How to manage finances being the lower earner and going back to work part time?

[taye1]

Mums who work part time how do you manage finances when you’re the lower earner?

We have been together 11 years, have a mortgage together and 2 kids age 4 and 7 months. He earns 60k and works away Monday- Friday (wage likely to increase soon) and I work 30 hours earning just under 22k. Plan was for me to cut down my hours, because it simply isn’t possible for me to work 4 days and manage every single thing to do with the kids and household while solo parenting all week. This will obviously come with a pay decrease and I will possibly have to go down a band in order to be able to work part time (nhs). Our total bills are around 1400. We have a joint account where we put bills money in and the bills come out of and Currently/in the past he puts in 1300 and I put in 600 (not always possible on mat leave). When I go back, what I earn will cover money to live on only for me and the kids. We won’t be saving anything in the joint account and I won’t be able to save much info my own account (I do currently have my own savings money around 14k) if anything at all while he is still able to and while his pay doesn’t change. We are clashing trying to come to an arrangement here’s and interested to know what others in this situation do and what others recommend.

This. DP’s salary goes into our joint account, our bills come out of there and then savings to our individual savings account. Day to day goes on my credit card which I settle out of the joint account monthly. I am not working and this is the only way we could make it work without arguments. I had my own savings coming into the relationship as did DP and those just remain separate.

You need to look at net earnings not gross. He might earn 60k on paper but he'll pay a far higher proportion of tax than OP and things like pension contributions need to be considered.
If child benefit is claimed, who receives it? OP?
You need to work out how much money is hitting your bank accounts each month before working out a fair split.
Im also unclear why your money feom inheritance is just 'your' money while you get a claim on his money??

Transfer your inheritance into a premium bonds account, ISA and a long term deposit account. Keep it separate from the daily expenditure current accounts.

Is there a reason why you don't live together near his place of work?

The OP's inheritance money could be paid off the family mortgage, reducing the monthly repayments and making life a bit easier for everyone. Im sure if OP's husband had inherited a chunk of money the expectation would be that it would be used to benefit the whole family

I now work part time and am the lower earner. DH and I are each paid our salaries into our own accounts, then we each pay a proportion into our joint account for most of the bills to be paid from. DH contributes more than me.

If I'm getting a bit short DH transfers some money into my account. I work 3 days so on the other 2 days DC and I are out at soft play etc and I pay for these sorts of things from my account. DH makes no comment on any of my spending and we're very open with each other about money.

I have savings in my ISA from an inheritance and am happy to use if needed, but we do try to keep this in case of any emergencies.

Joint account for everything.

DH earns more than me but I've had inheritance/savings so it all evens out.

Are you married? If not then stay full time, he needs to do half the childcare and jobs at home.

It reads as if you do t want him to be able to see what you spend. Has he taken issue with your spending habits in the past?

We stick everything in one account. Everything comes out of that account. If you want to be able to spend withoit comment, I'd suggest everything into a joint account, then equal, affordable, personal spends is sent to a solo account each month.

Looks like joint account is the most common answer, so we will definitely look into this properly but keep our savings separate? Does that sound fair? He does have his own savings too, not as much as me around 7k but he has a lot more ability to save than me.

Is that not what he was suggesting?

yes

He suggested putting our personal savings in too.

So given you think he can save a lot more than you… isn’t that kind of in your interests?

We have joint account and all pay goes in and all bills come out. We then have separate accounts that we have the same amount transferred into each month. I also have my own credit card. Things we need come from joint account and things we want from personal. So if I need a new coat etc that is joint, if I just fancy a new one I buy it myself. We have never argued over money.

No, it's not fair to keep savings separate like that.

Why would you keep savings separate - what is the endgame? Presumably you are both saving for the same thing?

If it's a question of one person wanting to save for, say, an expensive hobby or something, and you absolutely have to keep savings and/or current acounts separate, then -
You both split all outgoings in proportion to your earnings.
You pool what is left.
You allocate the same amount of spending money, and savings money, to each.
If one wants to save more, they take it out of their spending money.

When you are at home looking after the kids, you are doing a service to him, as the father of these children who will now have a better quality of life, as well as to your kids and yourself. You are also losing out on career progression and futuer pension earnings.

This is why his salary and your salary should be pooled - effectively, that is his part of how these benefits are financed.

Has some of your inheritance gone in to paying off the mortgage?

All money our is family money, including savings. All in joint pots. Always has been, including when I was on extended (so unpaid) maternity leave for a couple of years. We kept my pension topped up and made sure we maxxed out my ISA, etc.

However, we’re married (I think you said DP not DH?) and earn a lot more than you do. My current part time wage is higher than your DP’s full time wage and DH earns three times as much. Our arrangements might differ if we had less money to play with, but I’m not sure how.

You can’t have it both ways - having more use of his money while you keep your savings completely separate for yourself. All your money should be pooled - joint account, joint savings account, individual ISAs. You also need to make sure your pension is being topped up using the joint money.

