Author Topic: How do you and you SO split income?  (Read 7062 times)

StacheyStache

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Re: How do you and you SO split income?
« Reply #50 on: July 15, 2017, 05:58:58 AM »
Been with SO just under two years.  Since we aren't married, totally separate accounts.  I make 2x what he does (but neither amount is high, we're talking 25k and 50k, not 50k and 100k or higher) and our rent and utilities run around 1500 per month, sometimes more sometimes less depending on how much heat/air conditioning we used.  He writes me a check for 500 each month and also pays for our subscription services (Playstation Plus and Netflix).  As another poster mentioned upthread, I pay more both because I make more and because I was the one who chose to live in an apartment outside of his budget (although it was less about granite counter tops and a pool and more about not wanting to live with rats, cockroaches and two or more roommates, which is what his budget would have gotten.  No regrets).  I don't nitpick about months when the electric bill is slightly higher as there are other months where it's lower than average, it all balances out.  Groceries are split 50/50 and we trade off who pays for date nights.  Even though I pay more overall and could whine about what's 'fair,' I keep in mind that we both come out ahead sharing expenses than if we were living on our own and I'm paying way less now than I did when I was single, not to mention being happier.  I think that's an important thing to keep in mind when nitpicking over fairness and who pays more:  sharing expenses is generally cheaper than living on your own, especially if you picked a fairly frugal partner.

If we get married (and it's looking more and more like it's heading down that road) this will almost certainly change.  I much prefer the one pot approach with separate accounts for our own personal effects/gifts and treaties for each other, but since I've already been through one failed engagement I'm way too risk adverse to combine before marriage. 

yodella

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Re: How do you and you SO split income?
« Reply #51 on: July 17, 2017, 10:32:16 AM »
My husband and I have been married five years, and we maintain (mostly) separate finances and pay bills according to income. He earns a LOT more than me ($175k vs $65k), so by using this method we are both able to max out retirement accounts and save in taxable accounts too.

We use a simple formula: because he makes 73% of our overall income and I make 27%, we pay 73% and 27% of most household bills and shared expenses, respectively.

There is always a lot of debate around split vs. combined finances, and what it might mean about your marriage if you choose not to combine, blah blah. For us, we are both very independent people, so having independent finances works best.

"By using this method we are both able to max out retirement accounts and save in taxable accounts too."  Why couldn't you max accounts if you had a combined account?

You wouldn't have to waste time and do BS calculations of percentage of income just to pay an electric bill.

Also, you are only "independent" of one another" psychologically. Legally what's yours is his and what's his is yours.

One account, all goes in, all goes out, life's good.

Because if I had to pay 50% of expenses, I would not be able to max out tax-advantaged retirement savings and still save in a taxable account, too.

The "BS calculations" are really quite simple - we put all shared expenses on shared credit cards. Once a month we go over all expenses and plug relevent numbers into a spreadsheet that does the calculations for us. Then I write him a check for my share.

We are fully aware that in the eyes of the law, everything we have is shared, but the psychological benefits of maintaining some semblance of financial independence are highly valued in our case. The law will only be relevant if we divorce, which we hope and plan to avoid.

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Re: How do you and you SO split income?
« Reply #52 on: July 17, 2017, 12:22:24 PM »
Whatever way you decide, realize that communicating is a lot more important than the methodology you choose.

I married late and had already been established and independent.  I think that drove why we kept our "old" accounts.  We don't share joint expenses, we just divided up expenses.  He takes the car insurance because it's his old insurance company.  I take the utility bill.  etc etc.  Our expenses are very small.  Our investments are the more important accounts.  As long as we are both following the investment plan, we are good to go. 

I make a little more than my husband but he has a military retirement and super cheap health insurance.  So, he's probably "worth" more in FIRE. 


TheAnonOne

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Re: How do you and you SO split income?
« Reply #53 on: July 17, 2017, 06:07:47 PM »
We have one bank account that both paychecks flow into. It would be a mess to try and unzip them.

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Re: How do you and you SO split income?
« Reply #54 on: July 17, 2017, 08:23:47 PM »
Married and common potters here.  Soon after we married I became the SAHM, so all income was courtesy of DH, for the good of our growing family.  He has no interest in finances, so I'm the family CFO.  I'd have to press him to make changes necessary to contribute to employer retirement accounts, only because he hated being bothered to do it, but I couldn't do it for him.  Once they were set up, I managed them.  Eventually I opened Roth IRAs for both of us, after paying off our mortgage.  I'm a bit sorry I didn't open one in my name earlier, to even up the split of retirement account balances, if only for tax reasons, but we still view the totals as "ours".

Now I'm working part-time, so he still earns more than me, but he also has access to all the benefits and I don't, so they come out of his paycheck (medical, dental, vision, HSA, 401k).  Thus his take home is pitifully small, and mine pays a majority of household bills now.  Things change over time, details don't really matter, it's all family money. 

We tend to approach things from the viewpoint of what's best for all of us.  One year there was a question of claiming DD3 as a dependent or not, and thus who got the AOTC, and who claimed scholarship income as taxable.  I ran the numbers both ways, and it was most advantageous on whole to claim DD3 and the credit, but it meant she owed extra tax.  I paid the tax bill - it was the cost of gaining a larger total family refund (and parent vs student split of AGI would affect future financial aid).

Rosy

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Re: How do you and you SO split income?
« Reply #55 on: July 17, 2017, 09:07:26 PM »
I guess our system would be a nightmare to untangle for anyone but us. We didn't plan it that way - we've been together over 20 years, (not married) with each of us having separate accounts.
It worked well and still does, except that last year, we decided to change all our accounts to joint accounts, in case something happened to one of us.

