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Financial Friday: The 10% Rule

I disagree with maintaining separate checking accounts for most married couples. Of course, there are exceptions and situations I don’t understand. But assuming you and your spouse combine your finances and still struggle about having “personal” spending cash as we once did, try what I call the 10% rule. Otherwise known as the line item in our budget app called “Michelle’s allowance.” This principle applies to both couples and individuals.

The setup

Fun shit always comes up that is not mutually beneficial. Like Michelle’s Pole Dancing class, Shakira style belly dancing, yoga membership, musicals, princess coloring books, etc. Or my golf, hiking, camping, REI equipment, supplements, etc. In the past, when I saw these types of purchases come out of our shared account, I would become judgmental. This judgment would sometimes lead to money “spats”.

Now, I love my wife dearly and if baby wants to pole dance, then baby needs a pole! But, it was clear I needed another way to deal with my problem where I couldn’t project my frugalness towards her dream as a pole dancer in a negative way. So, the decided solution was to remove the trigger altogether and open her a separate account.

The 10% rule

We started by automatically saving/transferring 10% from each individual paycheck (total of 10% of your personal monthly salary) into a separate “hidden” account that is to be used as our own guilt-free spending cash and not tracked by each other. There are many easy ways to do this these days with automation.

There are two sub-rules below to keep in mind:

  1. The rest of your income goes into a combined pool to use for everything else you share in life together. You know, the necessities, couple stuff, etc. Try not to split hairs here. Give the other person the benefit of the doubt and try not to be overly critical of their 10%.
  2. Once your 10% is gone, you can’t continue to dip into the main pool unless it has been completely discussed and agreed upon with both parties. I’m thinking of a presentation of value here. Maybe even through a PowerPoint like I once did.

Some might argue that if your incomes are drastically different then it is unfair since one 10% share is significantly less than the other person’s. Or that the 90% one person contributes to the shared pot is significantly more than the other. By all means, tweak this any way you see fit. 

In closing

Neither of us is entitled to use all of the budgeted guilt-free money we share as a couple. Instead, the 10% rule forces us to separately manage our own “special funds” while requiring us to be smart managers of it. This means your partner has no access to it or the right to judge what you spend with your pot of money.

Most importantly, remember you’re a team. 90% of your budget and life goals should be together. Don’t split hairs. Don’t be (Tom) petty. Decide upfront and execute a plan. And if it doesn’t work, discard it.

Combine Your Finances And Define Financial Freedom To Eliminate Debt

Have you ever heard of the phrase “F-U Money” and thought about what that means to you? Otherwise, known as financial freedom or a “rich life”? Until you have or take steps to define it, how do you expect to be inspired enough to get there?

By the beginning of our marriage, it was apparent that combining our finances (including all debts) was going to be the only way to achieve financial freedom together. I knew if we maintained separate accounts, these little money spats could compound over time into larger arguments and hurt feelings. No progress would be made to our “Rich Lives”

The solution to this problem is to face the facts about money and marriage. It was about making financial freedom so clear, that combining finances would be the only solution.

This article introduces the first step in the Debt-Free Chronicles and explains why combining your finances is the foundation for becoming debt-free and financially free. Whatever that may be for you. If you’re not yet convinced of why you should combine your finances, take a look at a few of the facts.

The Facts

A financial survey found that only 51% of couples discussed how they would manage their money before tying the knot. I’m proud to say we were one of them. Although we may not have known very much about what to discuss other than being frugal.

According to various sources, money is the second leading cause of divorce behind infidelity and the number one issue couples fight about or avoid discussing altogether. To drive this home, I would like to highlight some statistics I found across le internet. If you would rather jump straight to my suggested solutions, I encourage you to do so towards the bottom.

Check the numbers

A 2017 study from Ramsey Solutions, conducted a study of more than 1,000 U.S. adults to gain an understanding of personal finance behaviors and attitudes, as well as how married couples communicate about money. The study showed that the larger a couple’s debt, the more likely they were to say money is one of the top issues they fight about. 

Some of the specifics of the study included:

  • Nearly 66% of all marriages start off in debt. 43% of couples married more than 25 years started off in debt, while 86 percent of couples married five years or less started off in the red
  • 33% of people who say they argued with their spouse about money say they hid a purchase from their spouse because they knew their partner would not approve
  • 63% of those with $50,000 or more in debt feel anxious about talking about their personal finances
  • 47% of respondents with consumer debt say their level of debt creates stress and anxiety
  • 94% of respondents who say they have a “great” marriage discuss their money dreams with their spouse, compared to only 45% of respondents who say their marriage is “okay” or “in crisis.”
  • 87% percent of respondents who say their marriage is “great” also say they and their spouses work together to set long-term goals for their money

More numbers…

A MagnifyMoney’s 2017 divorce and debt survey polled a national sample of 500 divorced U.S. adults to understand how money affected the end of their relationship. Among all respondents, 21% cited money as the cause of their divorce. the more money a respondent earned, the more likely they were to cite money as the cause of their divorce.

