Family Finances - Approach

[puppetmaster2501]

Hi All,

Long-time lurker - first time poster!

My wife and I (wed this year) are expecting our first child together early next year - exciting times! So it's a good time for us to re-examine our Family Finances. So I would appreciate any thoughts you have - an information gathering exercise at the moment :-)

Background:

Our current set-up is that we have our own seperate finances and pay 50:50 to support household bills and other expenses (eating out, joint social spend etc.) into a joint account. I own the house we live in overpaying the Mortgage myself whilst the misses puts money into savings for our next house move (the 'Family Home').

I earn nearly 3x (gross pay) what my wife does - naturally after tax, NIC and pension this drops in terms of net take home pay... However now she is my wife and a baby on the way time to re-examine the set-up.

Approach

Both the misses and I want to keep our Finances seperate (though I manage for both of us) and use a joint account arrangement as we do now. To me this has always seemed the prudent approach just in case either of us goes off the rails financially (unlikely to happen as both level headed but especially with a baby on the way its an extra form of protection individually).

So to my mind the question is - should the 50:50 split be re-examined for (1) in general due to differences in pay and (2) for arrival of baby.

An important note: Though I get paid ~3x the misses salaryI do not live a lifestyle that I can afford - but one that she can. The spare funds I get from this arrangement go to long-term goals.

(1) I think the default starting position for a couples finances is 50:50.

My view on this as well is providing one is not forcing the other to leave beyond their income then why should anything other than a 50:50 split occur?

That said as noted above the excess funds I have go towards our future (overpaying mortgage, child savings, retirement savings) and given married with a baby imminent I think 50% would be hers anyway!

(2) Now this changes things. My wife works for the NHS and is lucky to have a good maternity pay arrangement however eventually her income will drop.

If we keep the current arrangement then what would be sacrificed on her side would be her ability to put excess funds into savings but could still maintain her lifestyle and bill contributions.

If I were to provide an 'allowance' (dislike this word) should this be to the level of her previous pay? Its a joint decision to have children so I am thinking potentially yes.

If we look at it from the couples point of view and providing her lifestyle is not negatively impacted then it doesn't matter where the money is - it is our money.

Looking at it from individuals point of view if I do not transfer an 'allowance' then she loses out if I continue to invest fully in what are at present the most financially efficient route of mortgage overpayments.

If you made it this far great! Decisions, decisions...

Thanks for any input :-)

If your wife is going to have a lower income during ML because she's off recovering from the birth and looking after your share child then no, a 50/50 split shouldn't be the starting point. You should both be making contributions proportionate to your income. You'll also both need to discuss how you'll manage when there's less money coming in, what cuts will be made. This should really be mutually agreed. And who will pay for what baby things?

What's the plan for when ML finishes? Will either or both of you reduce your hours?

My DH and I share everything. Their is no his and hers. We are as one. It helps that we both have a similar attitude to money. We are frugal and have money left over every month. DH runs the money as he is better with it than me and it is his hobby.

I would imagine it being a difficult task to proportion the money between us according to whatever rules you decide to use. How do you put a value on having a baby.

Life is too short.

I never go short of anything and DH only buys music and sports stuff. We don’t drink or smoke. Hate crowds. Enjoy being together. Mostly.

The more I think about what you have posted the more perplexed I am, I just don’t get it.

Add it all together. Allocate money for bills, savings etc. Split whatever is left equally between you both. Simple.

Doesn't mean it all has to come into one account - the adding together is simply a paper exercise that you do at the beginning of each month, before sending money wherever it needs to go.

I am a stay at home mum and dh works full time. We also receive disability living allowance for our son and tax credits. All income goes into one joint household account where all bills and direct debits come out of. We give ourselves the same amount of spending money and transfer this set amount to our own accounts (both in joint names again but we use one each).

For me the basis of fairness is equal spending money. If you’re a family everyone should have the same spending money and same standard of living. I would work that out and work back from there.

I dont get it either - for us its simple all our money gets pooled together (he works 5 days I work 3 he earns 2.5 times me).

