How to manage separate finances?

[cucumberella]

Husband and I have clashed over the years when it comes to finances and just can't seem to get on the same page. It's time to separate finances. He's the higher earner however the house was purchased after marriage with my money. My thought process is that if we both keep our finances separate and both pay 50/50 towards all bills and expenses, then in the event we should get divorced, hopefully we should just both keep what is rightfully ours? E.g he keeps his savings, pension etc, I keep my savings, pension and the house? I know the courts won't necessarily see it this way and he could be unreasonable about it all, but I'm hoping it could make things a little bit more clear cut?

That being said how do you actually deal with separate finances? Do you just leave it to the individual to manage their own savings/pension/investments? If so and your partner is a big spender and you save a lot, do you not leave yourself open to then giving away half of all your savings should you divorce whilst they don't have a penny to their name? Do you have a joint savings accounts for things like holidays? If you have children, how do you decide who pays for what?

Also what happens when it comes to you both retiring and one has a big pension and the other doesn't?

Do you have children?

Sorry for the short post - we combine ours so I cannot offer any advice based on what we do. Your situation does intrigue me though and I'd like to see what others say on it.

Do you think it’s fair that your husband should have more disposable income than you though, simply because he’s the higher earner?

I hope he’s not the type of man who thinks that’s acceptable.

@BernadetteRostankowskiWolowitz

Do you have children?

Yes we do

DH earns several times what I do. He pays several times % wise what I do by direct debit into a joint pot for bills, holidays, DC etc, and the remainder of our salaries is for each of us to spend/save as we wish. Separate savings, investments, inheritances etc. No mortgage, house in joint names.
It's worked well enough for 30 years.

@Cosims8

Do you think it’s fair that your husband should have more disposable income than you though, simply because he’s the higher earner?

I hope he’s not the type of man who thinks that’s acceptable.

Is that inherently unacceptable? I don’t think so.

@Cosims8

Do you think it’s fair that your husband should have more disposable income than you though, simply because he’s the higher earner?

I hope he’s not the type of man who thinks that’s acceptable.

No it's not fair. But what I can't and won't have is him questioning my purchases, and how much they cost, and was it necessary etc. So I'm willing to take the hit with the lower income out of the two, just to have the freedom to say "F you, this is my money and you don't get to comment on anything I do with my money".

Does your H believe that as he earns more, he should be able to spend more on himself? Genuine question, not being snarky.

Also, has your career/earnings taken a hit as a result of having children?

We have mostly separate finances and always have. Joint expenses are paid out of a joint account into which we each pay a sum in proportion to our income. Broadly we calculated our monthly expenses and put that amount, plus a bit extra for holidays and one off purchases into the joint account. We both have access to that. We don't have access to each other's current accounts and savings.

We are entirely separate.
I earn a lot more than him, but he does have his own house and savings / pension.
It’s a second marriage for both of us and we both have two children, quite different ages, so our outgoings are different.

I am at risk of losing money in a divorce, however, not a huge amount. I would have just lived together if he didn’t have assets, exactly because of that.

He will have an easier ride in retirement because of me - but I’m perfectly happy with that, as I love him.

My position is that I’m perfectly happy to share my money within marriage by choice. Very unhappy to give it away by court order in divorce.

It works for us, because we have similar views and we talked about it A LOT before marriage. The fine detail. Future projections. What ifs. Pre and post nip options discussed. That’s the key - we were open and aligned.

As he’s the higher earner, do you know if your likely share of assets in the event of a divorce would outweigh the money you put into the house purchase?

We have a combination of joint money and discretionary spends, so:

• all income into one pot
• all bills, food, children's expenses, holidays, joint savings, days out etc come out of this pot.
• out of this pot, I transfer an equal amount of money into each of our sole accounts, which we can spend however we like, without the other questioning it.

Could that work for you? This only works if the higher earner doesn't feel short changed, i.e. 'I earn more, ergo I should get more to spend on myself', regardless of the reasons their partner is the lower earner.

Have one joint account for all bills. Work out the average monthly cost of all utility bills, car/house insurance, holidays cost, Christmas cost, etc and each of you pay proportionate to your salary. I would expect him to pay more given he earns more.

Just re-read...

You separating finances now will make no difference to a later divorce. Do it for other reasons if you like, but not that one.

Separate accounts for your own incomes, joint account for household expenses, each set up standing orders to transfer your share of expenses into the joint account?

Although however your handle your payments, a divorce settlement could still involve payouts being made.

We have completely separate finances and always have. I transfer an amount representing half of the bills and half of food money monthly. We pay five months of council tax each. We paid cash for our house when we were first married, an equal amount each from our savings/previous equity. We both owned houses before we met. We both are now in receipt of pensions which are roughly equal amounts. When we buy a new car we pay half each. Other stuff we just work out - sometimes I pay, sometimes he does. This way there's absolutely no resentment about our personal spends. I couldn't bear to have to account for every penny. I know lots of younger people think we're a bit strange - but our son-in-law and daughter have adopted our model, and it works for them too.

