Fair way to split expenses?

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Zach82
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Fair way to split expenses?

Post by Zach82 » Wed Nov 15, 2017 11:22 am

All,

In order to prevent future fights and difficulties with money, my wife and I have decided to have separate bank accounts and funnel money to a joint account that auto pays our bills. I would like to ask advice from those who have done anything remotely similar as to the best way to determine how much each spouse contributes? How do we handle family vacations etc? I do not need advice or opinions if this is a good idea or not in a marriage. This IS what we will do...just would like anyone with experience or knowledge how to make this fair and workable.

Thanks,
Zach

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Pajamas
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Re: Fair way to split expenses?

Post by Pajamas » Wed Nov 15, 2017 11:28 am

What does your wife think is fair?

Roothy
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Re: Fair way to split expenses?

Post by Roothy » Wed Nov 15, 2017 11:30 am

Zach82 wrote:
Wed Nov 15, 2017 11:22 am
All,

In order to prevent future fights and difficulties with money, my wife and I have decided to have separate bank accounts and funnel money to a joint account that auto pays our bills. I would like to ask advice from those who have done anything remotely similar as to the best way to determine how much each spouse contributes? How do we handle family vacations etc? I do not need advice or opinions if this is a good idea or not in a marriage. This IS what we will do...just would like anyone with experience or knowledge how to make this fair and workable.

Thanks,
Zach
My spouse and I decided that one of us (me, the greater breadwinner) would pay ALL of the bills that even remotely could be described as "joint" expenses, including vacations taken together, entertainment, and the like. He gives me a fixed percentage of his income every month, and then gets do to whatever he wants with the rest. (Similarly, I get to do whatever I want with my money, after I pay all the bills, of course.) This totally works for us: the greater earning spouse subsidizes the lower earning spouse. We never fight about expenses. I never have to haggle him to pay whatever bills he might have agreed to pay. (His "payments" to me are automatic.) It works beautifully for us.

ddurrett896
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Re: Fair way to split expenses?

Post by ddurrett896 » Wed Nov 15, 2017 11:31 am

50/50.

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DaftInvestor
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Re: Fair way to split expenses?

Post by DaftInvestor » Wed Nov 15, 2017 11:31 am

My spouse and I do it based upon percentage of income.
Since she is a Stay-at-home-Mom her income is zero so I put in 100% to cover the bills and she puts in 0%. It works well and we have no fights or difficulties with money. We manage the joint account well together - I put the money in - she takes the money out - the only trick I sometimes struggle with is keeping up with putting more money into the account than she takes out.

jimmyrules712
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Re: Fair way to split expenses?

Post by jimmyrules712 » Wed Nov 15, 2017 11:32 am

Zach82 wrote:
Wed Nov 15, 2017 11:22 am
All,

In order to prevent future fights and difficulties with money, my wife and I have decided to have separate bank accounts and funnel money to a joint account that auto pays our bills. I would like to ask advice from those who have done anything remotely similar as to the best way to determine how much each spouse contributes? How do we handle family vacations etc? I do not need advice or opinions if this is a good idea or not in a marriage. This IS what we will do...just would like anyone with experience or knowledge how to make this fair and workable.

Thanks,
Zach
My wife and I do something similar but in a different way. We have very different income levels, I make about 3x what she does, so it would not be fair for us to split bills 50/50 and each pocket the leftover from our separate incomes. What we do is all paychecks go to a shared central account and all bills and shared expenses (which would include vacations, etc.) comes out of that shared account. Each month an equal, set amount is transferred to each of our individual accounts and that's our play money.

Doing it the way you're suggesting would definitely be more difficult because you'll end up needing to haggle over every single expense to figure out who should have to pay for it. Seems like a lot of unnecessary conflict to me.

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dm200
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Re: Fair way to split expenses?

Post by dm200 » Wed Nov 15, 2017 11:37 am

Zach82 wrote:
Wed Nov 15, 2017 11:22 am
All,
In order to prevent future fights and difficulties with money, my wife and I have decided to have separate bank accounts and funnel money to a joint account that auto pays our bills. I would like to ask advice from those who have done anything remotely similar as to the best way to determine how much each spouse contributes? How do we handle family vacations etc? I do not need advice or opinions if this is a good idea or not in a marriage. This IS what we will do...just would like anyone with experience or knowledge how to make this fair and workable.
Thanks,
Zach
In your situation, I think I would start with what each of you thinks is "fair and reasonable".

How far apart are you on that scale?

bloom2708
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Re: Fair way to split expenses?

