Wendy & Summer
Wendy is a 31-year-old attorney with a base salary of $170,000 and an annual bonus usually around $20,000. She also makes an additional $10-15,000 per year from an adjunct teaching gig. Summer is a 29-year-old fellowship and administrative coordinator for a major hospital unit with a salary of $47,000. They live in Philadelphia and would like to stay in the city long-term.
Summer and Wendy started dating in college, but they didn’t begin seriously discussing finances until after grad school. These days, they make use of both shared and individual accounts. Money is automatically deposited into their personal account, and from there, they each transfer an amount into their joint checking that is proportional with their income. While they’re both contributing the same percentage of their income, Wendy allocates a larger dollar amount toward shared expenses.
The split works well for their overall bottom line — and just last year they bought a place in the city — but Summer sometimes struggles with what she perceives as an unequal contribution, worrying that she doesn’t “deserve Wendy’s share.’”
Wendy doesn’t agree and “doesn’t believe that contributing to the household is generous.” But she’s suggested trying an inverse of their current system in which all income is first deposited into the shared account, and then a percentage is reallocated from there into personal funds.
“We have not moved in that direction yet,” Wendy says. “For now, the current system works very well to pay all bills, build savings, and still have enough left over for fun and travel with minimal fights or money discussions.”
Summer and Wendy don’t generally fight about money, but there is sometimes annoyance when deposits into the joint account don’t happen in a timely manner.
The couple has recently started thinking about expanding their family, and the financial obligations that will go along with that. They both intend to keep working, so they’ll have to contend with childcare costs, but they’re also concerned about the education options available in Philly.
“We live in the city — and really like living in the city — but the city schools are failing. As such, we will either need to move (unlikely) or foot the bill for expensive private school,” Summer says.
Since raising a child in the city can be very expensive, Malani suggests Summer and Wendy start saving soon.
“If your mortgage is currently set up so that you’re paying down the principal as well as the interest, and you’ve locked in a low rate, we would leave that payment as is (not increasing it) and put any additional savings towards preparing for the baby,” she says.
Once the baby is born, Malani suggests taking advantage of an FSA offered by your employer(s), as well as signing up for a 529 plan, a college savings plan that allows parents to make after-tax contributions that can be used toward their children’s higher education costs. Both will be integral to Wendy and Summer saving smartly for their growing family.
For a small fix that could alleviate the timeliness issues around contributing to the “joint” account, Malani says it might be worth exploring an automated set up so that the percentage of their monthly contribution gets directly deposited into the communal account.