Allowance + Autonomy

Continuing the discussion from Mega Feature List:

Yes, I saw an interview of you two sometime ago but I don’t think I ever actually read before!

I am curious about some of the details of not sharing finances. My wife and I share finances except we each get an (equal) monthly allowance. That is, our incomes are paid to the household which pays each of us a small portion of its income. We buy most things like normal people, but when there is a dispute about whether something is a waste of money, she or I can buy things using our allowance and the other person doesn’t get to object. Most of the time we don’t even need to have the dispute because at this point we’re habituated to certain categories of items always being allowance purchases.

To me this arrangement seems a lot simpler than not sharing finances while still providing most of the benefits, as well as solving the income disparity problem mentioned in the blog post. But since you’ve given this more thought than I have, I’m curious what your thoughts are about my approach and how it compares to yours?

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I think it’s almost equivalent. We don’t have a joint bank account but we do have a joint credit card that we put joint expenses on. So I’d say we have the same system but yours is opt-out and ours is opt-in, as far as paying for things jointly is concerned.

Another difference is you’re effectively paying each other half your salaries. @bee and I instead find explicit reasons to transfer money between each other. Like I’m currently paying her $1k/month for being default parent [1].

[1] If you read that article then $1k/mo will sound stupidly low but we try to equalize things as much as possible by outsourcing everything outsourceable and having lots of auctions to divvy responsibilities. But just being on top of things and knowing what even needs to be auctioned about in the first place is a real burden.

Is that a natural consequence of @drtall’s scheme, or something you’ve read into his description?

It’s sort of true but sort of misleading I think. Normally if your income is being siphoned off (taxes, alimony, etc.) it reduces your motivation to get raises because you don’t reap the full benefits.

In this case, if I get a raise the full post-tax incremental goes into the household. This affects future conversations about the reasonability of a purchase. So to the extent that I want things my wife finds agreeable, I get the full benefit of my raise. And I’m still better off pooling incomes because her salary is much larger than the amount of my raise.

In the case where me getting a raise affects the reasonability of an increase to our allowances, here we see the splitting effect. But our allowances are such a small portion of the household income that the majority of my raise is still going to the household. So maybe I only keep 95% of the raise (and even that’s assuming the things she’s buying with allowance don’t benefit me indirectly).

So I don’t think it’s useful to reason about my arrangement as if it were a 50% money transfer, even if in the steady state it sort of resembles it. From an incentives perspective I don’t think there’s a problem.