Post by bloom2708 » Wed Nov 15, 2017 11:37 am

Use the ratio of your take home pay. If you do not make the same, 50-50 doesn't work.

You make $5,000 per month, she make $6,000 per month (take home pay). You pay 45%, she pays 55%.

Assuming you are both contributing the same percentage to 401k plans and things like that.

As you have pointed out, there are a lot of "gotchas" with any plan. Roth contributions, HSA, college savings, car funds, vacations.

What do you do with bonuses? Same ratio? Maybe you each keep an amount and the balance is deposited in the joint account for bills.

Trial and error. Do whatever works. Adjust. Communicate. Audit.
"We are here not to please but to provoke thoughtfulness" Unknown Boglehead

mhalley
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Re: Fair way to split expenses?

Post by mhalley » Wed Nov 15, 2017 11:37 am

There 2 way to do it, depending on your income disparity. If you both make similar incomes, then just going 50/50 is fine. If there is a wage gap, then each contributing the percentage they bring home seems more fair. Say monthly expenses are 2000 dollars, wife brings home 4000 and husband brings home 2500. Total income 6500. Wife puts in 62 percent, husband 38, or 1240 and 760.
Upcoming major shared expenses would be the same. Major individual expenses could also go either way, say new car.

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David Jay
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Re: Fair way to split expenses?

Post by David Jay » Wed Nov 15, 2017 11:42 am

DaftInvestor wrote:
Wed Nov 15, 2017 11:31 am
I put the money in - she takes the money out.
Hey, that's our system as well! :D

(on a serious note: she really is the household manager, seeing to it that all of the bills go out on time, etc. It would be difficult for me travel extensively for business without her management at home.)
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius

wrongfunds
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Re: Fair way to split expenses?

Post by wrongfunds » Wed Nov 15, 2017 11:43 am

Write down what you think is fair on piece of paper. Have your wife do the same. Then take a match and burn your paper. Use her paper to decide how to split the expenses. Anybody who is married over 30 years will agree with me.

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dm200
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Re: Fair way to split expenses?

Post by dm200 » Wed Nov 15, 2017 11:44 am

David Jay wrote:
Wed Nov 15, 2017 11:42 am
DaftInvestor wrote:
Wed Nov 15, 2017 11:31 am
I put the money in - she takes the money out.
Hey, that's our system as well! :D
(on a serious note: she really is the household manager, seeing to it that all of the bills go out on time, etc. It would be difficult for me travel extensively for business without her management at home.)
Our system too - for the past 40 years :)

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dm200
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Re: Fair way to split expenses?

Post by dm200 » Wed Nov 15, 2017 11:45 am

wrongfunds wrote:
Wed Nov 15, 2017 11:43 am
Write down what you think is fair on piece of paper. Have your wife do the same. Then take a match and burn your paper. Use her paper to decide how to split the expenses. Anybody who is married over 30 years will agree with me.
Interesting way to approach the issue.

Spekus
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Re: Fair way to split expenses?

Post by Spekus » Wed Nov 15, 2017 11:51 am

Common expenses is 50/50 , I think that is the only fair way if you have no kids,

usually she likes more expensive things than me but she earns less - that kinda puts limit on how much we spent, when I met her I started to spend more but it is still not much. We discuss on big expenses like rent on the flat, I put my desired price she puts hers and we meet in the middle - after a lot of arguing and some drama

Drinking out or coffee in a coffee places we have to finance by our own money, For computer I payed with my own money so did I for an iron as she does not use it. but she payed 2/3 for new wardrobe as I did not approve it but felt I should participate.

I remember we had an argument early about food she claimed I should pay a bigger part in food budget as I eat more - which is true. My argument was that she forces us to go out and thus I spent more than I desire on a thing I do not need. So we agreed to leave the split as 50/50 on these two things.



She does not know how much I earn and I think it is a good thing. But the most important thing we have similar understanding on the finance, we do not spend much money and we are against going into debt

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Edie
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Re: Fair way to split expenses?

Post by Edie » Wed Nov 15, 2017 11:57 am

We used to do it on a percentage basis, even though I paid all the bills. I just tallied up everything for the month, and he would either write a check, or do a bank transfer. If I were re-doing it, I would put the electric bill in his name to make sure the pain was visible :mrgreen:

Now that he's disabled, he pays a couple bills that I think are ridiculous (satellite tv and something else) because then he doesn't have to hear me grumble when they increase the rate, and he deals with it in his own time, and I pay the rest. The rest of his disability insurance payments go towards his vehicle, and family vacations, which allows me/us to save more than would be possible if I were responsible for vacation expenses (or we'd go on less vacations, and I'd save the same, which would make everyone else less happy).