It didn't start out that way, but at present, our system is slanted a bit in my favor - if you were to compare payments made by each of us.
That's because I slashed my fixed expenses and he is resistant to change, so his expenses have crept up.
Eventually he will see reason:)

In reality both incomes are "ours" and all expenses are "ours" with full access by both of us. We discuss big purchases, but we've split up the bill paying between us and even occasionally transfer money between our accounts. We each fund our own savings and investments too.
I could never deal with a partner that "allocates" my pocket money or questions my discretionary spending. He teases me about my jewelry purchases and I don't always agree with his spending on gifts for family and friends, but there has never been any friction due to money.
« Last Edit: July 18, 2017, 12:04:33 PM by Rosy »

Cranky

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Re: How do you and you SO split income?
« Reply #56 on: July 18, 2017, 07:27:09 AM »
It's all mine. :-o

No, really, we married young, we didn't have any money (or debt), I was a SAHM for a long time, and we've always just dumped everything into the same accounts. I pay all the bills. I run any big purchases by dh and if he's not enthusiastic, I rethink it.

He's not a very spendy guy. I complain about his coffee drinking habit, but that's about it. We've been married a long, long time now, and I don't think we've ever argued about money.

ReadySetMillionaire

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Re: How do you and you SO split income?
« Reply #57 on: July 18, 2017, 11:13:13 AM »

Because if I had to pay 50% of expenses, I would not be able to max out tax-advantaged retirement savings and still save in a taxable account, too.

The "BS calculations" are really quite simple - we put all shared expenses on shared credit cards. Once a month we go over all expenses and plug relevent numbers into a spreadsheet that does the calculations for us. Then I write him a check for my share.

We are fully aware that in the eyes of the law, everything we have is shared, but the psychological benefits of maintaining some semblance of financial independence are highly valued in our case. The law will only be relevant if we divorce, which we hope and plan to avoid.

I respectfully think you're misunderstanding the concept of a "communal pot." 

When you have a single pot, all the money is one. There is no, "I pay 50%, my wife pays 50%." It's all just one pot of money, and everything just gets paid from that pot. There are no percentages of anything, because it's just 100% "our" money.

For example, my biweekly paycheck is just $681 because I contribute so much to retirement accounts and our healthcare is through me. That technically wouldn't be enough to pay 50% of the bills, but it doesn't matter, because all the money from both our incomes flows into one account, all the expenses go out of the same account, all the credit cards are linked to that account, etc.

In short, having a "communal pot" has absolutely no negative effect on being able to max contributions to retirement accounts, and as my own example demonstrates, it actually helps both max because it combines the resources of both income earners.
« Last Edit: July 18, 2017, 11:15:10 AM by ReadySetMillionaire »
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DarkandStormy

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Re: How do you and you SO split income?
« Reply #58 on: July 18, 2017, 11:24:28 AM »
My husband and I have been married five years, and we maintain (mostly) separate finances and pay bills according to income. He earns a LOT more than me ($175k vs $65k), so by using this method we are both able to max out retirement accounts and save in taxable accounts too.

We use a simple formula: because he makes 73% of our overall income and I make 27%, we pay 73% and 27% of most household bills and shared expenses, respectively.

There is always a lot of debate around split vs. combined finances, and what it might mean about your marriage if you choose not to combine, blah blah. For us, we are both very independent people, so having independent finances works best.

This might be nitpicking (and this isn't directed solely at you, just using your example) - but I don't know if gross pay is the best way to determine how to split shared expenses.  This ignores that one person may have a higher effective tax rate, or in some cases may not be eligible for 401k contributions or Roth IRA contributions, etc.  If two people set a goal to be able to maximize retirement vehicles (such as 401k), I'd look at after-tax pay and then split based on that percentage.  Just my $.02.
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RamonaQ

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Re: How do you and you SO split income?
« Reply #59 on: July 18, 2017, 12:42:14 PM »
How do you handle finances with an SO if one of you owns the house and the other doesn't?

I'm not quite sure what is fair in this situation and would love to hear how others approach it.

My SO owns our house.  The mortgage and deed are in his name only.

I could have paid him rent, but neither of us really liked that dynamic on a purely emotional level.

He pays the mortgage, property taxes, and for any improvements to the house.  I pay all the other stuff (utilities, groceries, gym, etc.).  It works out well because he hates paying bills, so he's happy that he only has one bill to pay per month.  I don't mind paying bills so I don't mind having a bunch of smaller ones.  He pays less than if he were living alone, and I pay less than if I were renting an apartment.  Dollar-wise, the split ends up being about proportional to our incomes.
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bender

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Re: How do you and you SO split income?
« Reply #60 on: July 18, 2017, 03:20:01 PM »
How do you handle finances with an SO if one of you owns the house and the other doesn't?

I'm not quite sure what is fair in this situation and would love to hear how others approach it.

My SO owns our house.  The mortgage and deed are in his name only.

I could have paid him rent, but neither of us really liked that dynamic on a purely emotional level.

He pays the mortgage, property taxes, and for any improvements to the house.  I pay all the other stuff (utilities, groceries, gym, etc.).  It works out well because he hates paying bills, so he's happy that he only has one bill to pay per month.  I don't mind paying bills so I don't mind having a bunch of smaller ones.  He pays less than if he were living alone, and I pay less than if I were renting an apartment.  Dollar-wise, the split ends up being about proportional to our incomes.

He's benefited from you paying all the bills, while his asset has been building equity and possibly increased in market value. 

If you break up - do you get any of the home equity?  If you're married, there are laws that govern that.  If not, it seems like an unfair split since he would walk away with all the equity.

seattlecyclone

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Re: How do you and you SO split income?
« Reply #61 on: July 18, 2017, 03:26:58 PM »
Before we got married, we had a joint account that we contributed to equally, and shared expenses were paid out of that account. Now that we're married everything is joint except retirement accounts. Some people feel that a "fun money" bucket for each spouse makes things work out better. We've never felt the need because we're mostly on the same page about financial stuff. We each spend money on our own frivolous things from time to time, but it's rare enough and in equal enough proportions that it never has become a problem.
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BFGirl

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Re: How do you and you SO split income?
« Reply #62 on: July 18, 2017, 03:44:23 PM »
How do you handle finances with an SO if one of you owns the house and the other doesn't?

I'm not quite sure what is fair in this situation and would love to hear how others approach it.

