spending more money than we make.
In short, it frees me from silently worrying about money. Sure, I still worry about making a payment sometimes if we've had a rough month, but I've cast off the fear of not knowing. That, to me, is a really great thing.
Are there drawbacks to tracking every penny of your money? Sure. I have the tendency to dive in and micromanage our finances every now and then, and that can cause tension. If I've learned anything from doing it, you have to use it more as a tool for financial forensics rather than a way to point the finger at bad behavior. Like many things, it could be used for good or for evil.
If you're on the fence about getting more involved in controlling your finances in 2011, take this as encouragement to get in the game. It's not nearly as time-consuming as you think, and knowing where your money is can be a very freeing prospect.