You're going to need to figure out what works for the both of you. Our opinions are a starting point, but you're the two who have to agree on the right split and how to do it (whether it's put money into a joint account, or "hand" money to the other person, or put everything in one pot and each take the same amount to spend).

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djpeteski
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Re: Fair way to split expenses?

Post by djpeteski » Wed Nov 15, 2017 12:07 pm

To me, the underlying issue is that the two of you are not on the same page when it comes to finances. What you are proposing masks and delays the issue rather than addresses it. That is not to say such a relationship can not work, it really depends on the two of you.

My wife and I have separate accounts. I kind of hate the way she organizes her money, and she feels the say way. It is okay to have separate accounts, however, I would recommend that each is a signer on the other.

I would encourage the both of you to talk about goals in life. What are you trying to do? What would you like to accomplish? Why? Inevitably one will come out as more of a spender and the other a saver. That is okay, you need each other. Makes sure you don't eat alpo in retirement, the other makes sure you enjoy some of that hard earned money.

Once goals are set it becomes easier to come up with a plan to reach them. Those plans look a lot like a monthly budget. Both parties must participate. The one that prepares the budget must listen to the other one and accept their input. My wife and I hold a monthly budget meeting diligently despite being debt free and in the two comma club. The fun part is we also go over the status of our accounts.

Each of us has responsibilities for their own income. My wife, who is an incredibly smart human, has flaws. If she was in charge of paying the electric bill we'd have it disconnected several times a year. So I take that and the water bill and other things like that. She manages the grocery budget and savings that are for goals that we have agreed on. It plays into her mothering nature.

We each have a budgeted amount for blow money that includes clothing. Each of us is allowed to spend that at will, on anything we want. The rest needs to be spent as we have agreed. Emergencies do crop up, so we do have to be flexible, but there needs to be a discussion.

All I can say is that being on a team with my wife is a great feeling. While it may not work for everyone, it is very fulfilling for both of us.

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dm200
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Re: Fair way to split expenses?

Post by dm200 » Wed Nov 15, 2017 12:08 pm

Such differences of opinion are often not so much about spending decisions, but more about "not spending" or "savings" or "investing". One spouse may, for example, believe they should max out retirement accounts, save/invest even more -- while the other party may believe they should spend a (much) bigger part of their income.

So, then, what happens in retirement - as a couple - when one spouse has a much larger retirement balance - income built up? One spouse gets to occupy 75% of the retirement home and the other 25%?

Just the "present" split may only be a part of the issue.

gotester2000
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Re: Fair way to split expenses?

Post by gotester2000 » Wed Nov 15, 2017 12:13 pm

DaftInvestor wrote:
Wed Nov 15, 2017 11:31 am
My spouse and I do it based upon percentage of income.
Since she is a Stay-at-home-Mom her income is zero so I put in 100% to cover the bills and she puts in 0%. It works well and we have no fights or difficulties with money. We manage the joint account well together - I put the money in - she takes the money out - the only trick I sometimes struggle with is keeping up with putting more money into the account than she takes out.
+1 ☺. No other way way works as peacefully as this. I wish I would have known this early in the marriage - I am pretty sure wisdom comes with experience only.

chevca
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Re: Fair way to split expenses?

Post by chevca » Wed Nov 15, 2017 12:20 pm

Zach82 wrote:
Wed Nov 15, 2017 11:22 am
All,

In order to prevent future fights and difficulties with money, my wife and I have decided to have separate bank accounts and funnel money to a joint account that auto pays our bills. I would like to ask advice from those who have done anything remotely similar as to the best way to determine how much each spouse contributes? How do we handle family vacations etc? I do not need advice or opinions if this is a good idea or not in a marriage. This IS what we will do...just would like anyone with experience or knowledge how to make this fair and workable.

Thanks,
Zach
Along the lines of others, how does this prevent future fights and difficulties with money? So, you have the joint account for bills, and the individual accounts you're free to do with or spend however you want?

If one is a spendthrift and just blowing through money as they get it, the saver is going to see that and be bothered by it.

IMO, the only fair way to split expenses is 50/50. I assume you use the same amount of utilities, consume the same groceries, and take the same vacations...

Wellfleet
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Re: Fair way to split expenses?

Post by Wellfleet » Wed Nov 15, 2017 12:26 pm

OP, from your recent posts, it looked like you posed this question in 2015. How did that effort work out?

