How we spend money

July 19th, 2010
ea, money
Sharing finances with someone who has dramatically different ideas about where money should go is hard. Many couples have one spouse who likes to buy things a lot more than the other does, or perhaps one spouse who feels very strongly that they should be saving a lot more than they do. In our case, Julia believes that her money belongs to those who need it most, while I am less radical. Left to her own, Julia would spend as little as possible on herself, to the point of not getting anything not strictly needed. This would make her sad, her happiness is important to me, and so I want a system.

The most important thing I want out of this system is budgets. Constantly weighing purchases against the good the money could be doing elsewhere is very taxing emotionally. This is especially important if you're considering buying something for enjoyment only. Thinking of the people that the money could be helping is a good way to sap the fun out of any activity that you pay for. If we divide our money up annually between a category for donations and a category for absolutely no donations [1], all future spending decisions we make that year have no effect on how much is available for oxfam.

The division between giving and keeping is one that each of us makes for our own money on our own. Julia, being Julia, gives 100% of her income while I give 30% [2] of my salary [3]. The rest of the money goes to pay for other expenses: food, allowance, housing, taxes, and saving.

When you have to balance each purchase against the extent of global poverty, applying the strict "spend money where it will do the most good" criterion, not much stacks up. Maximizing global happiness is locally unhappy. When spending from a pool that is designated "for any use except donation", though, you're free to spend it however will maximize your happiness.

[1] Giving money from here is allowed under very limited circumstances. Presents are ok, as long as they are to people we know and not to strangers. Actual donations to non profits are also ok, but only to organizations from which we receive a service and that support themselves by donations. Our quaker meeting, for example. The underlying idea is that any money which we feel morally obligated to give for reasons of utilitarianism comes out of the "donations" bucket.

[2] My first year I gave 50% of my income away. This turned out to be rather a lot once taxes for both our incomes were taken out.

[3] Income vs salary: if I work extra at a side job or something and earn more money, it goes to my allowance. Otherwise I probably wouldn't do that extra work.
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