Couples finances

[Chris2202]

My fiancée and I are trying to find a reasonable and fair way to handle our finances together. We have slightly different views on what is fair regarding the finances. How to split the expenses and how we split the ownership of our flat. Is anyone of us being unfair?

A bit about the financial background:

We bought a flat together in 2015 for £ 481 000.
Person A had £ 150 000 in equity
Person B had £ 85 000 in equity.
We borrowed £ 300 000, i.e £ 150 000 each.

The rest amount £ 54 000 was used to buy a car, furniture etc, as well as a vacation for Person A.

Person A earns £ 42 000 per year, not including capital income of £1 500- £5 000. Person A also gets regular money gifts from parents for personal use, about £1 000 to £3 000 per year.

Person B earns £ 56 000 per year, but has neither capital income nor gets help from parents.

The salary of Person B is going to increase due to the profession, whilst the salary of Person A will not.

Since buying the flat in 2015, Person B has contributed £ 25 000 more to the household than person A.

Person A is of the opinion that A should own more of the flat according to how much they had with them into the relationship, i.e according to the equity share. Furthermore, that all expenses should be split depending on the salary, i.e the one with the highest salary pays more than the one with lower income. However, capital income and the regular money gifts from parents should not be taken into account when defining income.

Person B is of the opinion that if A shall own more of the flat, then all expenses should be paid equally as well. An alternative is that A owns more than B in the beginning, and what B contributes more to the household goes into the flat so that in a few years they own the flat 50/50. After that expenses are split depending on salary. A slight different alternative is that Person B takes a larger share of the debt, so that they own the flat equally, and then can split the expenses depending on income. Person B also thinks capital income should be regarded as normal income when sharing the expenses.

What is most fair? What is the fairest way split the ownership of the flat, and the living expenses? Is A unreasonable, or is B unreasonable?

Thank you for reading
Chris

[MrTrebus]

I think if a couple is truly a couple they wouldn't be so hung up on all this. It's joint family money or it's all completely separate but with no "I own X amount and you own less" blah blah.

[computationalAspects]

pool all the income, share all the expenditures from the pool. Save the rest.

If youaren't ready for that then marriage is a good way away.

[TheSpottedZebra]

Are you engaged for a party and a ring, or are you planning to be married?

[pinyata]

Everything is pooled together all expenses come out off the total pot. Agree to an amount for joint savings each month and the remainder can be split for personal spending.

Everything is added to pot including pay rises and parental gifts when this happens you can agree to save more or split or a bit of both.

Hope this makes sense

[HotelEuphoria]

I think A wants their cake and to eat it. I suspect Chris is B. I can see this relationship having a lot of financial arguments.

P is correct here. P being pinyata

[Travis1]

Flat 50/50 everything pooled(both salaries, capital income and gifts) then save a percentage of the disposable income and split the rest.

Though if it's this difficult and bean count-y a relationship and at those salaries is it really one you see lasting?

[greatpumpkin]

Are you sure you want to get married and spend the rest of your lives together? This sounds like a fairly even financial split to me, and your joint approach sounds a bit, I don’t know, ungenerous maybe?

From your description Person A is somewhat unreasonable and maybe a bit grabby. So I’m guessing you are person B. I would say capital income is normal income, less sure about gifts from family. I would go for a split of contributions that gives you both equal personal spending money and assume that over a few years Person B’s higher earning will contribute enough to assume a 50-50 split of the flat.

[Sparklemummyx0x0x]

I get it, but why can't you just split everything 50/50?

You're a couple, a couple who I presume will get married and possibly have children. Is this argument about finances and who has more or less money going to continue through the rest of your lives?

So one of you earn or receive more money than the other, I feel this is the case for the majority of couples, the one who earns more pays more to the kitty for bills, holidays, savings etc, and the rest of the money is yours to do as you wish.
Or why can't you both jointly own the flat and pool the money together? Money that you can enjoy together.

You should both be named on the flat though.

[WhatToDoAboutThis2017]

It doesn’t sound like you’re a couple, it sounds like you’re friends who’ve bought a flat together.

