Coin Confession — Couple (John and Chrissy)

Coin Confession — Couple (John and Chrissy)

Welcome to The Coin Confession! Dealing with money in a relationship can be tricky sometimes, so we looked for couples to tell us how they handle their finances.

Today: John and Chrissy’s story

Professions: I’m a management consultant, my partner is an entrepreneur

Age: 28–32

Working career: 7+ years each

Annual income: (undisclosed) a combination of salary, investment income, and some bonuses from our primary employers

Career & additional income: We both work a tonne, and we’re very fortunate to be able to work on things that we care about and are fundamentally making our economies and countries better. My day is typically 6 am-10 pm, with me on my computer/with clients from ~7/7:30am-~9pm. My partner has a similar schedule, except that her day involves a lot more juggling building the company, investing in and managing her team, and cultivating clients. Even in writing all that out I’m in awe that she keeps it all together! What this means is that side hustles/active income streams aren’t viable for us right now. We’ve chosen to focus most of our energy on growing our earnings from our primary jobs and are reinvesting our investment income to build passive income-generating assets.

Our income breaks down as: salary (73%), investment income (36%), and others including bonuses (10%).

Debt: My partner and I both took on a significant amount of debt in order to get our MBA’s (we both attended top global schools). We have an aggressive debt repayment plan and minimizing our student loans is a priority for us as we think about our finances. Debt repayment takes up 16% of our combined income.

Investments: We are big believers in investing and have been doing it consistently for all of our working lives (7ish years) and for about 4 years together. We are both members of investment groups but also do our fair share of investments individually. In the past, we mainly focussed on private investments where we would partner with entrepreneurs we knew well. This has its advantages and disadvantages. After we went to business school (took on debt) and decided to get married (combined income), our priorities have shifted to building assets that can provide us with passive income which we fully own and control. Our goal is to attain financial freedom (passive income > expenses) in our early 40s. We are spending the next 2–5 years building the assets and capital we need to make this happen. We invest 51% of our income.

Living situation & expenses: I have a house-mate, my partner lives at home with her parents. We COULD afford to rent our own places, but given our current priorities (accelerating our savings, supporting the business, paying down debt), renting our own place doesn’t make sense to us just yet. Additionally, having a roommate allows me to affordably live in a great neighborhood, reduces my transport costs, and ensures that I never lack for company — which is helpful given that I’m extremely extroverted. We are planning a wedding this year, which has increased our expenses, and next year we hope to redirect these expenses towards a downpayment for a property/topping up our emergency fund. Our expenses take up 32% of our combined income.

Our approach to money/budgeting: We both don’t love the “traditional” approach to a budget (take monthly income, break down where every coin will go, and then walk around with a check-list), so we can’t tell you precisely what we spent on groceries or transport every single month. Instead, we came up with variations of this that worked for us. They’re fundamentally similar in what they achieve, so we’ve not had too many disagreements on the approach to use as a couple.

My approach: I break my expected annual post-tax income, and think about how much of it I’ll have dedicated to life-changing/fantastic investments and experiences. This includes the trips I want to take with my friends or experiences I’m eyeing, investments that I’ve been considering, and any debt that I need to pay down (school loans, and then a mortgage down the line). I then break that into monthly amounts, and make sure that I’ve allocated enough for these “big things” and automate those deductions. This then leaves me with the amount I have for my life maintaining expenses like rent, groceries, etc. These amounts end up being fairly predictable, so it’s easy to plan around this. My favorite recurring amount is my “weekend fun” allowance — guilt-free money that I can spend however I want as long as it’s roughly within that guideline.

At the end of all this there’s usually a bit of money left over, but some months this is not the case (basically breaking even) and in some months there’s a sum that leaves me with a smile. I don’t really think about this “remaining” cash, since I know that my priorities are taken care of, and I’m living the life I want. This “remaining” cash is a buffer for those months when I end up needing more money than usual — I put this into high yield savings account so it earns some interest while I wait for that rainy day or large purchase.