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climber2020
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Re: Fair way to split expenses?

Post by climber2020 » Wed Nov 15, 2017 12:26 pm

Zach82 wrote:
Wed Nov 15, 2017 11:22 am
All,

In order to prevent future fights and difficulties with money, my wife and I have decided to have separate bank accounts and funnel money to a joint account that auto pays our bills. I would like to ask advice from those who have done anything remotely similar as to the best way to determine how much each spouse contributes? How do we handle family vacations etc? I do not need advice or opinions if this is a good idea or not in a marriage. This IS what we will do...just would like anyone with experience or knowledge how to make this fair and workable.

Thanks,
Zach
My spouse and I do this, and it works very well for us.

I make significantly more than she does and always will simply due to the nature of the type of work we do. So I pay the mortgage and all the utilities, and she buys all the food. We each have our own separate checking/savings accounts.

Vacations for us are frequent and can be pricey, so I pay for all of those.

The only joint account we have is a vanguard taxable account where we throw in any extra money after all bills have been paid.

Zach82
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Re: Fair way to split expenses?

Post by Zach82 » Wed Nov 15, 2017 12:36 pm

Thanks for the ideas and thoughts everyone...I appreciate your time! I think we can take these ideas and figure out something that we an agree upon.

Zach

chevca
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Re: Fair way to split expenses?

Post by chevca » Wed Nov 15, 2017 12:37 pm

Wellfleet wrote:
Wed Nov 15, 2017 12:26 pm
OP, from your recent posts, it looked like you posed this question in 2015. How did that effort work out?
Nice catch. Apparently it's a work in progress. :happy

HIinvestor
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Re: Fair way to split expenses?

Post by HIinvestor » Wed Nov 15, 2017 12:52 pm

Agree with the others that being on the same page is so important and I'm sorry this is a continuing issue for you. Would it be useful to divide expenses up--those you mutually agree upon and for both of you (food, shelter, transportation, insurance, taxes, retirement, savings) and then each of you have some "spending money" each month that you can spend as you choose, no Qs asked, on whatever you choose--meal out, clothing, jewelry, games, gifts, etc.?

H and I each have $150-200 apiece of cash each month and it works well for us and has for our entire > 30 year marriage. It's just another approach and to us is easier than totally separating finances. All income is put in the pot toward all the expenses and savings except for these small disbursements.

Spirit Rider
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Re: Fair way to split expenses?

Post by Spirit Rider » Wed Nov 15, 2017 1:29 pm

Ahhh, the question or fairness. Always a difficult question in all of human undertakings.

I always found focusing on the discretionary nature of personal spending was the best choice and fair meant equal discretionary spending. So this is what I have always done.

Joint and personal checking, savings and credit cards. Choose an amount of personal spending, E.g 10% of gross.

Spouse A: $104K gross, 26 paychecks = $4,000 = $400
Spouse B: $52K gross, 26 paychecks = $1,000 = $200

Total over two weeks = $500 + $100 * 2 = $600 / 2 people = $300 each over two weeks

Spouse A: $300/paycheck to personal account, balance to joint account. Preferably by separate direct deposit.
Spouse B: $300/paycheck to personal account, balance to joint account. Preferably by separate direct deposit.

The beauty of this is you never have to touch it except to change base amount. If one spouse pays the health insurance and HSA contributions, no problem self balances. If one spouse has a higher or lower 401k contribution, no problem self balances. If one spouse has more or less tax withholding, no problem self balances. Etc...

You are either in it together or your not.

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Doom&Gloom
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Re: Fair way to split expenses?

Post by Doom&Gloom » Wed Nov 15, 2017 1:59 pm

As someone who does this, here is my 2c:
A lot depends upon whether kids are involved--yours, mine, and/or ours. If they are, please give more detail w/ages, custody, living arrangements etc for additional suggestions. If not:

50/50 if incomes are similar.
Proportional if incomes are disparate. I would lean toward using income after any retirement contributions (if both are contributing or "should be" contributing).

Family vacations: It depends.
a) If incomes are disparate, just take it all out of the account you both are contributing to.
b) If incomes are similar and both are enthusiastic about the vacation, approximately 50/50. If one likes better hotels or better restaurants, I have found that "I pay for X & Y and you pay for A & B" helps balance out not only the finances but the resentment that can pop up to interfere with everyone's enjoyment of the vacation. If one person is enthusiastic about the vacation, but the other is luke-warm (or less), adjust accordingly unless it is always one-sided in the same direction.