A couple would pool all finances and not quibble over who owns what etc. If you truly want to be a couple, you need to forget all this, pool everything and go from there.

[Corcory]

A long term relationship should be 50/50. All income shared and everything equal. If not I would question the validity of the relationship.

[InDubiousBattle]

Both salaries into a joint account, all bills come out of it, transfer an equal amount into individual accounts for personal spending (or just use the joint account). You both own half of the flat. Are you sure you want to be married?

[NapQueen]

Any couple at the Finacee stage should just say "this is our home; an equal asset".

What then happens when A or B is off on maternity leave and cant contribute as much? Do they lose out proportionatley on the asset?

[Deshasafraisy]

Person a and person b should split up now before any possible future children get hurt.

[HuckfromScandal]

I ha e been in a relationship with person A
They totally and utterly shafted me in the end.
Grabby and money centred
If you are person b - run like the fucking wind
If you are person a - wake up

[TheNaze73]

Sounds more like a business arrangement than a relationship

[Trinity66]

Any couple at the Finacee stage should just say "this is our home; an equal asset".

yeah pretty much

[Handsfull13]

If your getting married then it will be 50/50 at some point. Unless your planning on using this to sort a prenup.
If it was dp and me I think we would consider it our home and if worse came to worse it would be spilt 50/50.
Finance wise I would have a joint account which the same set amount goes into from both parties. That's where all the bills go out from and anything you do as a couple ie cinema/dinner. Then the left over for wages will stay in your separate accounts to pay off any debt and personal treats.

If it's so much of a problem can person b put in a little more to the shared pot until they match up the deposit equally.

[Oysterbabe]

You're getting married so surely all income should be joint and the property 50/50?

[MrTrebus]

I think this thread has massively back fired for the OP!

[ChristmasAddict]

I agree that if you are getting married then it's 50/50.

[Toffeelatteplease]

The ownership of the flat should have been dealt with at purchase. It's probably already written into the title deeds etc joint tenants or tenants in common.

If you marry it's 50/50 anyway.

[spugzbunny]

You are over thinking this! Your financial situations are not vastly different to my own. Salaries are similar, the deposit on the property is similar. We had a deed of trust drawn up that stated that we would get our original deposit back and anything else would be split 50:50. We pay the mortgage 50:50.

We put an equal amount in to a joint account each month and then save what extra we can afford in our own savings accounts. That money is then pooled when we need it.

One thing to note - when you get married, any deed of trust will become void. You can get another written up after you are married though.

[NewYearSunshine]

Did you purchase the flat as tenants in common or joint tenants?
Why on earth are you arguing now about who owns what?
When are you getting married - have you discussed what will happen regarding finances once you do?

Reading your post you sound a long way off ready to be married.

[NapQueen]

Any couple at the Finacee stage should just say "this is our home; an equal asset".

What then happens when A or B is off on maternity leave and cant contribute as much? Do they lose out proportionatley on the asset?

[Firesuit]

If you are going to keep relationship accounts, I suggest that you keep a spreadsheet of all joint outgoings, including capital, interest and expenses relating to the house purchase. You need to record the amounts and (as accurately as possible) the dates.

From time-to-time, value joint assets. Let's say that's just the house, and it turns out to have gone up by 3% a year. Add 3% a year interest to all contributions to joint expense. Sum the contributions with interest of each participant, let's say the total (in many years time) comes to 400K for A and 600K for B. Then A would be entitled to 400/(400+600) = 40% of the house.

The reason for making the rate of interest the same as actual inflation on the house is that in the hypothetical case where one person contributed a paid for house at the start of the relationship, that would be the fair rate of "interest", i.e the whole value of the house at the end should be counted as their contribution.

The reason that other (non-housing) financial contributions should be inflated by the same rate of interest is because money is fungible. If one person paid bills of exactly the same monthly amount as the other person spent on the mortgage, the bill-payer should not be entitled to any less of the house than the mortgage-payer. They both contributed the same to the relationship, so should get the same out.