Splitting bills based on income?

[Mooncake2020]

Hiya all,

Looking for some finance advice on how to split the household bills with my partner. My partner earns a lot more than i do, so we are trying to make it as fair as possible for both of us. Would splitting outgoings based on income % be the best way to go? After tax i make 16K and he makes 50K.

thanks for any help

There is no one answer that everyone agrees is fair. You have to figure out what works for you - I can tell you what works for us and that we feel is fair for us, but some other MNer will be along shortly to tell you the opposite!

With that caveat, when we were young and starting out I earned £3 to DH's £1 so we added up all our joint expenses (rent, utilities, spends on shopping, sinking fund for fun things together like restaurants and holidays) and contributed to that in a 3:1 ratio. So if our joint expenses were £2k a month, I put £1.5k in and he put £500. The balance of our salaries we kept for ourselves. Over time, when DH would get a raise so we were earning the same, we would recalculate the ratio to contributing 50/50, when I wasn't earning for a bit on mat leave we lived off his salary, etc.

Once we had kids, we did it a different way - now we keep a set amount of money for ourselves, put a set amount into joint savings, and contribute all the rest into the joint account out of which goes the mortgage, bills, food, kids clothes, etc. Anything left in the joint account at the end of the month goes into the joint savings.

(I am massively simplifying but you get the gist!!)

DH earns six times what I do so he puts (by direct debit) six times what I do into the joint account for all joint bills, holidays, DC stuff etc. Then we each have the remainder to spend or save individually as we wish. Therefore if DH wants to spend £90 on a shirt he doesn't have to run it by me!
Worked well for thirty years.

Your posting history suggests that you have a child. If so, is it his?

If so, then pretty much the fair way is pooling all income and sharing equally.

If this is just a boyfriend and no children together, then it’s perfectly “fair” that he doesn’t subsidise your lower earnings at all, the opposite end of the scale.

If his salary impacts your entitlement to shy benefits, then you’ve got a nice messy grey area!

Do you make 16k part time?
Are you looking after a joint child?
Are you married?
Did you bring more to the relationship financially (deposit on house etc)
Do you do more of the child care?

loads of questions

@cptartapp

DH earns six times what I do so he puts (by direct debit) six times what I do into the joint account for all joint bills, holidays, DC stuff etc. Then we each have the remainder to spend or save individually as we wish. Therefore if DH wants to spend £90 on a shirt he doesn't have to run it by me! Worked well for thirty years.

This is what we did when DH earned much more than me. His suggestion.

@Cocomarine don't see why it's 'subsidising' her earnings to pay a larger share of the bills if his income is larger. They're still a joint household whether or not they have a child.

That’s what we do, and it’s worked well as we’ve swapped positions in terms of being the highest earner (with quite a big discrepancy). We do it for mortgage plus bills, but if we’re buying something big (tv, sofa etc) we have a bit of a negotiation! (No children though, and I did used to pay for the cats when they first arrived!)

We manage money based on income percentages. I earn more than double what DP brings in. We therefore split all household expenses on a pro rata basis. For example, for a bill of £100, I'd put in about £64 and DP about £36. We have a joint account and our own accounts. All joint bills come out of the joint account with them being split according to income amounts. What we have leftover is our own money to do as we please with. Works well for us.

@IndifferentFeet in my opinion, you are subsidising someone if they pay less than they would have to without you, and you don’t compensate them in other ways. There’s no value judgment to it. It’s just a fact. If it would cost you £500 to rent a flat, and instead you pay £250 of a £750 place with your boyfriend - you’re being subsidised. He might not be getting his £750 for £500 - and you as bonus! - so it’s win win. But his higher earnings would still be subsidising your share of the rent.

It really depends what you’re both comfortable with. We’ve always put all money into a joint account and then split the leftover money between us so we get the same spending money. But then we’ve always earned a similar amount and are now married with a child. You have quite an earning difference, call him your partner so presumably aren’t married and you don’t mention children so he might not be happy/ready to split the £34K difference with you in which case % would be the most fair way. A 50/50 split might result in you having nothing leftover and him having loads of ‘pocket money’ which I wouldn’t feel was fair either.