@cucumberella

Husband and I have clashed over the years when it comes to finances and just can't seem to get on the same page. It's time to separate finances. He's the higher earner however the house was purchased after marriage with my money. My thought process is that if we both keep our finances separate and both pay 50/50 towards all bills and expenses, then in the event we should get divorced, hopefully we should just both keep what is rightfully ours? E.g he keeps his savings, pension etc, I keep my savings, pension and the house? I know the courts won't necessarily see it this way and he could be unreasonable about it all, but I'm hoping it could make things a little bit more clear cut?

That being said how do you actually deal with separate finances? Do you just leave it to the individual to manage their own savings/pension/investments? If so and your partner is a big spender and you save a lot, do you not leave yourself open to then giving away half of all your savings should you divorce whilst they don't have a penny to their name? Do you have a joint savings accounts for things like holidays? If you have children, how do you decide who pays for what?

It won’t be as simple as that, married couples cannot put things in separate accounts in order to avoid them being marital assets or to claim things to be “rightfully theirs” upon divorce. If you both agree on the split you propose then that is fine, but if not you will need to come to a financial settlement from the starting point that everything is an asset of the marriage (no matter whose name it is in).

You are married so if you divorce assets would be split.

On a more day to day basis it makes sense (to us) to have your own bank accounts and credit cards, but have a joint account for the family / house stuff (with an accompanying budget). This gives some privacy of personal spends, and keeps credit scores alive.

It doesn't solve the fundamental issues of a higher earner resenting the lower earner for spending money, or the lower earner taking the family jewels in a divorce!

As others do, we are paid into our own personal accounts but each transfer a set amount over into a joint household account each month. When we first set up home together, we earned broadly similar amounts, so paid the same amount. When DD1 came along, I worked p/t so paid in less but we tried to retain the share of take-home pay to make it fair. Then a few years ago DH was self-employed and I was earning, so I paid in more. Now he earns more than I do, but our outgoings have reduced so we both pay in a similar amount.

All household expenses come out of the joint account. For things like holidays, it depends on the health of the account. For our last big holiday, he paid £1k, I paid £1 and the joint account paid the rest. It works for us.

Has your financial earning power taken a hit due to having children?

Was the childcare costs split across both of you?

Do you prefer separate as a way of escaping actual financial control he was exerting, or are you choosing it in case that's how he became?

Honestly, I just cannot understand how this can work, especially once children in are in the picture. So much of our income and our expenditure is related either directly or indirectly to our children that I just cannot see how you could separate it out. Take the most simply act of taking the children out for an ice cream - do the children's ice creams come out of joint money while I pay for my own? Or does it all come out of 'my' money because it was my choice to take them? Or does it all come out of joint money because I am looking after the children? It's bonkers.

One of the most fundamental elements of marriage is the legal act of joining your estates. Why would you marry if you don't want this? And why would you want to stay married to someone who happily enjoyed their higher disposable income while watching you unable to enjoy the same choices?

And yes, I think all the problems you foresee in the event of a divorce are unfortunately possible outcomes. I don't believe the courts would take into account the fact that your higher pension pot is a result of having lived more prudently during your marriage. And because the house was purchased after the marriage I think you would have a hard time ring fencing it unless there is a very clear paper trail to it being financed from money that was solely yours prior to the marriage, such as an inheritance. If you are really concerned about this I think you should take legal advice now so that you know where you stand.

We have a joint account which covers all bills and childcare when we had that. We put into it according to our relative earning at the time and adjust with pay cuts/rises.
We then make our own decisions about pensions/savings/investments, but have a joint savings account for holidays and one joint credit card, again for holidays.
Spends on days out, childrens clothes etc we do out of our own money. Its worked great for us for 25 years

We have joint and separate finances. We have a joint account for all joint expenses so everything for the house and our dog and our DD. We also have a joint savings account and a joint investment.

We are both paid into our own personal current accounts, then transfer 50% of the joint expense to the joint account. Whatever is left is our own. We both have personal pensions, investments and savings of differing values.

We have been together for 16 years, married for 7. Initially I earned a lot less than him, then it evened out, then I went part time after DD so took a cut but now I earn more. However, everything joint (including buying our house and our investment) has always been 50/50 - the initial deposits and the upkeep and ongoing costs. I absolutely insisted on this as the lower earner.

Things like holidays are jointly funded, and we have always had an understanding that if I ran out of money before the end of the month I would be honest and say I couldn’t do xyz activity - then it was up to him to offer to treat me or not, and there was never any resentment either way. This now works the other way. Its not for everyone but it works for us.

I think no matter what you do or how you split it the key is that you have to keep talking about it, always. As things change, as they get difficult and regularly when they stay the same. We do also discuss if we are going to make a big personal purchase from our own money - anything over a couple of hundred usually. Not often or for approval but as a “to keep you in the loop”