My SO owns our house.  The mortgage and deed are in his name only.

I could have paid him rent, but neither of us really liked that dynamic on a purely emotional level.

He pays the mortgage, property taxes, and for any improvements to the house.  I pay all the other stuff (utilities, groceries, gym, etc.).  It works out well because he hates paying bills, so he's happy that he only has one bill to pay per month.  I don't mind paying bills so I don't mind having a bunch of smaller ones.  He pays less than if he were living alone, and I pay less than if I were renting an apartment.  Dollar-wise, the split ends up being about proportional to our incomes.

I will own the house and it is paid for.  I think I'd feel bad asking for "rent", so perhaps a split like yours would be a better option.

ixtap

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Re: How do you and you SO split income?
« Reply #63 on: July 18, 2017, 03:50:08 PM »
How do you handle finances with an SO if one of you owns the house and the other doesn't?

I'm not quite sure what is fair in this situation and would love to hear how others approach it.

My SO owns our house.  The mortgage and deed are in his name only.

I could have paid him rent, but neither of us really liked that dynamic on a purely emotional level.

He pays the mortgage, property taxes, and for any improvements to the house.  I pay all the other stuff (utilities, groceries, gym, etc.).  It works out well because he hates paying bills, so he's happy that he only has one bill to pay per month.  I don't mind paying bills so I don't mind having a bunch of smaller ones.  He pays less than if he were living alone, and I pay less than if I were renting an apartment.  Dollar-wise, the split ends up being about proportional to our incomes.

He's benefited from you paying all the bills, while his asset has been building equity and possibly increased in market value. 

If you break up - do you get any of the home equity?  If you're married, there are laws that govern that.  If not, it seems like an unfair split since he would walk away with all the equity.

The other option mentioned was to pay rent, which would have had the same result.

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Re: How do you and you SO split income?
« Reply #64 on: July 18, 2017, 03:56:12 PM »
I've been married twice and have done it differently each time:

First marriage:  We kept our accounts separate.  We paid our bills separately.  We split shared expenses evenly (housing, electricity, etc).  Now: obviously this marriage didn't work out or there wouldn't have been a second one.  And there were multiple issues (and equal blame all around).  But we fought about money all the time.  This is probably just indicative of other issues.  But it really changed my mindset on things.  I decided I would not do things that way ever again (if there was an ever again).

Second marriage (22 years and cruising): Everything is community property.  If you make a buck, it goes in the joint account.  If you spend a buck, it comes from there.  We obviously have separate retirement accounts (because legally that's how it works) but neither of us really considers our retirement accounts as separate property.  They're all "ours."  It does help that in this marriage we were financially on the same page from the very start. 
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Re: How do you and you SO split income?
« Reply #65 on: July 18, 2017, 05:04:00 PM »
Regarding only one person owning the house, we bought it when we'd been together less than a year and I have no interest in owning a house ever again, so only SO's name is on it. He pays the entire principal portion of the mortgage, and we split everything else - generally 50/50 but we'll probably change to proportional eventually. It works out to about the same I'd pay to rent a cheap apartment by myself, and way less than what I'd pay to live in a house this size unless I had more than one roommate. So I get a nicer place. He has more extra money to spend or save.

If it had worked out that I'd pay more than I'd pay in rent on my own, we'd have done it differently.
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RamonaQ

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Re: How do you and you SO split income?
« Reply #66 on: July 18, 2017, 05:51:11 PM »
He's benefited from you paying all the bills, while his asset has been building equity and possibly increased in market value. 

If you break up - do you get any of the home equity?  If you're married, there are laws that govern that.  If not, it seems like an unfair split since he would walk away with all the equity.

No, if we broke up I wouldn't get any of the home equity and honestly don't see why I should.  I'm paying less overall now than I would in rent (and less than I paid in rent before we moved in together).  It would be a different story if I contributed to the down payment or was paying more than I would living solo.  But it works out as a win/win for both of us this way, at least as far as we see it.
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Half Stached

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Re: How do you and you SO split income?
« Reply #67 on: July 18, 2017, 08:10:11 PM »
We both work and all of our money effectively goes into one pot. However, we both have some individual items that are in each of our names (bills, credit cards, checking accounts) to maintain credit scores. We each also have a guilt free fun money yearly budget. Overall, it has been fairly straightforward and works well for us.

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Re: How do you and you SO split income?
« Reply #68 on: July 18, 2017, 11:51:03 PM »
I guess it really comes down to communication and what you agree to do.
Ive been married for almost 17 years and lived together 3 before that, and we combined incomes within months of moving in together. Communal pot. Ive been a SAHM for the past 14 years, which was a priority for both of us, and I manage our money. But that is what we both have always wanted, so it works for us.

yodella

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Re: How do you and you SO split income?
« Reply #69 on: July 19, 2017, 07:36:49 AM »

Because if I had to pay 50% of expenses, I would not be able to max out tax-advantaged retirement savings and still save in a taxable account, too.

The "BS calculations" are really quite simple - we put all shared expenses on shared credit cards. Once a month we go over all expenses and plug relevent numbers into a spreadsheet that does the calculations for us. Then I write him a check for my share.

We are fully aware that in the eyes of the law, everything we have is shared, but the psychological benefits of maintaining some semblance of financial independence are highly valued in our case. The law will only be relevant if we divorce, which we hope and plan to avoid.

I respectfully think you're misunderstanding the concept of a "communal pot." 

When you have a single pot, all the money is one. There is no, "I pay 50%, my wife pays 50%." It's all just one pot of money, and everything just gets paid from that pot. There are no percentages of anything, because it's just 100% "our" money.

For example, my biweekly paycheck is just $681 because I contribute so much to retirement accounts and our healthcare is through me. That technically wouldn't be enough to pay 50% of the bills, but it doesn't matter, because all the money from both our incomes flows into one account, all the expenses go out of the same account, all the credit cards are linked to that account, etc.

In short, having a "communal pot" has absolutely no negative effect on being able to max contributions to retirement accounts, and as my own example demonstrates, it actually helps both max because it combines the resources of both income earners.