Op I can't really understand what you do now except both pay into bills ? He from his acct and you yours and at least you pay less

Where does money for the DC come from ?
Where does Christmas spending ,holidays come from ?
If you want a treat at the weekend where does it come from ?

It doesn't matter to us who is the lower earner we have a joint account but mynwage goes onto mine just because I knew better how to navigate my one at the time.b
His goes into joint and every year we do a recalibration as to what money goes where.
So we know we need x each month for food my wage mostly covers that he contributed and that gets put into a Monzo pot for food.

We know our petrol costs are 50 PW and him 20pw. So we set aside money for that .
Bills of course.
I pay DC clubs and activities from my acct.
We pay into Christmas me 1oo him 150 and that is also our hols fund
We do about 20 each per month for all our bdays but really only spend on DC.
We have a pot for the children's clothes and one for their school meals and school clothes. Every month every penny goes somewhere.

He puts money into a saving acct in our joint and I have pb and an ISA I contribute too.

If I need money for food I go to our food pot. If we need new school shoes ..that pot
A new everyday coat ...the general pot.

I've just seen some items I want for Xmas so I've gone to the Xmas pot to buy them

We both view all money and savings as joint.
We also have a joint car pot but that mostly overs his car and I save for my own car insurance and stuff

Money is tight op and to be honest I don't have much for myself but neither does he
However we are in the bracket of earners where money is tight but we are doing a takeaway tonight and we know we can afford it because we have weekend spends.

Sounds complicates but if you have a bank like Monzo with pots abd start getting money in them you know where you are.

Sounds better than current set up.

It’s not coming across well he’s offer to go joint but you want to pick and choose what’s separate and what’s joint and keep your Savings separate

its as thought what’s yours is ours and what’s mine is mine

yours bills are £1400 so he could cover all bills then you both have a joint pot for stuff todo with kids that you both put into and you both keep respectively what’s left

Op I don't get where you are coming from. You are married. If you split up your income savings inheritance and pension would all be split. You may as well have a joint account. You asked what others do in your situation, which is very similar to mine. We have a joint account, we get paid into it, all bills comes out of it, we both spend it. We have £200 a month that goes into our personal accounts for fun money. I like to hoard mine like Smaug the dragon. DH spends his on football.

One joint account, all money paid into that because that means both of you get financial transparency in what the other person earns. No secret pay rises or bonuses. That has been an issue on here before.

Then work out all fixed bills you cannot change, mortgage, utilities, then everything else from childcare, petrol for cars, savings. Anything for the children, clothes, shoes, new coat comes out of this joint account.

Once that is agreed you can see what you have left and move equal money to your personal accounts by standing order so you can spend without reproach.

You have a house together, share children together and yet are both being prickly about money. Why is it not shared? It should be family money but as you are unmarried you both see it as your money and his money.

Given he pays higher rate tax, it would be crazy to have half the savings in his name. You are very close to be adding to the amount of tax paid - aprox 20k savings, so 10k would be in his name. At 4% interest that is already £400 of his £500 allowance.

So, adding further to my previous comment, current account is joint, savings are all separate. As the lower earner, more savings go each month into my name - but equally if there is a big spend, we go from whichever account is most appropriate. I bought "his" car for example - my savings had enough money in it.

But we also transfer savings on pay day - so salaries all go in, and we have standing orders to a savings account each. The money left after most bills go out on the 1st is for spending - on food, petrol, and fun stuff - but savings are classes as a bill in our minds.

So, what about:
4000 in each month
Bills: 1400
Other joint spends 500 (numbers from first post)

Leaves 2100. So, you could leave an extra 100 in the joint account, 500 savings each, 500 spends each.

So we’ve spoken and agreed both our wages to go into joint account and also all savings into one account (as someone mentioned, we save for the same thing anyway, majority of our savings go on either doing work to the house or holidays. We also had joint savings aswell so altogether we have around 35k now in total savings. @Cantseetreesforthewood I know I’m being stupid but I’m really confused, would you mind explaining that Any easier if possible 🙈 what do you mean about the tax/interest? We he have to pay more tax just because of our savings? We are planning on opening a separate savings account to put all our savings in when we get the chance to look into it properly but for now they will just sit in our joint account. He’s only been a higher tax earner for the last 6 months so we both don’t really have much knowledge around it to be honest!

So precisely what he suggested in the first place

@taye1 individuals can each have a certain amount of interest on savings before the interest is taxed. Basic rate tax payers can get £1000 each year. Higher rate tax payers need to pay tax on interest on savings above £500.

So, say your £35000 is in a joint bank account with 4% interest. You get £1400 interest. That is assumed to be half yours and half his. So he has to pay interest on £200 of his £700 interest.

If you know you won't need all the money immediately, you could each open a cash ISA, and put, say £10,000 each in (these wouldn't be joint accounts, but ISAs are tax free). The remaining £15000 in a joint account shouldn't earn enough interest to cause issues.