Her approach: She plans her finances in advance, dedicates money to the key categories for her (investing, long-term saving, emergency funds, etc.), and then spends the rest. And when the money is finished, it’s finished. It’s time to scale back until there’s more money available — funny enough, this rarely happens now.

Our approach: As mentioned, the approaches are not fundamentally different. We agree on the bigger details (what we’re trying to achieve, amounts needed for each), and don’t sweat the details at the end to give each other flexibility. When I organize our dates, I know much is in the “weekend fun” bucket that I can pull from, and when she organizes them she knows she’s already taken care of the key areas. In terms of splitting bills and combining our incomes, our approach has evolved as we’ve gotten closer.

  • Earlier in our relationship: Small costs would typically be equally split (we never did a disproportionate split) or fully taken by the person treating the other (we’d swap around so this stayed roughly equal). For larger purchases (e.g. joint travel) we’d make a budget, and I would typically put our joint expenses (flights, hotel reservations, meals) on my credit card (I earn great points on the card). We’d subsequently split the costs at the end of the trip. It sounds simple when I say it here, but it took us a few tries to get this right. In the end, using one card for major expenses made it easy to track and had the added advantage of taking the awkwardness out of money decisions (we had to agree on a rough budget in advance).
  • Today: We typically put all the money into one virtual “pot” and then allocate it across our goals+lifestyle needs. We have built up to a high level of financial transparency for optimal allocation, and create autonomy through a “flexibility/fun” budget that we each use as we see fit. We keep separate primary bank accounts and have secondary shared accounts where we are co-signatories. This allows us to balance collaboration and autonomy (I’d personally feel a bit odd if she knew where I spent every coin in my “flexibility/fun” budget, and I think it’s healthy for her to also have some privacy on her end as well)

Goals & how we adjust to meet them: We break down goals across 3 categories;

  • Long term: our highest priority and where we allocate the most money this will include the business and major investments
  • Short term: our plans for the next year or so like our debt repayment plans, travel and funding our wedding
  • Immediate (quality of life): the decisions around where & how we live (outside of our short term plans) and the expenses associated with this e.g. uber vs public transportation, what we do for date night

We allocate our money to keep us on track, and have scheduled conversations/money dates every few months to talk about our priorities, how/if they have shifted and what we’ll adjust to stay on track.

For example, we travel reasonably often, with ~3 international work flights a year and ~1 that’s totally personal/recreation. The work trips are key for my partner to build the business. As a result, it’s important for us to optimize her “up-time” (her ability to perform when she lands), and we are willing to spend a bit more for a better flight (fewer layovers, shorter layovers, etc.).

On the other hand, we don’t spend as much as other people in our social & professional circles on drinks, dinners, takeout, etc. We home-cook the bulk of our meals, and often host friends instead of going to restaurants. We also have learned to minimize our travel costs by booking early and over time learning how to manage our expenses when we are abroad while still having a good time.

During our money conversations/money dates we’re able to align on the compromises we’re willing to make to both enjoy the short term as well as successfully work towards the long-term goals we share.

Final reflections: In the words of one of my favorite quotes, “There is no free lunch.” Once you choose the life you want to build, you must also choose the compromises that will come with it — they are two ends of the same stick. For example, if you decide that you want to invest more, you’ll need to decide if you’re going to find a way to earn more, save more, or both. Additionally, if you don’t have a strong investing history, you also need to learn how to invest well, so you don’t lose all your hard-earned money. As a couple, you must decide which compromises you are most happy with, build a plan, and then move forward with that set of choices.

For us, we believe in sacrificing for the long term while enjoying some of our income today. We don’t always get the balance right, but our money dates have been instrumental in helping us stay on track. Without knowing how to approach those conversations (how to decide on our goals, how to think about prioritizing cash flows, how to course-correct, etc.) we’d not be able to effectively navigate these choices. So I’d highly recommend that each couple (or an individual) takes the time to learn these skills, by taking the Africa's Pocket online course.

Regardless of whether you are single or have a partner, I wish you a happy, fruitful future. Happy working and happy living!

Shout-out to my partner for the grace and space to write this — you’re awesome!

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