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 :-)

As everyone else has said - everything goes into a pot, you both transfer a set amount each into your own account to spend/ save as you see fit.

If I were your wife, id be mightily cheesed off that I'd been paying 50% of the household expenses when (1) you earn 3 times as much as I do and (2) the house is solely in your name.

You also say that left over money goes into paying the mortgage off and pensions which "indirectly" benefit you both. Does that mean they don't go towards your wife's pension, just yours, and the house which you own??

I think you need to seriously rethink your set up - it is massively biased towards yourself and to be frank, really unfair.

have seen a few horror stories about joint debt being racked up through use of joint cards etc
I guess that comes down to how well you know and how much you trust your spouse.

I trust mine. He trusts me.

What does she think?!?!?
I also don't like the use of 'misses' and 'the wife' it's weird combined with you asking us what we think while hardly mentioning her opinion at all.

Gosh this is a depressing post, poor 'misses' it's Mrs made to split all bills 50/50 even though you earn x3 more and live in 'your' house. It sounds mainly like your trying to protect yourself.

Anyway, all into one pot, bills/food/petrol etc come out, work out what---- you can put into savings, do that, split the rest 50/50. Simple? No?

I think the general consensus is paying the incomes into a single joint current account.

This has given a focus for the misses and I - many thanks for your input - if you have any more thoughts please do post I will read then.

A few more specifically I want to address:

namechangedtoday15 When the misses moved in with me she wanted to pay the same amount she did when privately renting - wanted to 'pay her way' in her own words.

She has always known I am the higher earner - as a couple we know everything about each others finances just keep them seperate with a joint facility.

House is soley in my name correct however she rented before and thus had no ownership then. However the day she moved in I told her it was our house, not just mine, and we have ever since treated it as such.

Finance wise paying the mortgage is the second most optimum choice we made this financial year. The first one was the misses opening a LISA (Lifetime ISA) and us both jointly funding the max £4k allowance. From a legal point of view I have no claim on this as it is in her name - but we treat it as ours and it will go to our next home.

We make financial investment decisions jointly to maximise returns. To say it is biased is truthful from an individuals view - but that is now how we view it. We simply invest where is best as jointly as we can.

Ta1kinpeece That's true. I trust my wife completely and vice versa - its why we know everying about each others finances. However we both accept people can change, go through bad times, make mistakes etc. so we see it as important to protect ourselves so that we can still protect eachother and our children should the need arise.

Thanks all!

He's not doing a very good job of protecting himself given that they're married!

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.

The point is that she will have less money coming in, so her contributions to the pot will have to reduce, in order that she can have the same amount of personal money you do and that she does now. No way round it. If you define that contribution to the pot as including savings and mortgage overpayments too, and one or both of those being reduced accordingly, that's fine. The point is that the loss in funds will have to show somewhere, and it cannot be in her personal spending as compared to yours.

Add both incomes together. Pay all bills. Split leftover money 50/50 between you.

For the record the wife / misses / Mrs opinion is that she doesn't know either! Sitting right next to me :-) Also she prefers the misses :-D I'm not one for political correctness so you'll either have to forgive my ignorance or ignore the post!

Her view is in line with mine - we have a long-term goal of financing the next family home as a unit - she doesn't care how we do it as long as we can afford our lifestyle and providing for our child.

We go through our finances together each month - she understands exactly where our money is, where we will be next month and where we will (hopefully) be in four years time (our budget goes this far!).

Like me she says as long as she can still buy the things she is used to personally and spend on the joint for the family she is happy - and happy for myself to continue to manage the family finances.

I don't think it matters particularly whether you actually have a joint current account, a joint credit card or maintain your own personal accounts. What matters is that the household's expenditure is jointly agreed and the money contributed in proportion to incomes, and similarly with savings, you should agree what and how you are saving, whether that's pensions, overpaying the mortgage, an ISA, whatever. I think it's also important that both parties have access to an equal amount of discretionary/personal spending money on a day to day basis, the level to be agreed by the couple with regard to their circumstances - I think this is what you are getting at with your 'lifestyle' comments but I can't work out whether you mean you do or don't have equal access to spending money?

I don't really understand what you are saying about protecting yourself in the event of a split either. You spending your money on overpaying the mortgage and paying into a personal pension isn't really protecting yourself- the equity in the marital home and your pension would be considered assets of the marriage and therefore split 50:50 (or in whatever proportions a court considered fair) in the event of a divorce, regardless of whose name they are held in and from what current account the money was paid. That's just the way English divorce law works. Similarly any debt would usually be considered joint. If this isn't what you want you probably shouldn't have got married, sorry.

The only real way you and your wife could seek to protect individual assets in the event of a divorce would be through a properly drawn up pre or post-nup agreement, and even these aren't automatically considered valid in English law. Most people in this country don't feel the need to do this with their spouse though (exceptions being where one person brought significantly more capital into the marriage than other), they trust to themselves to be able to divide the cash fairly or that failing, that the courts will decide what is fair. How would your wife feel about this OP?

GrabEmByThePatriarchy You have hit the nail on the head exactly.

I have roughly calculated that once the misses is on ML and starts being paid SMP - if I do not contribute more (either to the joint account with the misses reducing hers or as a 'allowance' directly to the misses) then she in effect loses her ability to save.

And from an individual perspective this is obviously a bad thing. From a family perspective it doesn't matter as overpaying on the mortgage (albiet in my name) is now optimum compared to our previous investment in her LISA (albiet in her name) which we intend to target.