We have a child together, not married, renting, I work 30 hours per week, childcaring is equal at the moment as we work from home, I do everything housework wise.

We've been together 12 years and have a child. I always paid 50/50 before we had our child but wanting things to be a bit fairer money wise now as 50/50 leaves me with pretty much nothing.

And do you earn so much less than him because you impacted your career progression to have that child?
And is you working part time just because you want to - or have you been unable to find full time work, or as a couple have decided 30 hours is fine?
My husband worked 4 days for a while and put less into the pot as we both were happy with that. But in a previous relationship, I wouldn’t have thought it fair that my proportionately increased contribution www buying my boyfriend a day off.

In the 12 years before you had a child, was he always earning more than you?

@Cocomarine I was previously on 36 hours (most you can do at my job) before having our child and have dropped down to 30 hours to look after him and still work from home as my partner doesn't want him going to nursery at the moment. He's always been the higher earner while we've lived together and my job has always been on the back burner while he got to progress with career etc... We are currently living near London as we both moved here for his new job and our rent is 1.5K which is what I earn in a month. I can do my job from anywhere.

I’d not pay more than half if not married regardless of differing incomes.

If you live near London then there’s no reason not to pursue your career and increase your earnings if that’s what you want. If he doesn’t want to use childcare then he can reduce his hours etc.

@IceCreamAndCandyfloss He can't/won't reduce his hours as he has the higher salary.

Why did you choose to put your career on the back burner?
It’s not because you had a child - you didn’t, for most of this time.
It’s not because you followed his location, because you said your job isn’t location dependent.

If you put your career on hold to support his, then the spoils of thaw should be shared.

If you just coasted of your own accord, he shouldn’t have to subsidise that.

Until he chose to start a family with you: so now he should.

Why are you stopping your hours because your partner (and he doesn’t sound like a partner) is calling the shots about nursery?

I’d approach this a different way. Child to nursery, go back up to 36 hours, chase career profession, and then contribute 50/50 when you’re also earning £50K.

@Cocomarine I've always loved my job and never wished to change it, i did my job before meeting him and how have I coasted when I've paid 50/50 up until now? We've had to relocate many times previously while he changed jobs and it's always been very handy to have one of us that didn't have to change job when relocating so much.

Given your updates I think you are a family and therefore all money should be family money. So all money into one pot and an equal amount of spending money especially as your career and location have enabled his and your hours have been reduced to care for yours and his child.

Also wanted to add he's not been earning 50K for 12 years. He was on around 20k until 5 years ago and has gradually increased each year up to where he is now, with going up 15k the last year. I've always been happy paying 50/50 until the recent move to London as it's so expensive & I feel like I'm the one now losing out a lot more as rent has more than tripled so we can live somewhere close enough for him to commute to work.

Going back to my original question, would 60/40 or 70/30 be fair? I'm just really wanting enough left at the end of the month so I can pay my pension & save some.

We don't have his and hers money. We share our resources and bills, spending money and savings.

I earn double what my DH does. Sometimes he's earned more than me.

I think splitting bills proportionately is a fair way to do it when there is a big difference in incomes.

That isn’t quite how we do it. I earn double what DH does but only pay marginally more towards bills and mortgage, however I put more than him towards our joint savings so we’re left with roughly the same disposable income. That works for us, but his salary is high enough that he still has a decent amount of money left for himself after paying half of the bills, that doesn’t sound like it’s the case for you so splitting proportionately would probably be fairer in your case.

I think the goal is to make sure that you both have a similar level of lifestyle/disposable. Does splitting the bills 70:30 get you to that point? If so, that’s probably a reasonable suggestion.

We used to split 50:50 regardless of income until we got married. We earned roughly same and had no rent to pay so had lots of disposable income :) since getting married, we have same set amount of spending money (dh actually has another 25% on top as he works ft and has more work related social stuff on that isnt 100% covered) and the rest is joint managed by me. Dh makes triple of what I do but I work pt to look after our young dc.