Our bills etc come out and then we agree on big spends and have some money each leftover to spend on what we want

You can't expect her to contribute 50% if she earns a third of what you do...

As a pp said all bills, including food, baby stuff, savings and childcare, to come out of your joint account. Joint account funded by both of you, ensuring you both have an equal amount of spending money left in your own accounts.

You are a family unit now.

How would you want her to treat you if you were made redundant and had no earnings?

I have had 3 maternity leaves. My husband has been made redundant twice.

We have one joint account and discuss financial matters. We don't make big purchases without discussing it first.

When I was on maternity leave I did not have an "allowance". I spent our money. Likewise when my husband was out of work and I was the one earning - I did not give him an allowance or nit pick over what he spent. As times were tight both times we were more careful over spending than usual.

What Nix said.

We put everything into the same 'pot'. Everything we have to pay is allocated from that pot - childcare, mortgage, household shopping, bills, some personal interest stuff (his gym membership, a couple of reading subscriptions for me), phone bills, etc etc. Stick a chunk in savings. Divide the rest by two and it goes into each of our 'frittering' accounts. It meant that when I was on maternity leave we both noticed a dip but it wasn't unequal, and neither of us has more spending power than the other - and indeed, no one has to justify their expenditure to the other partner. It works very well.

Both the misses and I

Is it just me that really, really, really can't stand this phrase ?

From when dc1 was due, we put all income into the one joint account, and worked out our budget. Each month we both have the same "allowance" / "pocket money" / "own money" / "treats money" call it what you like.

Over the years we've had times when I've earned more than him, when he's earned more than me, and times when he's earned nothing, but neither ever felt resentful as we've always had 'our' money. We've made big financial decision together and each had our own little pots of money to do with as we wish, which takes away any resentment of one being a spender and one a saver.

If you are both level-headed then a joint account with a set amount of individual spending money after joint expenses is most fair.

Not sure why she was contributing half to everything if you make three times her salary; seems like it should have been proportional as you both work full-time?

DH and I have had a joint bank account for nearly 30 years
we have no individual money - its all OURS
we like it that way

we both spend what we like on what we like from the communal pot

What % of your wage and her wage is the 50/50 split? So if it’s 70% of her wage and 30 of yours it seems unfair. The mortgage you are paying off is yours? Although obviously it would benefit you all. Could you consider each paying 50% of you wages to bills? Would that cover everything? And may be increase your input as her maternity leave continues?

Hi All - many thanks for the quick responses!

Ill try to answer all input but the responses have helped :-)

GrabEmByThePatriarchy From a family point of view this does not make financial sense. Providing my wife still has sufficient income to maintain her lifestyle our best financial option to overpay on the mortgage (saving @ ~4.2% interest) vs myself contributing to the misses (which she would put in 2.5% interest savings). However from an individualistic point of view I take the point.

Poppyinagreenfield I think our relationship is akin to yours! We do have seperate accounts but consider our finances as a family. In this though we do need to decide whom contributes what to the joint account. Out of interest do all your incomes pay into a shared joint account?

Nix32 Completely agree. Where it can get more complicated is what area to invest our finances - at present overpaying in the mortgage is optimum which is entirely in my name. Taking the family view of finances it doesn't matter as its ours rather than mine.

Fairylea Agreed - as noted I live at my wife's lifestyle rather than vice versa which she could not afford. This suits me as the lifestyle I would live is at hers anyway - a saver not a spender :-)

Quartz2208 Assume you pay all incomes into a joint current account? If not then the contributions each make need to be agreed which is our set-up.

titchy With respect I can if we agree to live a lifestyle of her means rather than mine which has always been the case. The excess funds I have go to long-term financial commitments such as mortgage and retirement (indirectly to mutual benefit).

In general the main two models I have seen are completely joint finances with both the misses and I agree is higher risk compared to a contributions-based model to joint expenditure i.e. both paying into a joint account.

Some may think the latter odd but in the (hopefully unlikely) event of your OH's going AWOL it provides a degree of protection (for yourselves as individuals and your children if so fortunate).

A good example of this is life assurance. We both have policies that dictate an element of any payout be held in trust for the children. What this is for is in case our OHs make poor financial decisions or get mis-lead with new partners etc.