But really there are almost infinite possibilities, so whatever works for both of you. The most important thing is that you both be totally on-board (with no coercion) about any overall arrangement. The second most important thing is that the agreement be open to re-negotiation in the event that either party requests it.

Our experience is that, over time, more and more things end up just being split 50-50.

mortfree
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Re: Fair way to split expenses?

Post by mortfree » Wed Nov 15, 2017 2:07 pm

On a household basis: my wife pays the cable, electric, gas (heat) bills.

She contributes to daycare, groceries, water/sewer. clothing and other expenses for our son.

She makes her car payment (gasp!), cell phone, car insurance and I pay my 2 car payments (yikes - so not a BH!), car insurance, cell phone.

When we move, I will go back to paying the mortgage, Taxes and Insurance.

I feel like I'm running a business, but it has been working for us - married 5+ years.

I guess it boils down to she pays for the majority of her expenses as well as the smaller bills and I handle my expenses and the larger expenses.

Of course, if it isn't a fun thing to pay (smoke detectors as an example), she doesn't want to contribute.

randomguy
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Re: Fair way to split expenses?

Post by randomguy » Wed Nov 15, 2017 2:18 pm

mhalley wrote:
Wed Nov 15, 2017 11:37 am
There 2 way to do it, depending on your income disparity. If you both make similar incomes, then just going 50/50 is fine. If there is a wage gap, then each contributing the percentage they bring home seems more fair. Say monthly expenses are 2000 dollars, wife brings home 4000 and husband brings home 2500. Total income 6500. Wife puts in 62 percent, husband 38, or 1240 and 760.
Upcoming major shared expenses would be the same. Major individual expenses could also go either way, say new car.

There are 100's of ways of doing this. The problem is that "fair" isn't something that you can define exactlu. And defining joint expenses can get messy when you try to get really exact (i.e. what percentage of your cable bill is ESPN versus lifetime?. Who pays for heating the house at 72 instead of a more reasonable 66? ....).

Take your above scheme. And lets have one partner taking home 100k, the other 50k with family expenses of 100k. The first person will have ~33k to spend but the other partner will only have ~17k. Does that sound more or less fair then them both getting 25k to spend how they see fit?

In the end you are going to have to discuss the various options with the SO and decide what is best for you.

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dm200
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Re: Fair way to split expenses?

Post by dm200 » Wed Nov 15, 2017 2:23 pm

The other issue that may be (often is) involved is the choice(s) of one or both parties about employment and income. If, for example, the decision is to split expenses according to each's income - then does one person's go down if he/she chooses to take a lower income job OR go up because he/she takes on a higher paying one?

wrongfunds
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Re: Fair way to split expenses?

Post by wrongfunds » Wed Nov 15, 2017 2:23 pm

"Fair" is a four letter word which starts with letter "F". It always causes problem.

marcopolo
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Re: Fair way to split expenses?

Post by marcopolo » Wed Nov 15, 2017 2:27 pm

DaftInvestor wrote:
Wed Nov 15, 2017 11:31 am
My spouse and I do it based upon percentage of income.
Since she is a Stay-at-home-Mom her income is zero so I put in 100% to cover the bills and she puts in 0%. It works well and we have no fights or difficulties with money. We manage the joint account well together - I put the money in - she takes the money out - the only trick I sometimes struggle with is keeping up with putting more money into the account than she takes out.
+1
Describes our family situation perfectly!
Once in a while you get shown the light, in the strangest of places if you look at it right.

Rupert
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Re: Fair way to split expenses?

Post by Rupert » Wed Nov 15, 2017 2:30 pm

randomguy wrote:
Wed Nov 15, 2017 2:18 pm
mhalley wrote:
Wed Nov 15, 2017 11:37 am
There 2 way to do it, depending on your income disparity. If you both make similar incomes, then just going 50/50 is fine. If there is a wage gap, then each contributing the percentage they bring home seems more fair. Say monthly expenses are 2000 dollars, wife brings home 4000 and husband brings home 2500. Total income 6500. Wife puts in 62 percent, husband 38, or 1240 and 760.
Upcoming major shared expenses would be the same. Major individual expenses could also go either way, say new car.

There are 100's of ways of doing this. The problem is that "fair" isn't something that you can define exactlu. And defining joint expenses can get messy when you try to get really exact (i.e. what percentage of your cable bill is ESPN versus lifetime?. Who pays for heating the house at 72 instead of a more reasonable 66? ....).

Take your above scheme. And lets have one partner taking home 100k, the other 50k with family expenses of 100k. The first person will have ~33k to spend but the other partner will only have ~17k. Does that sound more or less fair then them both getting 25k to spend how they see fit?