Dude, obviously I know what "communal pot" is, since this is how MOST married people do money. Anyone would have to be living under a rock to not understand the concept.

But as I've explained, in OUR relationship, maintaining separate finances and paying bills based on percentage of income works best. Therefore, as the lower-earning spouse, only having to pay 27% of bills means I personally have enough leftover to max out my 401k, IRA, and contribute to a taxable account as well.

It's fine if you disagree, but it almost seems like you're willfully misunderstanding and trying to "mansplain."
« Last Edit: July 19, 2017, 09:15:04 AM by yodella »

ixtap

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Re: How do you and you SO split income?
« Reply #70 on: July 19, 2017, 08:05:04 AM »

Because if I had to pay 50% of expenses, I would not be able to max out tax-advantaged retirement savings and still save in a taxable account, too.

The "BS calculations" are really quite simple - we put all shared expenses on shared credit cards. Once a month we go over all expenses and plug relevent numbers into a spreadsheet that does the calculations for us. Then I write him a check for my share.

We are fully aware that in the eyes of the law, everything we have is shared, but the psychological benefits of maintaining some semblance of financial independence are highly valued in our case. The law will only be relevant if we divorce, which we hope and plan to avoid.

I respectfully think you're misunderstanding the concept of a "communal pot." 

When you have a single pot, all the money is one. There is no, "I pay 50%, my wife pays 50%." It's all just one pot of money, and everything just gets paid from that pot. There are no percentages of anything, because it's just 100% "our" money.

For example, my biweekly paycheck is just $681 because I contribute so much to retirement accounts and our healthcare is through me. That technically wouldn't be enough to pay 50% of the bills, but it doesn't matter, because all the money from both our incomes flows into one account, all the expenses go out of the same account, all the credit cards are linked to that account, etc.

In short, having a "communal pot" has absolutely no negative effect on being able to max contributions to retirement accounts, and as my own example demonstrates, it actually helps both max because it combines the resources of both income earners.

Dude, obviously I know what "communal pot" is, since this is how MOST married people do money. Anyone would have to be living under a rock to not understand the concept.

But as I've explained, in OUR relationship, maintaining separate finances and paying bills based on percentage of income works best. Therefore, as the lower-earning spouse, only having to pay 27% of bills is what allows me to max out my 401k, IRA, and contribute to a taxable account as well.

It's fine if you disagree, but it almost seems like you're willfully misunderstanding and trying to masplain.

I am a woman and I didn't get how your split helped with contributions, either. Ready Set just beat me to it.

davisgang90

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Re: How do you and you SO split income?
« Reply #71 on: July 19, 2017, 08:08:14 AM »
My wife is a SAHM.  Our paycheck is used to pay bills, fund investments etc. and each of us get an allowance to spend however we want.

Works great!
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neo von retorch

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Re: How do you and you SO split income?
« Reply #72 on: July 19, 2017, 08:11:06 AM »
Please don't comment on this thread to criticize how others choose to handle their finances. Provide your recommendation, include your reasoning, and move along. Those that disagree with you just have different reasons to choose an alternative, and no vested interest in changing how you do what you do.

bryan995

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Re: How do you and you SO split income?
« Reply #73 on: July 19, 2017, 08:24:25 AM »
Communal pot here.

Step 1) we each max 401ks, ESPPs, HSA etc.
I pay health insurance for the family.

After all this, we have close to a 50/50 split remaining.

My paycheck has enough left over for us to live off of in a HCOL area.
My wife's entire check goes directly into savings/investments.

All bonuses, ESPP, RSU etc go immediately to savings/investments.

This works for us because we are then forced to live off of a single salary, and since we are now expecting our first child, getting use to living off solely my salary/insurance works for us!
We each play the credit card game. So all bills/purchases are just paid from our shared bank accounts.  Working on the 2x Southwest CC 60000points offers now. Hellooo companion pass!

All large purchases we discuss together. Little stuff on Amazon or whatever, we just buy as necessary.
« Last Edit: July 19, 2017, 08:34:37 AM by bryan995 »

omachi

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Re: How do you and you SO split income?
« Reply #74 on: July 19, 2017, 08:42:41 AM »
Yet another joint account for nearly everything as we're married and view ourselves as a team. All bills come out of there. Investments are bought with the joint money and sit in a joint investment account of their own. Retirement accounts are obviously separate but tracked as one big pot. It's worked well over the years. I used to make much more than DW and now we're about even, but how we handled things never had to change. There never was a power dynamic since our viewpoint was one of being a team. No running tally or paying each other. We make a budget to reflect our joint goals and that's that.

We do each take a small and equal bit as fun money for private accounts, because it is nice to have a small private stash that you can use for things that don't align with your partner's goals. We have enough latitude in our normal budget that this doesn't get used much, but if I want to do something like go out for a drink with friends and it doesn't fit our going out money for the month, I can do that out of my own small pool of funds. That gives enough latitude that it's easy to keep the team mentality on the vast, vast majority of our income.

Raenia

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Re: How do you and you SO split income?
« Reply #75 on: July 19, 2017, 08:58:11 AM »
We're not married, but when we moved in together we opened a joint account.  Each of us deposits our paychecks in our own accounts, then transfers a set amount to the joint account monthly.  Currently we're doing it 50/50, but I'm thinking of suggesting a move to proportional (I'm the higher earner) at some point in the future.  At our income levels, having contributions be proportional would be important because currently I'm able to max both 401k and IRA and still have a bit left to invest post-tax, and he's not yet maxing pre-tax options.  I want to be able to take more advantage of the pre-tax space.

If and when we do get married, I expect we'll keep the same type of system, mostly because we have different ideas about how we like to manage our investments, and it would take some of the fun out of the quest for FIRE if we couldn't each play with our investment accounts according to our own comfort.  For instance, he keeps a small amount of silver, tracking the price and buying and selling occasionally, which would make me incredibly nervous.  I prefer buy-and-hold, with periodic rebalancing.

