Complicated splitting finances when married - ideas?

[jendifer]

DP was made redundant in 2018, before we were together. He had already paid his mortgage off, and had a good pension pot. He left with a 70k payout which he’s invested. He’s now an author and investor but money is tied up in pension and ISA. Bills are £300pm, currently covered by a lodger.

I work in two jobs, one 4 days pw and one 4 evenings. I earn about £2k and have £3k in debt which I’ve got down from £20k. We’ve agreed to not have a joint bank account until my credit rating is better.

How would you split the contributions we each make?

If the bills are covered what else are the contributions for? I think each person should pay their own expenses (phone, gym membership) and household bills based on a ratio split based on income eg you're on £20k, he's on £80k so split 20/80.

Are you saying your bills in total are only £300, covered by a lodger?

Or they are £600 and having a lodger covers your DH’s £300 because the lodger was there before you?

That’s very low either way. How much does your DH ‘earn’ via investments and being an author?

How do you pay for food, discretionary expenses etc?

Agree need to know what the £300 covers as that is very low. For any property where the mortgage is paid he will be paying for at least some of: gas/electric/oil, water, insurance, ground rent, service charges, TV license, council tax, broadband, subscriptions such as Netflix etc. Council tax is likely £150pcm or more depending on area/band as he won't get single household discount. He will also have maintenence costs for the home.

How big is the house and will the lodger stay if you move in? If the lodger leaves, you need to replace that income and pay half the food/joint leisure costs in my view.

If the lodger stays then you still need to pay a contribution (to be agreed with him but probably less than £300) and half the food/joint leisure costs.

What are your circumstances ? Are you married? How long for? Do you live together ? Who is currently paying what ?

What are your respective incomes?

I would start from there to work out what the overall running costs are for the house that he owns. What would 50% of that look like for each of you.

Who gets the £300 subsidy from the lodger. It doesn't seem fair to me that he should have it all, surely you have the impact of sharing your space with someone just as much as he does.

So, I'd take off the lodger contribution and then look at the split of what's left. If 50:50 would be manageable for you then go for that, to represent no rent/mortgage for you. Otherwise, split that cost in proportion of your incomes.

Back to whether you are married or just thinking about it.

Sorry, we currently live separately and will live together when married, without the lodger that DP has.

I think he spends £320 as bills pm as that’s what he charges the lodger- that may be wrong, I’ve always rented in a house share so I don’t know what is average or not. That’s council tax, electric/gas/water/broadband. He doesn’t have tv packages.

We each have our own phone bills, he brings in around £5k per year in book sales although more when he promotes it. Investments make about an average of £60,000 per year but he invests that back in to them.

Normally I would say it’s 50/50 or a representative of the incomes but it’s harder because he has more in savings/investments but less month to month cash. It would make sense for him to pay bills and I use my income to pay off debt but I’m not sure if that’s fair as I’m living for free that way for a few months.

Investments make about an average of £60,000 per year

Wow. He is hardly short of cash if his portfolio is bringing in £60k per annum.

@FinallyHere

Investments make about an average of £60,000 per year

Wow. He is hardly short of cash if his portfolio is bringing in £60k per annum.

A lot of it is his pension portfolio and the amount of time he spends on it - ie if he a “normal” job then he wouldn’t bring in as much.

It’s complicated though as although the money exists, it isn’t as easily accessible as a salary.

@jendifer

Sorry, we currently live separately and will live together when married, without the lodger that DP has.

I think he spends £320 as bills pm as that’s what he charges the lodger- that may be wrong, I’ve always rented in a house share so I don’t know what is average or not. That’s council tax, electric/gas/water/broadband. He doesn’t have tv packages.

We each have our own phone bills, he brings in around £5k per year in book sales although more when he promotes it. Investments make about an average of £60,000 per year but he invests that back in to them.

Normally I would say it’s 50/50 or a representative of the incomes but it’s harder because he has more in savings/investments but less month to month cash. It would make sense for him to pay bills and I use my income to pay off debt but I’m not sure if that’s fair as I’m living for free that way for a few months.

It doesn't make sense for you to pay less than 50/50, he shouldn't have to pay off your debt and you should pay your way. I would imagine you will be saving lots of money by moving in with him whilst he looses the income from the lodger.

He must be taking some money out as income surely? £5k isn't really enough to live well on even without mortgage and utilities. That's less than £420 a month for all food and other groceries, car/travel costs, leisure, house maintenence and sundry purchases. Does he never go anywhere or do anything?

I might be misunderstanding, but I'm not sure why his pension is being factored into how you split the bills as he presumably doesn't have any access to that money until he retires? My DP and I don't consider our pensions to be 'income' at this point in our lives.

Where is his actual day-to-day income coming from and how much is it? He has 5k in book sales and then reinvests 60k - what money is he actually living on? Is that 60k available for him if it isn't invested?

I don't think he should pay everything while you pay off your debts tbh. If he has a chunk of money at his disposal then I'd be more inclined to ask him to borrow the remaining 3k you owe, pay it off and then repay him at a lesser amount each month, if he would be up for that.

Then you can work out what to pay in bills more proportionally on top of that.

So you plan to get married and live in his house, where the bills are about £320 per month? What is he suggesting, that you split that and pay £160 per month each? That's very low - I'd bite his hand off!

Is he going to secure his money in a pre-nup? If so then you will need some way of investing in property yourself, otherwise if it all went to pot in later years you wouldn't have anywhere to live.