In the end you are going to have to discuss the various options with the SO and decide what is best for you.
+1. Don't start nickel and diming things. That leads to conflict. Just settle on a system that you both find reasonable, whether it would look that way to an objective observer or not. In my family, I pay all the household bills that don't require frequently interacting with customer service representatives. Customer service representatives make me angry, and when I deal with them, somehow our cable and internet service always ends up being cut off. So my partner handles all expenses that have to be re-negotiated from time to time, and I handle the fixed expenses, such as the mortgage. Vacation expenditures also stress me out. So she handles that too. I handle all unexpected home repair things -- a recent tree removal, for example. At the end of the day, I end up paying more, which is fair because I make a little more. But we don't really talk about it. At the end of the road (as opposed to the end of the day), one of us will likely die first and the other will inherit everything. So it all comes out in the wash. We're happy.

DrGoogle2017
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Re: Fair way to split expenses?

Post by DrGoogle2017 » Wed Nov 15, 2017 2:30 pm

I would think along the like of ratio of income. If you make $100k and she makes $50k, then it would 2:1.
Last edited by DrGoogle2017 on Thu Nov 16, 2017 12:56 pm, edited 1 time in total.

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dumbbunny
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Re: Fair way to split expenses?

Post by dumbbunny » Wed Nov 15, 2017 2:33 pm

50/50 works best - that way no one has controlling interest. Our incomes are the same. I can only guess if there was a difference in income, we would break the expenses down to a ratio of what we earn.

I owned a house before we got married. She wanted a piece of homeownership so I came up with a 80/20 split plan. She paid 20% of mortgage, property tax, repair, and closing costs when we sold. But the utilities, groceries, blah, blah were split 50/50.

We celebrated our 25th wedding anniversary this year.
“It’s the curse of old men to realize that in the end we control nothing." "Homeland" episode, "Gerontion"

cbr shadow
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Re: Fair way to split expenses?

Post by cbr shadow » Wed Nov 15, 2017 2:43 pm

My wife and I struggled with this issue when we first got married and started sharing money. She makes significantly more than I do.
She'd shop and I'd resent that. I'd spend money on my hobbies and she'd resent that. We decided on some savings goals and then came up with budgets for "shopping" and "hobbies" that we both found reasonable. This helps a LOT because nobody could be upset about what the other was spending money on as long as it stayed within the budget.
After a year or so of doing this we both decided it wasn't needed anymore. I think we both matured a bit and had similar long-term goals. I guess I can't pinpoint the exact reason it stopped being necessary.

This worked for us, but may not work for everyone.

trustquestioner
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Re: Fair way to split expenses?

Post by trustquestioner » Wed Nov 15, 2017 3:59 pm

All our income flows into a joint checking account for bill pay, etc. Anything large is discussed; all taxable investment accounts are also joint (funded from checking). No issues.

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Pretzel lover
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Re: Fair way to split expenses?

Post by Pretzel lover » Wed Nov 15, 2017 4:00 pm

Spouse and I always just have one pot of money.

Splitting expenses? It’s all the same money. Doesn’t matter if there is a difference in what each person makes.

Many problems can occur if a couple doesn’t have the same financial priorities. This should be fully understood before getting married. That way there are no surprises.

flyingaway
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Re: Fair way to split expenses?

Post by flyingaway » Wed Nov 15, 2017 4:15 pm

Zach82 wrote:
Wed Nov 15, 2017 11:22 am
All,

In order to prevent future fights and difficulties with money, my wife and I have decided to have separate bank accounts and funnel money to a joint account that auto pays our bills. I would like to ask advice from those who have done anything remotely similar as to the best way to determine how much each spouse contributes? How do we handle family vacations etc? I do not need advice or opinions if this is a good idea or not in a marriage. This IS what we will do...just would like anyone with experience or knowledge how to make this fair and workable.

Thanks,
Zach
Does this work in case of a divorce without a formal premarriage agreement?

2Birds1Stone
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Re: Fair way to split expenses?

Post by 2Birds1Stone » Wed Nov 15, 2017 4:29 pm

Interesting debate that seems to pop up on various finance forums regularly.

We are not married, yet. My fiance and I have been living together for 7 years and started doing so when we were young and had little to no professional experience and a low income. We split the rent/utilities 50/50 and kept our finances separately otherwise.

I never liked the idea of contributing as a % of our income in our situation since we don't want kids. Why would one spouse subsidize the other? would you be more or less inclined to advance your career if your spouse would just pick up the slack for your lack of wage growth?

