Living together and finances

[Helpyou]

I've posted this in 'money matters' section too but only had 2 replies so wasn't sure if perhaps I posted in the wrong place! So just posting here for hopefully a tiny bit more traffic.

Hypothetical question as this is early early stages but having never had to cross this stage in the past I wonder what do people do when one earns more than the other in a relationship and buying a home?For context: both own their own properties separately and if the time comes, both properties will sell for a similar amount (give or take)But one person earns approx 20k more than the other. Do you put the same amount in each for deposit? Or is it relative to pay? Does one pay more for bills?And if making a joint bank account, do you put in the same amount or again a relative percentage?Having always been an independent person, I am just not sure how this will all work. It wouldn't be for another year or 2 so there's no rush with this really but want to be prepared and I guess need to start thinking about saving for the future.Thanks!

I earn significantly more than my husband (always have). And he has higher outgoings for various reasons. We take the view that everything is shared. So we pool our income and give ourselves a similar amount of "pocket money" each month. That means that I contribute way more (at least a couple of grand) each month to our joint finances. Doing it any other way would mean I would have a much higher standard of living which isn't the way it should work (imo) in a committee relationship.

Thank you both! This is helpful!

I like the idea of 'pocket money'
But for e.g. if one parent is on paternity / maternity leave and went out for coffee / lunch would that come out of joint account or pocket money?
And I assume birthday presents you purchase from 'pocket money'
I'm just clueless. My parents had and still have separate finances but each put in to a savings account.

We have always had joint finances. At times my husband earned a lot more than me, at other times it's been the other way round. We currently earn a similar amount. It doesn't matter, we treat it all as our money, regardless of who earned it. We are a team. We don't have 'pocket money', we just trust each other to be sensible with spending. Big purchases (cars, holidays, furniture) we discuss and decide together. I wouldn't want to be in a committed relationship and have separate finances, it just wouldn't feel fully committed, trusting, and mutually supportive to me.

If you're considering having children or already have them, the only fair thing to do is pool everything. An ex- colleague had a baby and saw everything baby related as her lookout, all finances were separate. It was an absolute clusterfuck of an arrangement and she was skint whereas her husband wasn't affected at all. It makes a mockery of what a family is, IMHO. You're a family: you share. That ex-colleague didn't have another baby with her husband and now is with someone else, so go figure. Your income takes a massive hit by being the one who has the baby so there's no way to divide things equally if you don't just pool stuff. In terms of spending, we generally can purchase what we need below £50 and we decide together about anything over that. It's worked for nearly twenty years and two kids later.

Thank you, this is super helpful!

Separate finances here. Never had a joint account ever. Works for us.

Remember what you do doesn’t have to be forever, it can change as you go.

Initially my DH moved in with me as I owned and he rented but he earnt double what I did. Therefore we agreed an amount that he would contribute to the household that he gave me each month whilst I administered all bills. This made me better off each month and was still cheaper for him than renting. As the income gap was so wide he also paid for all our holidays.

When we decided to get married, it started to get much more blurred as we were saving towards a shared goal and therefore we started to care less about where money came from, particularly if it was for costs we consider shared. Eventually we evolved that we needed a certain amount to pay the bills, a mutually agreed amount into joint savings and the same amount of “fun money” per month each.

Now we are married, live together in a house we bought together and it’s even more blurry than that, we are still technically doing the fun money approach but I’ve way overspent this month and he doesn’t care etc.

Our ability to discuss finances and agree approaches together is one of my favourite things about our relationship so I think I would just be looking for someone I could discuss it with.

We had 'pocket money' in our shared finances. Anything non-essential and not for the house or kids came out of pocket money, so lunch without the other person or coffee of course from pocket money as with all other socialising, haircuts, clothing (to be fair, some clothing is essential but it still came out of pocket money), presents for friends and each other etc. If we went out together and the joint finances allowed it, we'd take it from the shared pot. But if that fund was too low, that was also out of pocket money.

Everything in one pot, discuss any big purchases

Unless one person is really bad with money or you don’t actually see a future together what’s the point in anything else?

TBH I don't think one pot works when the money is very tight. It would only take a couple of not large purchases to mean there's nothing left for the other person for the whole month and that could lead to resentment. We're better off now than when the kids were little and there is some flex in the finances so now we do one pot. When there is £100 fun money between two a month, then not so much.

One big pot. DH earns around double what I earn and for the first years we had seperate accounts and shared costs pro-rata. Worked well but when we moved and bought a house we also were engaged and with that comes a family income in my eyes.

We luckily have very similar spending habits so it works. When I was on maternity leave and then moved to part-time it was clear that my lower earning was set off against me doing more at home and with DD. And all of DD's costs are joint as well, no way I would say my salary was calculated against the nursery or similar.

Find out how this person is before moving in.

Is he generous in the relationship or resentful of buying you a cup of coffee. Birthdays, holidays, gifts?

How is he with chores? Does he adult well or has his mum done everything for him?

If you're looking for something long term with children, marriage first before buying anything together.

We pool all income too as working towards same goals. Think it's a safe thing to do unless there are red flags like spends roo much, controlling about money and as long as you agree some ground rules.

Never been a problem for us some months I earn more some months he might. All goes same bank account bills come out what's left we both can access for ourselves or kids anytime we want neither questioning the other about whats what. Never had a problem in our marriage with finances all pooled regardless of who's got what cars,house from pretty much day one.

These are all good questions, thank you!

He's generous etc... I have 0 worries about controlling around money etc. I guess I just want to have open conversations before we commit to having children together.

I'm not sure if I want to get married. So I guess I may have to protect myself too? Naturally I'll be earning less when children come along.

@Helpyou

If you don't want to get married you need watertight documentation. Wills, Power of Attorney and rental contracts or house purchases in both names.

I would also then insist on a joint account for normal expenses and all personal ones but seperate saving accounts and if you go p/t or on maternity leave that he helps to pay into a private pension to ensure you are not loosing out.

I wouldn’t pool finances unless married or have absolutely watertight legal agreements re property, joint savings and assets. It’s too easy for the lower earner to end up in a very difficult position if things don’t work out.

Do Not Earn Less, by going part time, if you are not married as you won’t get a share of his pension should you split up.
Work full time to maximise your own pension and share child care costs between you.
Or get married and go part time once married

My DH and I kept our finances separate for the first 6 years. He earned more so he paid 2/3 of the bills and I paid 1/3. We lived in his house. When it came time to move he used the proceeds of his sale to pay for our next house and we bought as joint tenants. He had always wanted to pool our money so when we moved we also opened a joint account and now everything goes in and comes out of there. We use YNAB to budget together but neither of us police each other's spending. He's a generous person and I've always been good with budgeting. Neither of us feel disadvantaged by the set up. He's quite pleased that he's saving more because he's too embarrassed to spend as much as he used to.

The most important thing about this is to have a frank discussion and agree a fair arrangement before you commit to a property together, before you commit to children, and before you marry. The actual details of what you agree are up to the two of you and may change as circumstances/incomes change, but if you can't have an open conversation and agree a fair, secure arrangement then don't get pregnant.

(I speak from bitter experience).