Among people who earned $100,000 or more, 33% cited money as the cause of their divorce. Of those percentages, 70% of respondents who said their marriages ended due to money said they didn’t stick to a budget during their marriage.

Beyond studies relating to married couples, some money facts for American people in general include:

  • 58% of Americans have less than $1,000 in savings
  • 78% of U.S. workers are living paycheck to paycheck
  • 85% of Americans feel stressed about money

The point? – Combine your finances

Maintaining separate bills and separate accounts is a dangerous path forward if you are married. It creates a sense of “mine” and “yours” instead of “ours.” yet, when shit gets really interesting, it is both of yours.

Ask yourself, why wouldn’t I want to work out a budget with my spouse, make joint decisions about expenses, and be totally transparent about spending?

If you intend to achieve financial freedom, you will have to think differently. It starts by recognizing that debt is not your friend and should not be considered as a part of your life. It has no long term place in your financial life.

It’s often hard to make a change when there is no clarity behind what you are doing. The path begins when you both define what that clarity is. Maybe your not quite on board with combing your finances just yet. But the next section provides another chance to come to that realization and set your financial future up for success.

Defining Financial Freedom

Instead, if people are not controlled or restricted by circumstance or design, they will organically attempt to fully develop their individual potentialities become themselves- in ways that release energy and capabilities and wisdom that can make them more useful and helpful to their immediate and wider communities.

Self-determination theory, Wikipedia

My thoughts on financial freedom relate very closely to the self-determination theory. If you are enslaved to your debt and all of your decisions, actions, and ambitions are influenced by money, is that really living fully? You may say that’s not the case, but are you kidding yourself? Think about the following.

  • Who will I be if I conquer the thing I struggle with mentally the most, my finances, our debt, expenses, costs, etc. 
  • How will financial security change the perspective and lens I view the world with? 
  • What would guilt-free purchases feel like?

The realization of becoming debt-free was the only option when you think about it this way. Because you may not even realize that living with debt becomes hardwired in your financial attitudes, habits and values. Yes, having money is not the purpose of life. It’s obvious that becoming who you’re meant to be is. Money is merely a tool to help you become that person.

As you will see below, a rich life or financial freedom doesn’t have to be what society tells you it should be.

Financial freedom to us

Simply put, financial freedom to us is the following.

  • Understanding the foundation of personal finance and not spending the majority of your life stressing about it
  • Knowing our money is automatically deposited in the right buckets each month (i.e. investments, savings, vacations, etc)
  • When all bills are automatically paid on time every month
  • Not batting an eye when a significant unexpected expense happens because you have a fully funded 6 months emergency fund
  • Budgets for spending money in categories that make me happy
    • Life-changing experiences like conferences and vacations
    • Buying a round of drinks/dinner for family and friends 
    • Giving
    • Books
    • Health supplements
  • Getting appetizers
  • Being amazingly healthy and energetic
  • Guilt-free side guacamole/avocado
  • Supporting amazing companies and choosing high-quality products
  • Taking spontaneous trips
  • Paying someone to do my yard work, cooking, house cleaning, etc.

It’s a fun way of thinking about money. That is, discovering who I might become and what choices I might make without the subconscious (or conscious) impact of money/debt.

Enjoy a bottle of wine (or tequila paloma’s) and talk about this definition together. Hell, maybe even give a powerpoint presentation as I did. Until you make it fun, it will always be about scarcity and stress. Notice how much this exercise lights each other up when you talk about even the smallest of luxuries.

To Conclude

Life is complicated and cannot be fit it into a pretty little box. But kicking the finances under the rug sets you up for financial disaster and stress later on when things get really interesting.

Have that talk and make it fun. Experiment with unique perspectives and figure out how to get excited about what your “rich life” and financial freedom means to you. Take a closer look at your life, possessions, purchases, and experiences. Are they bringing you joy?

And most importantly, if you’re married and are secretly managing money through separate accounts, its time to reflect on why. Find a system that works for both of you and start crushing your financial life.


If you’ve been following so far, you’ve read about the intro to me (us) becoming debt-free and the article above. In the next few articles ahead, I’m going to be talking about the dark horse I used for paying off our debt and the obvious thing you’ll need in your debt-free journey.