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 :-)

Reading with interest as I am currently planning integrating family finances with my DP ahead of moving in, marriage and hopefully pregnancy.

I do think it's useful to have some principles to work to that you can both agree to.

We do not have the same salary differential, both earn well, and have plenty of savings and assets independently.

Current thinking is as follows:

• maintain separate current accounts for independence
• create a joint account to cover ALL family and living expenditure
• contributions to the joint account are proportionate to individual current income (pre mat leave, during, after)
• my financial situation (short and long term) should not be disproportionately compromised as a result of pregnancy and motherhood
• based on this, when my income drops, DP to contribute towards my pension, savings and disposable income, such that we are able to benefit and accrue at the same rate as each other (recognising that this may likely not be at the same rate as before)

Following the thread to see what else I need to consider to get to a fair position.

No, we don't have a joint account. We have an extremely complex spreadsheet instead - we can adjust it with the income each month and it will calculate our 'spends' and show whether any transfers need to be made between ourselves.

We have a joint account which every penny goes into from our jobs. I earn around 3x more than my husband even though I am part time.

We then have separate accounts. Everything regarding the family home comes out the joint account; all bills, food , direct debits, petrol etc.
We have a direct debit set up which transfers a set amount each week into our personal accounts and we consider this our own money to do with what we want (lunches, saving for bigger things) this amount we negotiated on and changes with wages increases and was necessary as one of us is a saver and the other a spender. The amount we both get is the same as I don’t see our finances as separate but a family income.

Any remaining money left in the account at the end of the month over £1000 gets transferred into our offset mortgage account (so we are basically overpaying but still able to access this money) the £1000 is therefore re-set at the beginning of each month so we always have a cushion in that account

@Sammy867 I like your approach and can see that working for me and DP too.

Hi All,

Have been chatting through with the missus so thought I would update you.

Believe me or not I have been the one arguing for full consolidation into a single joint account which we have both agreed is probably the best way forward.

I researched further the potential protection afforded by maintaining two seperate accounts and it is negligible (nod to maxelly).

Both of us will still maintain savings accounts but only to maximise the potential investment returns - so if it is more efficient to put money with one rather than the other that's the approach we will take (such as the LISA).

I note your approach Sammy867 and can see the benefits however we have agreed that if going full consolidation - to go full and have all income and expenditure on joint current account and joint credit card.

I have always managed our finances (we sit together each month and go through them) so always know who's spent what and why (mainly for budgeting and security purposes!). It does make buying gifts for eachother transparent but in the past when I have downloaded her statements she comes in and deletes the appropriate line until birthday / Christmas has passed!

Part of my argument to the missus came from the idea that in a few years time when we come to buy the next house rather than us putting in individually what we can (which will be significantly more for myself which in itself is not good for a family mentality) we put in jointly from our funds. If it all comes from one account rather than two individual accounts then it leans more to ours as a single unit.

A productive session!

As an ancillary benefit it means I can set up only one budget spreadsheet for 2019 rather than three (mine, missus and joint)!

@puppetmaster2501

Who is the puppet that you are master of?

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

It seems pretty weird to me too and we do not have children. We do have separate bank accounts at the moment, just because I have had mine for 25 years and wanted to keep it, however when we lived overseas we took out a joint one.

In any case all our money is pooled, we don’t have allowances or allocate money for joint bills, we share and transfer money around at absolute will and without ever tracking it. Our money is ours, jointly, no matter what account it happens to be in.

I would be horrified if my husband would analyse this or post a thread asking for ideas on how to split things. This is somethng I might expect flatmates to do, not people in a relationship that are actually serious about each other.

So you are aware once you got married your wife will no longer be a ‘first time’ Buyer as your house now becomes a marital asset and she therefore loses out on any first time buyer benefits.
I speak from experience after getting legal advice.

Blimey. I don't work. Haven't for 4 years, been a sahm since our ds was born 3 years ago. The money dh earns is ours. It's not complicated. What actually winds me up about all this is that your wife will be taking a hit ie ML and have to adjust financially because she's at home with your baby. The hit should be taken as a team. You BOTH adjust financially.

We aim for roughly 50:50 as we both earn roughly the same. If one of us earned more/less we would either go all money is joint money or a % based on income into a joint account for family expenses (including child care).

ohamIreally Was waiting for that one. Its a name taken from the anime 'Ghost in the Shell' - one I would recommend!

Alfie190 Nothing wrong with seeking advice and evaluating opinions - otherwise how do we learn and grow? The variety of responses is a testament to the value in this .

Andwhat Your legal advice differs from mine here but this may be due to a different set of personal circumstances. My wife is not listed on the mortgage or deeds to the property as such is classified as a FTB. Would be interested to know your personal circumstances for comparison?

Shmithecat Depends how you view the finances. If you do take the ours view does it matter where it rests as long as each has sufficient access to the necessary funds for day-to-day spending requirements?

It all appears to be "resting" in your assets however.

Saw that anime decades ago thanks. Still looks to be an interesting choice of username for someone who looks to be developing a financial control habit.

When I download her statements indeed.

You obviously care for your partner. I think it would be a caring and important act to support her in taking more responsibility for her own finances. Do not take it all on yourself, even if you enjoy it and are trustworthy.

As you'll know from reading MN, so many women are left financially vulnerable after having children and drifting away from their own financial situation.

You are both keen to maintain a level of independence and financial safety. Her being responsible and knowledgeable about her own finances is part of this.

I’m a sahm currently but it’s the same as when I was working. All money goes in to the joint account. We worked out a budget for everything apart from bills. On payday, the budget amount gets transferred to a separate joint account which we spend from, savings get transferred out to joint savings account, and money for our individual spends for hobbies/whatever fun stuff we want for ourselves goes to an individual account.

Works pretty well, we discuss major purchases, and I manage the finances/financial admin.

Honestly, just merge it. All into one big pot. If it was 50:50 then you'd need to be paying her half what you'd pay a nanny for the time she is off on maternity leave, as she's looking after your child. It doesn't sound as if you trust her, and surely the decision as to what she does after mat leave is a joint one?