Are you saying his investments are about £60,000 OR the income from his investments is about £60,000.
If the former then his income is about a hundred quid a week. Frankly, I'd think twice about moving in with someone on this basis if I had no stake in the property too. And starting married life with someone who is out working 4 nights a week to make ends meet isn't ideal either...but would you be able to drop this if his income is so low?
If he is expecting to keep his entire stake in the property, and earn a hundred a week, that leaves you without enough income to get a big enough mortgage to invest in your own property. £320 a month on bills (which seems low for a house even without a mortgage), what about food, leisure activities, essential maintenance and repair, your own pension arrangements, holidays.

When you get married will you be saying the traditional church wedding vows? We said something along the lines of ' all that I have I share with you.. for richer for poorer' etc.
To me if you are getting married you are becoming a unit, for life, with no reservation. You're a team. The pension fund is now for both of your shared future - why would he want to be rich in retirement and see you poor? Your debt is a shared encumbrance - why should you struggle and waste money on interest when he can afford to pay it off? All decisions are now made as a couple, for the good of the family. He obviously loves you and wants a future with you.

You've done amazingly well paying off so much debt by the way, congratulations. I completely understand how you might feel like you don't want to bring this to your marriage. Is there anything else you can do as a final push to clear it? There's a list on money saving expert of ideas to boost your income in case there are any there you haven't already tried.

The investments make about £60k per year. I don’t know how much of that is on the pension portfolio so can’t be touched and how much is a separate portfolio.

He has a good budget and doesn’t buy frivolous things which means I think he mostly lives off book income. He takes a nominal amount which he “pays himself” each month too - sorry I’d forgotten that before. I’m not sure how much but I think it’s £1000. That’s for car/clothes/food etc.

My work pattern will change when we’re married.

We suggested we’d talk about how we’ll manage money when we’re married over this weekend. His suggestion is that we have a “fun money” budget allocation which we can spend on what we want, then everything else is either bills or saved but I’m not sure if that works in practice.

@Hollywhiskey that’s his vision for it, that it’s all ours when we marry. I’ve really pushed on the paying it off front and it will be clear by spring, maybe Christmas.

@Hollywhiskey

When you get married will you be saying the traditional church wedding vows? We said something along the lines of ' all that I have I share with you.. for richer for poorer' etc. To me if you are getting married you are becoming a unit, for life, with no reservation. You're a team. The pension fund is now for both of your shared future - why would he want to be rich in retirement and see you poor? Your debt is a shared encumbrance - why should you struggle and waste money on interest when he can afford to pay it off? All decisions are now made as a couple, for the good of the family. He obviously loves you and wants a future with you.

You've done amazingly well paying off so much debt by the way, congratulations. I completely understand how you might feel like you don't want to bring this to your marriage. Is there anything else you can do as a final push to clear it? There's a list on money saving expert of ideas to boost your income in case there are any there you haven't already tried.

Yes, this. The vows are what make it a marriage (if you're doing a church wedding). If either of you have no intention of reflecting on the vows beforehand and talking through together what the vows mean for your upcoming marriage in practical terms, it'd be utterly bonkers.

OP you need a proper sit down open chat with him to discuss it all. For all you know he could be planning to wipe out your debt once the two of you marry or he's not even aware how much debt you have left. Or he could have very different ideas, especially if you've not had marriage preparation and talked about what marriage means for you both.

Don't sign any pre nup (to be honest I'd never marry someone who would even suggest something like that). It defeats the whole point of marriage.

I think you both need to make a full list of what your expenditures is at the moment and categorise it into essential bills, things you aren't prepared to do without and more frivolous spending.

Then you can compare lists, discuss differences of opinion and thrash it out properly.

For example if he doesn't think that birthdays/Xmas need to be budgeted for but you do then you need to agree about that. Are mobile phones a personal spend or an essential item? Takeaways?

It might sound quite picky but these things can easily cause couples to go over budget and cause arguments. Even with a full and Frank conversation there will be things that are forgotten and need to be discussed later.

Me and DH have a good financial arrangement/budget which leaves us both with the same "fun money" and we're on the same page about what is fun and what is essential (which is very important as like hell do I want to pay for splashback kitchen tiles out of fun money or similar). Lots of couples on here aren't on the same page and it can be financially abusive.

You need a clear idea of how much you each bring in.

If you're bringing home 2k and he's paying himself 1k so he can keep saving the rest, I think you need to be putting money into your own savings pot.

I think all house bills and food should be split, pay a good portion off your debt, a good portion into savings in your name, some money into a shared pot for house savings and some into a pot for fun.

How old are you both? Do you plan dc?

The pension fund is now for both of your shared future - why would he want to be rich in retirement and see you poor?

Yeah but OP is asking about how to split bills...presumably he can't use his pension to cover any bills at this stage. Not sure why it's been referenced here as part of his income/savings - normally you only see a pension referenced in terms of a divorce settlement, not when it comes to paying bills each month.

I think you are not clear with his finance, his investment could be in a share account or ISA account instead of pension account, you said he salary himself £1000 per month, that means his investment is not in a pension account.

He also makes some money form book sales, and a lodge, so his total disposable income is around £23K per year which he is comfortable with, pays his mortgage and living expense and have plenty of time on hand without an 9-5 job. Sounds like you earn about £26K a year as well.

If you get married, what capital and investment he has will also become yours in later life stage, so you shouldn't worry about cash that out too early.

With both of your incomes, you can at least chip in 50%/50% for the living expense. considering he will have less income because he lost an lodger and you have accommodation for free.

Agree, you both need clarity about each other's finances, much more than 'reinvesting £60k a year - might be in pension might be in shares'.