ReadySetMillionaire

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Re: How do you and you SO split income?
« Reply #76 on: July 19, 2017, 09:57:20 AM »
Dude, obviously I know what "communal pot" is, since this is how MOST married people do money. Anyone would have to be living under a rock to not understand the concept.

But as I've explained, in OUR relationship, maintaining separate finances and paying bills based on percentage of income works best. Therefore, as the lower-earning spouse, only having to pay 27% of bills means I personally have enough leftover to max out my 401k, IRA, and contribute to a taxable account as well.

It's fine if you disagree, but it almost seems like you're willfully misunderstanding and trying to "mansplain."

I honestly didn't even know if you were a man or a woman, but whatever. I can assure you that I think your position is silly regardless of your gender, age, religion, or whatever.

What I tried to get across in my last post is that I am the lower earning spouse by a pretty significant degree, and I still max all my retirement accounts and pay for healthcare. This is because what's hers is mine and what's mine is hers, so no further math has to be done.

In fact, the only reason you have to do financial cartwheels with percentage of income is because you have not combined your assets. In other words, because you're separate, you have to do percentage of income to pay bills so you can max.

I guess my point is that you still seem to be convinced that your system "allows" you to max. It does no such thing, and instead just makes you do a bunch more steps. Your position is simply mathematically and logistically incorrect.
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DarkandStormy

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Re: How do you and you SO split income?
« Reply #77 on: July 19, 2017, 09:59:48 AM »
I guess my point is that you still seem to be convinced that your system "allows" you to max. It does no such thing, and instead just makes you do a bunch more steps. Your position is simply mathematically and logistically incorrect.

They are both maxing their retirement vehicles if I read correctly.
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dreadmoose

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Re: How do you and you SO split income?
« Reply #78 on: July 19, 2017, 10:13:30 AM »
Please don't comment on this thread to criticize how others choose to handle their finances. Provide your recommendation, include your reasoning, and move along. Those that disagree with you just have different reasons to choose an alternative, and no vested interest in changing how you do what you do.

Thank you for being a voice of reason, different values doesn't make one side wrong.

I've also enjoyed the comments that focus around talking to your spouse about goals and making sure you're on the same page.

There isn't one perfect way to run your finances, separate or communal you're choosing visibility or privacy and both of them involve different levels of trust that you need to work out with your partner.

A communal pot appears to be the favorite, and as far as I know that's been normal for decades. It sure hasn't seemed to be a panacea for divorce rates just as obviously as having completely separate finances isn't going to cure any issues a relationship has either.
Just starting on my FIRE journey, hopefully posting here creates accountability and eventually lowers my very anti-mustachian life habits.

BFGirl

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Re: How do you and you SO split income?
« Reply #79 on: July 19, 2017, 10:17:32 AM »
Anyone here have perspectives on this when the couple is older (say 50s) and have kids from previous marriages?  I certainly understand each relationship is different and a communal pot seems to make a lot of sense when it is a younger couple first marriage situation.  However, there are different dynamics when each partner has young adult/adult children from previous marriages and have retirement accounts/assets which have been accumulated over 20-30 years before the partners become a "couple".

ixtap

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Re: How do you and you SO split income?
« Reply #80 on: July 19, 2017, 10:25:42 AM »
Anyone here have perspectives on this when the couple is older (say 50s) and have kids from previous marriages?  I certainly understand each relationship is different and a communal pot seems to make a lot of sense when it is a younger couple first marriage situation.  However, there are different dynamics when each partner has young adult/adult children from previous marriages and have retirement accounts/assets which have been accumulated over 20-30 years before the partners become a "couple".

It still depends on the couple. Communal pots are still featured at this stage, with the surviving spouse getting everything, hopefully leaving a will that does whatever the couple agreed to. Trust accounts with clear instructions regarding the children are another way to deal with this.

Since retirement accounts must be individual, many people use beneficiaries to divvy up these separate funds while using a communal pot for everything else.

SeaEhm

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Re: How do you and you SO split income?
« Reply #81 on: July 19, 2017, 10:33:54 AM »
So much of this is based on the individuals in the relationship.

If you get separate accounts, one may feel that the relationship isn't in unity.
If you get communal pot accounts, one may feel that the other is overbearing.

Find out what your expectations are and what your SOs expectations are.

Try to discuss what each person feels is comfortable in terms of contributions.  If you have no kids, talk about life if you were to have kids.  Stay at home?  Part time? How would that affect contributions and payment?

What happens when one person disagrees with a purchase? 

Open up a line of communication and find what works best for you and your SO.
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cats

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Re: How do you and you SO split income?
« Reply #82 on: July 19, 2017, 10:51:26 AM »
We are married, so ultimately it's all a communal pot that we both have equal rights to/responsibility for.  In terms of the actual day-to-day spending, we each have a big monthly expense that we are primarily responsible for (he handles rent, I handle our daycare payment...they are roughly equivalent), then we handle other expenses as they make sense when they come up.  At the end of the month, we tally all our expenses into a shared spreadsheet.  Anything for the household (groceries, activities done as a family, utilities) is split 50/50, anything specific to an individual (clothes, meals out without other family members) are left to that person.  We keep a running tally of who "owes" how much and when the number gets large-ish the person who owes transfers some money to the person owed.

We do not keep a joint account or a communal pot of money that we both draw out of, I have heard too many stories of people not communicating/tracking joint accounts well and winding up overdrawn. My husband is listed as a joint owner on my checking account, but he does not use that account to cover any spending or bills that he is responsible for.  It just facilitates transferring money (and I also like knowing that he COULD access my checking account without trouble if I were to die suddenly or something).

I think our system works well right now as we each individually make enough money to cover a typical month of expenses...so if my husband is for some reason unable to write the rent check one month, I have enough money coming in to cover it.  I like also that our monthly tally includes ALL expenses, not just "shared" ones like rent, groceries, etc.  If ER is a shared goal, you really need to know what the total outgoings are.