Also I have never got the idea of proportionally splitting income due to differences in earnings providing you life the lifestyle of the LOWER earner. In my mind you make the most sensible financial decision as a family unit - surely it doesn't matter whom earns what if you treat finances as a single unit?

BackForGood To each is their own I suppose - the misses loves the term. Quite likes being 'my' woman...

I think you are making this far too complicated.

DH & I have been married nearly 30 years & all our earnings have gone into one joint account from which all bills are paid.

We transfer out an equal amount into our own accounts each month to spend or save as we please.

During my maternity leaves & when I was SAHM we kept the same arrangement.

We treat whatever we have as family money, not our own money.

And all just to clarify this chat is post-marriage pre-end of ML.

We have not yet decided as a couple what the wife would like to do following end of ML - whether to stay a full-time mother, part-time worker or full-time worker.

That will be a conversation (and a probable thread) for a later day.

We pay an equal percentage rather than half half. So our total family outgoings are about £3k a month. So we work out what % that is of our total income. Say we together earn £100k then it's 36% so we both pay 36% of our income. This has seen us through my salary going up and down as I am self employed, maternity leave, sick leave etc. We think it's fair.

Definitely overthinking it. Just put everything into the same account.

Everything we have, and everything we own is in joint names.

With separate accounts, even if married and if either of you suddenly dies, you may have to wait for several months to access the funds of the others bank account. Not to wish this on anyone obviously, but I have seen this happen and it is truly awful, with the remaining partner having to bag and borrow from family and friends.

Just pool it together. What possible reason is there to not? You don't have to do joint account. Just add up at the start of the month.

Just saying..you said you own the house ye currently live in. But does she not own half of it now ye are married.
My dh has a house when we met. The day we married he was quite happy that half of it was mine and never once called it his house from there on in. He also had quite a lucrative business which he immediately put my name on. I didn't ask for that but he wanted to.
Roll on 30years and 3dc later . He had to give up work due to long term illness and now my earnings pay the bills while he uses his pension as spending money. Marriage is either all in or not.

Just put it all into one pot. Add up all bills, add up all savings, then split whats left into three equal amounts - one lot for you, one lot for her, one lot as a buffer. Pull these individuals into separate current accounts if you wish.

Why are you bringing your wife's lifestyle vs your lifestyle into it?

Just agree between you what sort of lifestyle you both want, how much spending money you want each month, and put the rest into joint accounts for mortgage overpaying, pensions, bills, childcare etc.

It's 'the mrs' or 'the missis' btw. Misses is the plural of miss. Not appropriate unless you're talking about a harem of unmarried women...

A few more posters whilst I wrote my previous messages - never thought the responses would be this quick! Given the (welcomed!) volume will pick out a few that strike the tone with me (and the misses who is reading btw!).

FamSpamTastic In that scenario my standard of living has been affected. In that situation one would prop up the other. However working the numbers for the length of the misses ML the lifestyle will not be impacted - merely the ability to save (which as a family unit is not the optimum financial route to take regardless).

LBOCS2 You mention 'pot' - to confirm is this a single joint current account?

PineapplePower Agreed on the first element. On the second element from a family unit perspective I would argue it doesn't matter as all of hers and mine money is ours - doesn't matter where it sits or how it is contributed (as long as this arrangement does not impact on eithers lifestyle which is how we designed it).

Out of interest if we were a couple rather than a family unit that had not yet taken the view of a single unit - would most here still argue for a non-50:50 split, even if they lived the lifestyle of the lower earner? Just trying to get my bearings on how people view the difference...

Ta1kinpeece Sounds good - have seen a few horror stories about joint debt being racked up through use of joint cards etc. Also a slight nod to credit scores and effects of joint accounts resulting in financial associations - doesn't affect the misses and I specifically but there are situations where financially it is not prudent to share a joint account.

Gizlotsmum In regards to the mortgage from an individualistic point of view you are entirely correct. From a family unit point of view it makes the most financial sense to overpay this debt down. I would note however as married with a baby on the way it is now a marital asset so she has a right now in the eyes of the law.