So I completely agree as long as personal (or I put it 'lifestyle' spending) is not impacted then, from a family perspective, we should still make the next best financial investment i.e. paying the mortgage in my name IF we are both happy with the understanding of family finances.

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

🙄

Yes that sounds fine. You've agreed to reduce saving to account for the drop in income during her ML. Both the LISA and the equity in the house are assets of the marriage so it shouldn't really matter which you reduce the saving into - I would go with whichever pays/costs you more in interest (so if the interest on the LISA is higher than the interest you are paying on the mortgage save into that). Both can be treated as an investment in the family either way...

maxelly Very informative thanks for taking the time!

Agree with all your points.

From a protection point of view if one were to run up debts having seperate accounts with our incomes paid in individually does enable one to potentially withhold making joint contributions (that could potentially be drawn away) without having to notify payroll departments of a change of bank details.

Overall though I think the protection is probably miniminal - might be an area I need to re-consider! If I void this then paying into a single joint becomes the real option.

Ha pre/post-nup agreement. Nothing we ever considered. As stated we trust each other completely but agree a hope for the best, plan for the worst mentality. However if keeping seperate accounts does not offer the protection I thought then it makes this risk hedging redundant.

Yes a family unit is crucial - my earning power is less because I took the hit (and still do) in the childcare stakes. I went down to 3 days (2 at home) to save money on childcare and now work my hours around dropping the children to and from school. He earns more because I do that. To then make it so he has more money because of it is, to me, inherently unfair.

That said my time on SMP and then 3 months no pay did mean we took a hit and during this time lifestyle changes had to be made by both of us due to the money coming in

Misses would be the plural of Miss.

Missus is the word you’re looking for.

What are you hoping to get out of this thread exactly?

Out of interest maxelly if I may what do you do for a living? Your obviously very informed on these subjects!

OP you're coming across really poorly in my view. "Protecting yourselves" as you keep mentioning is a bit false - you "treat" the home as joint but seemingly have done nothing about her legal ownership, you (alone) have a big pension pot presumably and you (alone) presumably have a big saving pot because your wife has been paying a disproportionately large proportion of the joint expenses. Other than a recent ISA, how is she (legally) protected should you split up.

It's immaterial that you're both completely open about finances - it begs the questions why you even need to say that, it's the basis of any marriage. She's being naive if she's happy with the status quo (Sorry to be blunt!).

I do understand your mentality- my DH and I are somewhat similar and do actually each have our salaries paid into personal current accounts and maintain small amounts of personal savings in cash (a few thousand pounds each) as a 'running away fund' should it ever be necessary - something many on MN would find weird I am sure. But we are realistic that beyond this, keeping any assets in personal names is really only for tax efficiency reasons or convenience and everything else is or would be treated as joint in the event of a split. Good luck with the baby and the ML, sounds like you have it sussed.

MissMalice In a nutshell opinions.

I read Mumsnet a lot and always found it very informative for getting the different views on the same information.

Naturally everone has their own view and can interpret the content or how someone writes information differently. Thus from the same information I have provided I have got a range of views and opinions - it has proved very informative!

I may have come across to some as reasonable - others a complete a***e. But each opinion I take to try to decide the optimal route for our family.

To all - probably my final post on this one.

Many thanks to all your comments it has been greatly appreciated and in a single day only.

Next on my admin list is a checklist of overnight bag for the missus [better?]. Far easier to sort!

When children are involved I find it very weird when couples have ‘indervidual’ finances 🤔.

Keeping a bit in your own accounts to cover basic things like a phone contract or gifts etc fine but just paying enough to cover bills into a joint account and keeping the rest separate is weird.

You’re supposed to be a team and your baby certainly won’t care whether it’s mummys money buying their clothes or dads.

Surely rather than ‘living the lifestyle your wife can afford’ you could combine your income and live a middle ground lifestyle that’s a little more comfortable for both of you and your little one.

At the very least your wife should not be in any way negatively impacted by taking maternity leave. I’ve read stories on here of DP’s expecting women to continue paying 50% of expenses whilst on SMP😵 - I would divorce my DP on the spot if he thought that was fair!

I asked because you seem to have already made your mind up about what is best for you.

From what you’ve written, I wonder if your wife is actually not too happy about the arrangement but finds you too overbearing to say anything.

MissMalice

Well I cannot convince anyone across the internet or in reality what state my mind is on the matter so I wont try. As mentioned above all posts are open to interpretation.

I could tell you my wife is perfectly happy. I may not even have a wife! Who knows I am just a set of 1's and 0's.

MeteorMedow Much as maxelly notes it is more for tax purposes - or will legally move further that way with our next home when the misses will be on the mortgage as well. For example I cannot use a LISA to contribute towards the next house purchase as I am not a first time buyer - however the missus is. So legally the LISA account is in her individual name and its her funds - socially we are a family unit an that account, like the house and everything else is jointly ours :-)

MeteorMedow Much as maxelly notes it is more for tax purposes - or will legally move further that way with our next home when the misses will be on the mortgage as well. For example I cannot use a LISA to contribute towards the next house purchase as I am not a first time buyer - however the missus is. So legally the LISA account is in her individual name and its her funds - socially we are a family unit an that account, like the house and everything else is jointly ours :-)

MissMalice

Well I cannot convince anyone across the internet or in reality what state my mind is on the matter so I wont try. As mentioned above all posts are open to interpretation.

I could tell you my wife is perfectly happy. I may not even have a wife! Who knows on her all you know is that I am just a interpreted set of 1's and 0's.

Again thanks all.

Kind regards,

puppetmaster2501.

Well my first thread and first double-posting.

Why you shouldnt work in two windows at once...