TartanTallulah

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Re: How do you and you SO split income?
« Reply #83 on: July 19, 2017, 12:28:21 PM »
Anyone here have perspectives on this when the couple is older (say 50s) and have kids from previous marriages?  I certainly understand each relationship is different and a communal pot seems to make a lot of sense when it is a younger couple first marriage situation.  However, there are different dynamics when each partner has young adult/adult children from previous marriages and have retirement accounts/assets which have been accumulated over 20-30 years before the partners become a "couple".

My husband and I are both recycled spouses; we're in our early fifties and we both have children, similar in age (all young adults now), from previous marriages. We've been married for nine years. My children have always lived with us and my husband - their stepfather - stayed at home and looked after them during their senior school years. My stepchildren live some distance away and although we saw a lot of them when they were younger we have only a fingertips-touching distance relationship with them now. They're all decent young folk.

While DH wasn't earning, a portion of my income went to subsidise his ex-wife's household, which is perhaps a slightly bizarre situation but it was only right that he should contribute something towards his children's upkeep while they were dependent, and we could otherwise have been accused of having made him unemployed to avoid his obligation to pay maintenance. Not saying I didn't quietly begrudge it, because I'm human and his XW stink-mouthed us both relentlessly, but it was the right thing to do. My XH was the opposite; he was happy to take the coats off his kids' backs to feather his own nest. They know this (for they're not stupid and could see what was going on) and take him as they find him.

I paid for our house, it is solely in my name, and as things stand my children will inherit it.

We've had a joint checking account since early in our marriage. Even when we've both worked, my income has always been much bigger. DH had walked away from his first marriage with nothing rather than exposing the children to conflict over money; I'd let my XH have most of our financial assets to stop him playing Courtrooms and Barristers for his own entertainment and let me get on with my life. We both had a lot of healing to do! When I suggested a joint account and gave DH free access to my income, I was faking a level of trust that I didn't feel, and it was a long time before he had the confidence to use the account. I'm totally secure about everything being "ours" now and we don't pick over one another's spending decisions. We do have separate retirement savings, but for planning purposes these are combined. DH leaves saving and investment decisions to me and knows I'm aiming for FIRE at 55 and intend that he should be able to stop work then if he wants to.

Looking back, I'm pleased at how far we've come on. There was a time when, if things had come adrift between us, DH would have walked away with nothing again and I'd have let him.

My mother frets that if I inherit from her and my father, and then predecease my husband (or die at the same time as him, in a car crash or something like that, since I'm older than he is and would be presumed to have died first), everything they worked for will end up in the hands of strangers - DH's children - rather than their own grandchildren. I've suggested that they circumvent this problem by leaving anything they want my children to have directly to them, or helping them out financially while they're still alive, rather than stressing about it.




CindyBS

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Re: How do you and you SO split income?
« Reply #84 on: July 19, 2017, 01:19:34 PM »
One aspect not discussed it that some people make more money not because they work harder, or have more training or education than the other person, but because our society has deemed that profession to be more highly valuable.   That is highly subjective, of course, but something to take into consideration when splitting things on an income basis.  Does the person who works just as hard in a lower paid field "deserve" less?  (highly individual question)

THE notable example of this is caregiving.  I work my ass off in highly emotional, very difficult conditions handling complicated medical terminology and concepts that take a lot of brainpower to digest.  (luckily I have a science background).  This work is often 24/7, and away from home in a hospital, more recently in a very stressful ICU.  I get paid exactly $0 for this and between this and being a SAHM for a while, I will never get to the income level I could have been when I do go back to work.   

My example is extreme, of course, but it applies to many SAHP or people who have to downshift or drop out of the workforce to care for others.

When I did work my DH made 5X more than me (I worked part time to help with our special needs son).  We have always had 1 pot of $$.  I manage it all.  He spends more than I would like, but will pull back on spending if asked to. 

Giro

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Re: How do you and you SO split income?
« Reply #85 on: July 20, 2017, 07:42:52 AM »
Please don't comment on this thread to criticize how others choose to handle their finances. Provide your recommendation, include your reasoning, and move along. Those that disagree with you just have different reasons to choose an alternative, and no vested interest in changing how you do what you do.

+1

mustache you a question

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Re: How do you and you SO split income?
« Reply #86 on: July 20, 2017, 08:06:59 AM »
My wife and I have a joint savings account and pay our mortgage out of that.  We split all of the bills up 50/50 and keep separate checking accounts.  I manage the budget spreadsheet that we use to track net worth, savings etc.  We both have the same financial goals so neither of us are worried about spending. 

I would say the most important thing is to just make sure you are on the same page.  My wife and I talk about our savings, investments, debt and anything coming down the hopper that might be an expense not budgeted for probably once every 2 weeks.  No surprises makes it easier to develop the trust needed.  Hope this helps.

TheAnonOne

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Re: How do you and you SO split income?
« Reply #87 on: July 20, 2017, 11:22:11 AM »
Please don't comment on this thread to criticize how others choose to handle their finances. Provide your recommendation, include your reasoning, and move along. Those that disagree with you just have different reasons to choose an alternative, and no vested interest in changing how you do what you do.

+1

While the comment was a bit harsh I do see a little of it.


Legally, if you are married there are NO SEPARATE BUCKETS. You pay taxes on one income as a family*, you have bills as a family and you have income as a family.

Any separation is pretty-much self induced, any complications, weird maxing schemes, or reasons why one person can MAX XYZ where the other cannot are entirely self induced.


------------------------------
My personal example...

My wife, gets basically no paycheck despite earning just shy of 50k, because we max her HSA @ $6,700, her 401k @$12,000(all her company will allow), and she pays for all of our benefits. Her check is TINY.

If we tried to split it 50/50 or even the proportional 80/20 that it is, it wouldn't work. As it stands, combining everything enriches us to an unbelievable amount. My wife basically works tax-free! How cool is that?

I don't begrudge anyone for going with XYZ schemes if they think it works best. Though, lets not pretend that any of it helps make more money, I can't see a way that adding a wall increases your net worth other than mental benefits. Especially, with something like my situation.