Maybe with kids it's different, or in a trailing spouse scenario (moving around to support the higher earning spouse's career).

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dm200
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Re: Fair way to split expenses?

Post by dm200 » Wed Nov 15, 2017 4:34 pm

Why would one spouse subsidize the other?
What if one partner/spouse has a much lower choice or ability to earn a high income? Let's say one is a Physician specialist and the other is an elementary private school teacher? Not that uncommon a situation - and, today, it has become much more common that the female spouse/partner may be the much higher earning of the two.

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DaftInvestor
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Re: Fair way to split expenses?

Post by DaftInvestor » Wed Nov 15, 2017 4:38 pm

2Birds1Stone wrote:
Wed Nov 15, 2017 4:29 pm
I never liked the idea of contributing as a % of our income in our situation since we don't want kids. Why would one spouse subsidize the other? would you be more or less inclined to advance your career if your spouse would just pick up the slack for your lack of wage growth?
Because you and I have very different views of what marriage is all about. Its not about one spouse "subsidizing" the other financially - its about sharing a life together - having common goals in life and working together towards those common goals. When one spouse spends money on something they enjoy - the other actually shares in the joy in that they see the enjoyment in their spouse.
Its okay if you think differently - I'm just trying to explain another viewpoint.

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dm200
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Re: Fair way to split expenses?

Post by dm200 » Wed Nov 15, 2017 4:40 pm

Because you and I have very different views of what marriage is all about. Its not about one spouse "subsidizing" the other financially - its about sharing a life together - having common goals in life and working together towards those common goals. When one spouse spends money on something they enjoy - the other actually shares in the joy in that they see the enjoyment in their spouse.
Its okay if you think differently - I'm just trying to explain another viewpoint.
My/our general view - married almost 40 years.

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Re: Fair way to split expenses?

Post by barnaclebob » Wed Nov 15, 2017 4:42 pm

My wife and I have joint accounts and buy what we need/want. If spending vs saving is the issue then I would say stick with joint accounts and give yourselves allowances each month to separate accounts.

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DaftInvestor
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Re: Fair way to split expenses?

Post by DaftInvestor » Wed Nov 15, 2017 4:44 pm

dm200 wrote:
Wed Nov 15, 2017 4:40 pm
Because you and I have very different views of what marriage is all about. Its not about one spouse "subsidizing" the other financially - its about sharing a life together - having common goals in life and working together towards those common goals. When one spouse spends money on something they enjoy - the other actually shares in the joy in that they see the enjoyment in their spouse.
Its okay if you think differently - I'm just trying to explain another viewpoint.
My/our general view - married almost 40 years.
26 years here. We put all our money together on day 1. Our incomes were quite different but we didn't see our marriage working any other way. In our case (as I stated above) one of us eventually dropped down to $0 income (wanted to raise our own kids) while the other kept working. My spouse has had the harder job (even though she was the one that dropped down to $0 income) :happy

ajjulee
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Re: Fair way to split expenses?

Post by ajjulee » Wed Nov 15, 2017 4:49 pm

We echo what others said about sharing 50/50.
However one of us got a huge raise a few years after the marriage.
So, we came up with a few rules.
  • For joint expenses such as mortgage, utilities - we share the cost.
  • For individual expenses such as a nose job, it comes out of individual savings.
  • We do not share continuing education cost. We are on our own: In one year, he studied architecture, food, female form, landscapes in Italy, France, Germany, Russia. That education ended up costing me too much.
  • We also decided charging each other for avoidable chores. If someone spills milk after the other person cleaned the kitchen, milk spiller depots $100 into cleaners bank account.
  • If he uses words ‘potato’, ‘yes, it does make you look fat’, ‘moron’, ‘our babysitter is so dope', he is charged $100 per each incident.
  • If I use words ‘nincompoop, antidisestablishmentarianism, does this make me look fat’ I’m charged $100 per each incident
  • If he forgets any of our kids names in a senior moment, I charge him $100.
  • If I forget that we have kids, I’m charged $100
  • If he grows wider and his pants don’t fit him, I charge him $100 per inch.
  • If my bits suddenly grew larger, he said he would pay me $100 per ccs
The system worked out very well for us. And I’m sure he will agree if I asked him, but I don’t know where he is now. I heard he was living somewhere in Texas with someone.

Anyway, hope it helps

ps: See my signature for further clarification (joke, I apologize if I offend anyone, feel free to delete if it’s in bad taste:)
What I write on this forum is sometimes the truth, maybe the whole truth, and not always nothing but the truth, for the purposes of online anonymity.

