Financial management advice needed: how to help my SO

My boyfriend and I live together. I’m pretty much a miser, but he’s a big spender. He makes pretty good money but never seems to build up any savings. He says that this is mostly due to the fact that he is (self-confessed) not very good at managing his money. He always has enough for rent, bills and food: he pretty much spends the left over after necessities.

We’re trying to figure out some way to get him to save. This needs to involve some way of making sure he doesn’t have easy access to money over a reasonable amount per pay period. We were talking about maybe him opening up a separate savings account (which probably woudln’t help, he’d still be able to take money out from ATMs), maybe an account at a different bank which ATM card he’d leave at home (but money transfers might be so inconvenient as to not happen).

The other option is to in some way have him give me the money - he’d always have it if he needed it, but he wouldn’t be able to spend it on a whim. I’m not sure how that would work. We aren’t in any way financially integrated and there aren’t any legal protections in place, for either of us. Also, I’d want to open another bank accoutn if this would be the case, so there is some sort of clear delineation between his money and my money.

So, what do you think the best way to do this would be?

I don’t know the whole picture, but maybe a payroll deduction at work? That way it comes right out of his check, he never has to touch that extra money.

Ah, but where to put the payroll deduction? He is, as an aside, already taking advantage of some payroll deduction plans (into shares) at work.

Smack that payroll deduction into a retirement fund or money market fund or some sort of asset that’s not as easy to get to. I do generally loathe books on finance, but I just read The Automatic Millionaire because everybody’s got it on hold at the library, and it gives fabulous advice, particularly if you can put your money somewhere pre-tax. The book advises that you get 10% or more of your income automatically moved elsewhere so you never see it or touch it. Obviously the best place long-term is in a 401K or similar account, particularly if your employer matches, because contributions are not taxed. If you just want to use a savings account, you can certainly do it so that you can’t use your ATM card with it. Just adding the additional step of having to contact the bank to get your money may be a help for him. Personally, when I was having contributions to my IRA deducted automatically from my paycheck, I put a lot in there. A year ago I changed jobs, so of course that bank instruction fell by the wayside - haven’t put a penny in since. It really is all about automatic savings, not budgeting.

Auto deduction into a company-matching 401. Not an option? Try a “Roth” or other type retirement fund to funnel cash into.

These don’t work? Try “direct deposit” of the paycheck. This keeps cash out of his hands and maybe you can help funnel it into more beneficial areas.

As a last resort (and I don’t really think this is a GOOD option, but an option none-the-less) : Finance durable goods. Washers, dryers, refers. If he is good with payments, make him “invest” in “reasonable” items. Tie his money up in items that will last for a while, and may have re-sale value, if times get tough. NOTE: do not buy cars or motorcycles! :wink:

Buy Real Estate! It never goes bad!

[Groucho]
You can have any kind of a home you want. You can even get stucco. Oh, how you can get stucco.
[/Groucho]

On the positive side, it looks like he’s paying his bills and just spending what he earns and has enough discipline to not go into major credit card debt.

Another couple of ideas for payroll deduction are savings bonds and something like an ING savings account, which draws from checking, but you can’t get to it with an ATM. With either of these you can get to the money if you have to, but it’s enough of a hassle to make you think twice about it.

Shares are good, but remember Enron. You don’t want to put too much into one stock. If his company has any kind of a retirement plan there should be a family of funds (Janus, Fidelity, etc.) that he can choose investments from. The fund family has different mixes of investments (% and types of bonds, % and types of stocks) depending on investment goals and the amount of risk one can endure.

Just a few points: I’m using a separate bank account to accumulate my income tax payment because I’m not being taxed on my job, and moving money to that account is simply writing a cheque to myself from one bank to the other.

A second point: RRSPs (which I believe are similar to your 401ks) are NOT tax-free - they are tax-deferred; I think this is an important point to make. If your employer is matching amounts, go ahead with them, but if not, I wouldn’t put all my eggs in that basket. The banks love them, therefore they must not be very good for us. There are better ways to invest for retirement. Real estate is one of the methods we’re using.

Maybe the first thing would be to have him write EVERYTHING he spends down. Coke at work? Write it down. Gas fillup? Write it down. Get cash from an ATM? Write it down. I did that for a while, keeping a running tally of cashflow, with frequent balancing (add or subtract “lost” transactions). Then categorize the cashflow into subjects (Gas, Fast Food, Groceries, Beer, Strippers, Gambling losses, Hookers and Blow…) and he’d likely be surprised at how much money goes to areas he doesn’t think take much. This is the beginning of a budget based on a certain Quality of Life standard he chooses. I have an area in my budget where I take EVERYTHING left over every pay period (after leaving a buffer in Checking) and move it to Savings. True, I could pull it out, but I don’t unless it is REALLY needed.

I’m getting the impression that you are committed to this idea…I’m not sure how committed HE is to the idea.

Simply put, what everyone has said is he needs to find a way to stash money. I have money transferred from my checking account to my savings account by my bank.

It may also help if he has a goal - something to save for. i.e. I will save $5,000 this year - and use $1,000 of it on a short trip.