I am basically putting money into HER 401k


*I understand you can elect to pay separate but higher taxes

ReadySetMillionaire

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Re: How do you and you SO split income?
« Reply #88 on: July 20, 2017, 11:32:52 AM »

While the comment was a bit harsh I do see a little of it.


Legally, if you are married there are NO SEPARATE BUCKETS. You pay taxes on one income as a family*, you have bills as a family and you have income as a family.

Any separation is pretty-much self induced, any complications, weird maxing schemes, or reasons why one person can MAX XYZ where the other cannot are entirely self induced.


------------------------------
My personal example...

My wife, gets basically no paycheck despite earning just shy of 50k, because we max her HSA @ $6,700, her 401k @$12,000(all her company will allow), and she pays for all of our benefits. Her check is TINY.

If we tried to split it 50/50 or even the proportional 80/20 that it is, it wouldn't work. As it stands, combining everything enriches us to an unbelievable amount. My wife basically works tax-free! How cool is that?

I don't begrudge anyone for going with XYZ schemes if they think it works best. Though, lets not pretend that any of it helps make more money, I can't see a way that adding a wall increases your net worth other than mental benefits. Especially, with something like my situation.

I am basically putting money into HER 401k


*I understand you can elect to pay separate but higher taxes

Well said, and exactly what I was trying to get across.  This whole having separate but proportional accounts "allows me" concept is self-induced and FORCES you to make things more complicated than they have to be. If all those additional steps and calculations help you sleep better at night (even though they have no legal effect whatsoever), then that's fine. But don't sit and pretend like the math actually supports your method.
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dreadmoose

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Re: How do you and you SO split income?
« Reply #89 on: July 20, 2017, 11:39:50 AM »

While the comment was a bit harsh I do see a little of it.

Legally, if you are married there are NO SEPARATE BUCKETS. You pay taxes on one income as a family*, you have bills as a family and you have income as a family.

Any separation is pretty-much self induced, any complications, weird maxing schemes, or reasons why one person can MAX XYZ where the other cannot are entirely self induced.
------------------------------
My personal example...

My wife, gets basically no paycheck despite earning just shy of 50k, because we max her HSA @ $6,700, her 401k @$12,000(all her company will allow), and she pays for all of our benefits. Her check is TINY.

If we tried to split it 50/50 or even the proportional 80/20 that it is, it wouldn't work. As it stands, combining everything enriches us to an unbelievable amount. My wife basically works tax-free! How cool is that?

I don't begrudge anyone for going with XYZ schemes if they think it works best. Though, lets not pretend that any of it helps make more money, I can't see a way that adding a wall increases your net worth other than mental benefits. Especially, with something like my situation.

I am basically putting money into HER 401k

*I understand you can elect to pay separate but higher taxes

Well said, and exactly what I was trying to get across.  This whole having separate but proportional accounts "allows me" concept is self-induced and FORCES you to make things more complicated than they have to be. If all those additional steps and calculations help you sleep better at night (even though they have no legal effect whatsoever), then that's fine. But don't sit and pretend like the math actually supports your method.

May I provide a word of caution assuming everyone lives in the same country and that your tax laws apply to everyone equally (Canadian RRSP's are individual and not family buckets of contribution room).

Also, "complicating" the matter by having two separate accounts isn't really an issue if you're comfortable with online banking in the modern era. With everything automated it's more of an artificial set of buckets to meet spending / savings goals anyways.
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DangleStash

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Re: How do you and you SO split income?
« Reply #90 on: July 20, 2017, 12:31:04 PM »
Great subject, I've been polling some of my peers and figuring out what to do.  We put it into action this morning!

Background:
Bought a fixer upper multifamily early this year to house hack (live there now, interior done, exterior this fall)
Got married early this summer
Incomes are fairly close but not equal
Similar spending habits... she is over the top generous, we are working on it!

Pre-marriage I made her an authorized user on one of my credit cards and we opened a joint checking account.  We contributed equally to the joint account to cover rent/food/common expenses.  I would not feel comfortable fully combining finances until marriage when they become legally combined regardless of account structure. 

At this point, we are married.  Consolidating all of our savings into 1 joint savings account.  Consolidating our checking accounts into 1 checking account.  Keeping a personal credit card or two each, and keeping our joint credit card.  All money flows into the checking.  All car payments (0.9%!!!!), mortgage, insurance, gas, food, and anything else for the two of us or the household goes on the shared card or directly from the checking.  The personal cards are our "fun money" and we each have an EQUAL and firm budget for them each month.

We can both see exactly how much money we have, but still have the privacy of a personal credit card for when I need to buy some gadget that I really don't need, or when she wants to go out to dinner with the girls after work.
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2Birds1Stone

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Re: How do you and you SO split income?
« Reply #91 on: July 20, 2017, 12:43:55 PM »
Been with SO for 7 years.

She is 4 years my junior and was in school the first 3 years of our relationship. She chose a lower demand degree with a corresponding lower pay.

We split our rent 50/50 and pay individual expenses from our respective funds.

I pay for a lot more of our "entertainment" spending, such as vacations, eating out, movies, day trips, etc.

On average I make 2X what she does, thanks to busting my ass and being in the workforce 5 years longer.

I don't see us combining $$ into "one pot". We have totally different savings, investing, and spending styles. I'm very detail oriented and track every dime, she doesn't track at all. She is much more disk averse with her investments. I also want to encourage her to not rely on my income since we are not married. Since she has ownership of her funds, it motivates her in regards to career choice, spending, etc. I can't say for sure, but I suspect that if the money just kept piling into a joint account that motivation might not be as prevalent.
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mbl

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Re: How do you and you SO split income?
« Reply #92 on: July 20, 2017, 01:24:57 PM »
Dump all your money into one account and pay all expenses from one account.  Anything else is a psychological ploy to make you feel better about yourself, and it's basically worthless. 

Make your life easy: one account; all income goes in; all expenses go out; trust your spouse and yourself to make smart, discretionary purchases; communicate about any large expenses.

