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

I know I'm naive but I honestly can't believe that couples think like this. What on earth is the point in being in a couple at all if you're both going to jealously guard your possessions from each other as though you don't trust each other in the slightest??

DH and I stared going out at university and have been together nearly 20 years. I know it's unusual, but right from day one we shared everything - I used to top up his phone, he'd buy dinner, I'd get him a book etc. As far as we were concerned we afforded things together or not at all - there was no point in having anything if we couldn't share it. That's the whole point of a partner isn't it? How can you share bodily fluids with someone that you don't share money with? How can you have children with them? If you want to keep every penny for yourself, why not be single?

If the couple gets married, the flat will legally be seen as owned 50/50, regardless of the amount each has put in. I think person A is bloody selfish and wants their cake and to eat it too. I wouldn't be marrying person A if I were person B.

In case it's not clear, there's an implicit assumption in my accounting method that assets should be split in proportion to contribution. Obviously not everyone agrees with that. In particular, divorce courts seem to think 50:50 is fairer.

I advise the financially weaker party to propose marriage, and the financially stronger one to say no.

A is the woman and B is the man, right?

A is being very greedy. I would think twice before marrying her.

No happy marriage can be based on any veiw other than 'whats mine is yours'
I think you have bigger problems to be worrying about OP.

I couldn't handle living like that, thinking of 'mine' and 'yours' all the time. That's not a marriage in my book. DH and I put everything in one pot, bills come out and we each receive an equal amount into our individual accounts for our own spending (clothes, toiletries, basically anything that the other one has no stake in). Then we have a joint account for all groceries, things for the baby etc. DH earns more than me but wouldn't dream of saying he owned more of our family home than me! Similarly when I get a bonus, it's ours and we decide together what to do with it. One day I may well earn more than DH and again, it's all for both of us and our children.

I simply don't get relationships where it's all 'that's mine and that's yours'.

I think if you can't agree on money then you absolutely should not get married. It must be torture being with someone who constantly monitors you and is mean about everything - how you could continue to like them never mind love them is beyond me.

You're engaged?

flags. Red ones

Although, it's not un-sensible to protect your finances prior to the event... I'm shocked that the ownership of the flat is not already decided though?!? Did you not enter a deed of trust when you purchased in 2015? If you saved money using a cheap solicitor in 2015, you'll be spending a lot lot more on them if the wedding should not go ahead and you have to divide up the ownership as ex-partners!

The "capital income" - what happens to it? My OH reinvests his into basically a pension pot, so I don't actually view it as income. A conversation needs to happen between A and B about how it is spent/divided and why and what will happen after the wedding.

My suggestion would be:

Ownership of flat - ring fence the deposits. In the event of a sale, the same amount that was paid in is paid back out to A and B, then the remains of the sale divided 50/50.

Gifts from parents - forget factoring these in financially.

Living expenses - I'd adjust these based on your salaries. So if A earnt £42k salary and B earnt £56k, then A would pay 43% of the joint expenses, and B would pay 57%.... B's share is going to increase (until the wedding, when a whole new understanding is needed!)

We have a joint account that we each pay into monthly that covers all bills, plus 10% as a contingency. We actually pay in 50/50 (not married). I'm the lower earner and boy do I regret my stupid "independent woooomaaaan" arrogance when I signed up to that.

Whatever else you do make sure you nail down what will happen if you have children and one of you reduces their hours.

Having spent 22 years with someone who subscribed to "what's yours is mine and mine's my own" and now expects to leave a divorce with half my inheritance but none of our jointly accrued debts I'd say, get your flat on the market and then run run as fast as you can.

DH and I stared going out at university and have been together nearly 20 years.

That's the bit we don't know, isn't it - what stage of life the OP is at.

I am 49, when I got with my now-ex I was 42, he had nothing and I had quite a lot in savings and equity. But we were not going to have kids, I have none and he has one. The relationship was supposed to be forever - but I didn't not want to just hold everything 50-50, why would I?