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DaftInvestor
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Re: Fair way to split expenses?

Post by DaftInvestor » Wed Nov 15, 2017 4:53 pm

ajjulee wrote:
Wed Nov 15, 2017 4:49 pm

Anyway, hope it helps
:D Helped me tremendously! Just got off a rough conference call and needed a good laugh!

dcdowden
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Re: Fair way to split expenses?

Post by dcdowden » Wed Nov 15, 2017 5:14 pm

My wife and I have been married for over 40 years and have always handled our finances jointly. When we married we were both just out of grad school, made about the same amount of money, and neither had accumulated any significant debt or assets. Our primary goal was to save a down payment to buy a house, so we scrutinized all our expenses carefully. Things were easier then as well: no cable bills, fancy smartphones, no fancy coffees, and no kids. We had a general rule that we would discuss any expenses that exceeded a certain threshold - in the 70's that number might have been as low as $20 or so. We still do that now, but the number is much higher. But my wife and I are both computer engineers and tend to be fairly frugal (cheap) and fiscally conservative like many engineers. Our parents are children of the depression, so we grew up in fairly frugal families as well. We still handle our finances jointly, but our roles have become more specific - my wife pays all the bills and I manage all the investments.

But we now hear of many couples today that do struggle with this issue of how to handle their finances. This seems particularly important in situations where the couple may have significantly different accumulated assets, debt or income or where the couple doesn't really have a shared set of values as to saving, spending and investing. It can be especially difficult if one partner tends to be frugal and the other is more of a spendthrift by nature. The scheme of sharing common expenses in proportion to income has seemed to work well for some. But there can still be extraordinary issues like losing a job, disability, or having children that can strain the relationship. In those cases it seems you still have to go back to your typical wedding vows of 'for richer or poorer, sickness and health, etc.' and try to find a way to make things work out.

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dm200
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Re: Fair way to split expenses?

Post by dm200 » Wed Nov 15, 2017 5:21 pm

Married over 39 years.

When first married, I had significantly higher income and significantly more assets than my wife brought to the marriage. We shared everything.

Without going into all the details, due to bad luck, bad decisions on mostly my part - all was lost.

My wife has not made a big issue of this. :)

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Re: Fair way to split expenses?

Post by quantAndHold » Wed Nov 15, 2017 5:32 pm

For all of my working life I consistently made about 2x what my wife made. When we first started living together, we opened a joint checking account, and pooled money for our joint expenses, at a 2:1 ratio. I contributed twice as much to the joint account. At the start, the only things paid for by the joint account were rent, utilities, food. As we were together longer, we gradually paid for more things out of the joint account. Vacations, cars, medical expenses. When my wife hit age 50 and started making catch-up contributions to her 401k and IRA, we changed the calculation to use net after taxes and retirement contributions, to not penalize her for maxing out retirement accounts.

After we'd been together ten years or so, we just gave up and put everything in a single joint account. By that point we were on the same page financially, knew that the relationship was forever, and the complexity of having three accounts was more bothersome than beneficial. The credit union was having trouble getting deposits credited to the correct sub-account, neither of us could keep straight which credit card to use for what, the math to keep it all balanced was annoying, and pretty much the only things we were paying for out of individual accounts were gifts, clothes, toys, and separate lunches out.

Anyway, philosophically, this is what I now know:

* If you have unequal incomes but are contributing to household expenses equally, both people will eventually resent it. The higher earner will have a lot more discretionary spending power than the lower earner, which means that the higher earner will either be having all the fun, or continually subsidizing the lower earner's discretionary spending, which will create a power imbalance in the relationship.
* You still need to have money discussions. Is savings and retirement paid for? Are you on the same page as far as retirement savings, or is one of you a saver and one a spender? What's the correct budget for joint expenses? Does one of you intend to retire early? What things are appropriate to spend money on, and how much is appropriate? Kia, or Mercedes? Even if you disagree, you need to discuss your values and beliefs related to money.
* After doing it for years, I'm not even sure I'd recommend having separate accounts anymore. For a new couple living together, ya, sure. But once you get to the point of being married, having kids, buying a house, etc? No. It's family money, and we're a family.

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Toons
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Re: Fair way to split expenses?

Post by Toons » Wed Nov 15, 2017 5:47 pm

We are "married" as one.
What's mine is hers and vice versa,
Including any monies,,,
been that way for 38 years.
Never considered 'separate'
:happy
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

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