BS....do what works for you.
DH and I have been married for 32 years and each have separate accounts and a joint account for common expenses.

We decide individually on how much to save for retirement, savings, investing etc.
We also make decisions together on common purchases and how much to save for these things.

We don't have any debt at this point in our lives and therefore have more money available for wants vs needs.

It has worked for us and I never really discuss it with anyone...who cares?

Who is anyone to judge someone's marriage and the way in which they set up their finances?



BFGirl

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Re: How do you and you SO split income?
« Reply #93 on: July 20, 2017, 01:48:32 PM »
A lot of people are also assuming that SO means spouse.  I thought SO meant "Significant Other."  There are valid reasons for not combining finances if you are cohabitating, but not married.  However, the issues of how income is allocated to expenses still exists.

TravelJunkyQC

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Re: How do you and you SO split income?
« Reply #94 on: July 20, 2017, 02:17:24 PM »
Currently (living together, not married) - we both have individual accounts, as well as a joint account and joint card. The joint account is contributed to pro-rata according to our salaries, and our joint expenditures come out of that. We live in his condo, so I don't contribute to the principal of the mortgage, but everything else, we take from the joint account.

We are going to close on a piece of land together in September. At that point, we've decided that we will change to a one-pot deal for simplicity's sake. We'll be writing up a pre-cohabitation agreement, that will stipulate that if we split BEFORE having children, we each leave with whatever assets we brought into the deal.

Once we have children, we keep the one pot deal, naturally. If we break-up AFTER children, we will split everything 50-50 in order to keep things as comfortable and "even" for the children no matter with whom they're living.

Of course, these are situations that have not occurred yet, but it's how we've decided to organize things in advance.

As a note, we've been together 6+ years, we aren't married, nor are we likely to get married (although you never know). In Canada, as a poster above explained, retirement accounts are individual. However, once we mutate to a one-pot deal, we'll contribute into our retirement accounts from that one-pot. So theoretically, although each account is in an individual's name, the money going in is shared money. Our salaries are currently approximately 40% me, 60% him. That's not likely to change much, although the split might skew higher for him. However, I have considerably more assets to my name. So in the short term, I have more to lose, in the long term, he would have more. With our agreement, we both feel comfortable that no matter what happens, we're both protected and/or protecting the well-being of any eventual children.
« Last Edit: July 20, 2017, 02:19:54 PM by TravelJunkyQC »

Giro

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Re: How do you and you SO split income?
« Reply #95 on: July 20, 2017, 03:08:30 PM »
Well, I'm self-employed and own a business.  My husband is an employee and a military retiree with a side gig.  Tell me again how the tax burden is one family tax burden and there are no separate buckets.   

All of my income and expenses stay separate.  All of our sheltered investment accounts are separate including TSP, ROTH, i401k, 401ks, IRAs. 

The generalizations that everyone just gets a paycheck and should put it in a joint account are too simplistic for all families.






ixtap

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Re: How do you and you SO split income?
« Reply #96 on: July 20, 2017, 03:21:51 PM »
Well, I'm self-employed and own a business.  My husband is an employee and a military retiree with a side gig.  Tell me again how the tax burden is one family tax burden and there are no separate buckets.   

All of my income and expenses stay separate.  All of our sheltered investment accounts are separate including TSP, ROTH, i401k, 401ks, IRAs. 

The generalizations that everyone just gets a paycheck and should put it in a joint account are too simplistic for all families.

I am not sure I understand your point. My income is my business revenue minus expenses, so the fact that I am self employed doesn't change how we manage our personal finances vis a vis how we did so when I was an employee.

On the other hand, I do not understand all these people insisting that it all automatically becomes "ours" when you get married. Even in communal property states, there are ways to shelter individual accounts. It becomes "ours" because you co-mingled it, not because you got married.

JanF

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Re: How do you and you SO split income?
« Reply #97 on: July 21, 2017, 12:22:16 PM »
Before we got married, we were living together and split most things 50/50. Rent and utilities money came out of my account and I tell him how much he owes me each month, I pay for groceries and he pays when we eat out (this is our pre MMM days so that split was probably 60/40!).
After we got married we made a joint account that's more of a travel fund but our finances are mostly separate. Now the husband takes care of all our bills and I pay for our groceries and Internet and the reason for that is just because of how things turned out. I take care of our grocery needs and I signed up for our internet so it ends up coming out of my account. We moved into his grandma's house and took over her bills so he's taking care of that. I got my credit card debt to pay and I don't want to involve him in my mess so I don't use his money to pay for it (but he doesn't mind and I'm too stubborn and the debt is almost gone).
I think in the near future when I take over our finances I'll have us put most of our money into the joint account and still keep some money into the individual accounts for personal things.

theotherelise

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Re: How do you and you SO split income?
« Reply #98 on: July 21, 2017, 02:46:48 PM »
We do a communal pot and it has allowed us to maximize things really well. I came into the marriage with no debt and about 10k in cash. DH had 55k in student loan debt and then was unemployed for months 3-6 of our marriage. If we hadn't had a communal pot, he would have had to take the first crappy job that he could to keep paying for his share of things. Instead he was able to go through a real application process and get a much better job.

We also would have been very very held back if DH had to spend $800/month for 10 years paying his student loans. By working together, we paid them off in 21 months.

I love the flexibility of the communal pot. It lets us each make career decisions in a long term view instead of out of fear. It also helps us stay in the team framework instead of keeping score. I make more right now, but I doubt that will always be the case and I know that if we have kids someday and I want to cut back on hours, we will figure out how to adjust our finances to make that happen.

I agree that there are a lot of ways to make it work depending on your situation.

kwarden13

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Re: How do you and you SO split income?
« Reply #99 on: July 21, 2017, 04:23:55 PM »
A lot of people are also assuming that SO means spouse.  I thought SO meant "Significant Other."  There are valid reasons for not combining finances if you are cohabitating, but not married.  However, the issues of how income is allocated to expenses still exists.

We own a house together and are engaged. Not married yet though. Basically just don't want to have a wedding so not sure when we will actually get married.