Luckily, we didn't. We split the house 50-50 (tenants in common) but he paid the mortgage as I had put in my fill 50% in cash. Luckily I kept my savings and we both paid half of the expenses into the joint account and half our monthly savings target.
And we had a deed of trust showing who owned what. So, when we did split up, we didn't have to have a row about it (well, not about that anyway!) and I didn't need to worry that his addiction to motorbikes and his predilection for having expensive holidays with his mates (but not with me) was using my money.

I think the answer depends on a lot, but stage of life is important. if you are both in your 20's then it's sensible to just pool everything when you're both fairly equal. Later, maybe not so much.

We do it differently and keep our finances separate. Mortgage paid off, mostly by me. I pay home and contents insurance and TV licence. He pays utilities and most of the food bills. We pay for our cars individually. Whoever's feeling most flush pays for meals out, holidays, etc. I know it's very un-MN but has worked for us for nearly 20 years.

It sounds far too complicated - getting married everything should be shared and how will kids fit in

Am i being thick? The flat is already purchased. Why the question now? Dont marry.....it really doesnt sound right from an angle

It should all be split evenly. All earning in one pot, all from bills etc from said pot. Maybe have seperate accounts that you transfer X amount into each month for coffees etc.

Income should be split equally.

The flat is different and a deed of trust should have been drawn up at the time of purchase to safeguard the investment - e.g it should have stated the amounts each put in (and should get out) and how any profit/ loss on sale should be spilt. If you didn't get a deed of trust drawn up then, do one now.

*Bluelady

We do it differently and keep our finances separate. Mortgage paid off, mostly by me. I pay home and contents insurance and TV licence. He pays utilities and most of the food bills. We pay for our cars individually. Whoever's feeling most flush pays for meals out, holidays, etc. I know it's very un-MN but has worked for us for nearly 20 years.*

Yeah that's similar to how me and DH work it aswell, I think that only works though if you're earning similar money which we do. I mean it's still our money as such, it just the way we started out and it works fine, we never felt like we needed to change it up

When DP and I bought a place together, I put in 61% of deposit and DP 39%. I pay 61% of the mortgage and own 61% of the house.

For bills we split 50/50. Thats the official split anyway.

In reality, I earn more so pay for the treats/holidays etc. But if I'm short of money DP will give me some, I don't even have to ask, if he knows I've had an expensive month, he'll just transfer some money to me.

He gets regular cash presents from his parents, but these will be spent on us both. We are in it for the long term and neither of us is tight with money so its not an issue for us.

Persons A and B should have talked all this through before buying the flat and couple of years ago.

Either person may find themselves out of work at some point, whether due to illness, babies or redundancy.

A & B Need to talk about those possibilities.

You're getting married so all this - who owns what % of a flat you bought between you is or will become irrelevant.
It's your home and you should share it equally no matter who puts in what money. You don't know what the future holds, one of you may need to rely financially on the other.
What about kids? Will the person getting pregnant lose more of the flat if they aren't paying as much into the mortgage??
You are both in a similar situation financially and seem quite well off, so why the nitpicking? It's not a great start to married life...

Errrr you are pretty equally matched in terms of income. I don't think it's good to be being petty over pretty small amounts.
A relationship is a partnership and finances should be shared accordingly, especially as you are looking to marry.
If you can't agree to share now then I definately don't think you should have kids at all!

Is this a GCSE maths question? 🙄

If/when property is sold then each get back what they put in and the 50/50 split the rest. Bills split 50/50 both have a decent salary. We have no idea if A & B have kids from previous relationships for example. I don't care which way round A & B are both seem selfish! If both names are on the mortgage then you didn't really borrow £x each you are both probably liable for the full amount.

What will happen if one of you has children and takes a years leave or cuts your hours or turns down a promotion because you can't get childcare for the overnights?

Who pays for holidays?

There is no sense of a team in the op. You have to work together you'll be a family ffs.

That you are wrangling about finances in this way suggests to me there are problems ahead for you. When we bought our first home joint names equal share even though one pur more in than other. We have had a joint account for 30+ years with very different salary levels - everything is paid for from this account. We have a joint savings account and we put in equal proportion of salary into it. Taking money out by one of us has never been a problem.