Author Topic: Spouse A and Spouse B income differences  (Read 3406 times)

Imma

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Re: Spouse A and Spouse B income differences
« Reply #50 on: December 05, 2017, 08:36:05 AM »
Funny how these always go the same way.

Separate finances people: This is how we do it, and it works for us.

Joint finances people: This is how we do it, it works for us. Oh, and those separate-finances people are WRONG, don't understand marriage, have serious relationship issues, aren't a "team", and need to do things our way if they want any chance of a lasting marriage.

Like seriously, what's up with that? It happens like clockwork in these threads.

Interesting point. I suspect that the fact that keeping separate finances is a relatively new concept so the anecdotal longevity data just isnít there to really support belief in this concept.  It is also an arrangement that requires significant contingency planning which is rarely hinted at.  I am genuinely interested in knowing how it actually works.  How does separate finances work when a spouse loses their job and canít keep up with their portion of the mortgage or rent?  What about kids and maternity/paternity leave?  Does the working spouse pay the spouse on leave 1/2 day care fees?  What about sickness?  What about life insurance?  Single life term on your pension?  Separate finances in Canada would mean not taking tax breaks by taking out spousal RRPSís, which seems silly. Not to mention marital propery laws in many places would negate any attempt to keep separate finances during a divorce unless a prenup was created.

I don't think having separate finances is such a new invention. At least where I'm from (western Europe) prenuptial agreements have always been common among people with any kind of assets, ordinary farmers as well as the aristocracy.

I don't understand all your questions, but i'll try to answer a few of you questions.

Our joint expenses are very low, so if we had to take a pay cut it wouldn't be a problem. We each contribute about Ä350/400 a month to the joint account and this covers all our housing and food expenses (mortgage, water, electricity, heating, property taxes, insurance, internet + groceries). We haven't been in the situation where one of us wasn't able to pay this kind of money. In our country there are social security benefits if you are unemployed or too ill to work.
We don't have kids, but I imagine if we did we'd just pay the kid expenses from our joint account and maternity leave is paid in here.

I don't know how life insurance is a problem. I pay his and he pays mine like you're supposed to. I think mine is Ä5/month more expensive than his, but well, we're not greedy. As for our pension: I have arranged for my own pension and he is my sole heir, so if I die the money goes to him. He has a small company pension and I'm listed as his partner there so I'd receive the monthly payments if he died. In our country there are no tax breaks for married people. I'm not sure if I understand your question about not having a prenup. I'm not sure how you'd be able to have legally separate finances without having a prenup. Ours states that our own property is and remains our own and any joint property is only joint because we paid for it jointly.

2Birds1Stone

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Re: Spouse A and Spouse B income differences
« Reply #51 on: December 05, 2017, 10:14:27 AM »
Funny how these always go the same way.

Separate finances people: This is how we do it, and it works for us.

Joint finances people: This is how we do it, it works for us. Oh, and those separate-finances people are WRONG, don't understand marriage, have serious relationship issues, aren't a "team", and need to do things our way if they want any chance of a lasting marriage.

Like seriously, what's up with that? It happens like clockwork in these threads.

This has been my observation here over the past 3 years as well.

We are in the separate finances camp. When we moved into together, she was a student and I was an entry level retail employee. Over the past 7 years we have both made choices that have lead to our respective incomes. I make ~2X as much over that time due to aggressive career advancement and a lot of personal time spent learning professional career skills and industries to do so. I am also more frugal, as well as more conservative with my investments.

We split fixed expenses such as rent/utilities/groceries 50/50. Pay our own car insurance, cell, personal expenses from our own accounts. For join entertainment, travel, etc I pick up more of the tab because I want to. We are both happy with this system.

In terms of unemployment or sickness, we each have at least 12 months of living expenses in an EF, and if things were so bad that that was not enough, I would happily pick up the slack and vica versa.

Me being the more frugal one, my SO never feels the need to spend money to do things together. She's able to max out a Roth IRA, do 30% of salary to 401k, and still have enough leftover to spend $20k/yr. I can see how she would be in a place of tremendous disadvantage if I wanted to live in a big house, take expensive vacations, split expensive meals out, etc 50/50.

We also don't have kids, so it's not like she earns less money because she is doing more chores or raising the family, in turn allowing me to earn more.

I can see both sides of the argument, but to me it sounds like the "one pot is the only way" crowd is MUCH more narrow minded.
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mm1970

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Re: Spouse A and Spouse B income differences
« Reply #52 on: December 05, 2017, 10:15:21 AM »
If we were really keeping track weíd see that every meal I eat more than DW. Where would the counting stop.
Yeah that's my take on it too, as an uber-optimizer. My life would become a never-ending stream of financial modeling, trying to figure out the perfect way to split everything from rent to toothpaste. Much simpler to opt out of the whole thing.
This is funny because I used to read a food blog of a woman who was constantly counting calories.  She'd very carefully measure out her food and give her husband THE SAME AMOUNT, and he was a 6' tall skinny dude.  Because that was "fair".

PhilB

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Re: Spouse A and Spouse B income differences
« Reply #53 on: December 05, 2017, 10:27:48 AM »
Funny how these always go the same way.

Separate finances people: This is how we do it, and it works for us.

Joint finances people: This is how we do it, it works for us. Oh, and those separate-finances people are WRONG, don't understand marriage, have serious relationship issues, aren't a "team", and need to do things our way if they want any chance of a lasting marriage.

Like seriously, what's up with that? It happens like clockwork in these threads.

This has been my observation here over the past 3 years as well.

We are in the separate finances camp. When we moved into together, she was a student and I was an entry level retail employee. Over the past 7 years we have both made choices that have lead to our respective incomes. I make ~2X as much over that time due to aggressive career advancement and a lot of personal time spent learning professional career skills and industries to do so. I am also more frugal, as well as more conservative with my investments.

We split fixed expenses such as rent/utilities/groceries 50/50. Pay our own car insurance, cell, personal expenses from our own accounts. For join entertainment, travel, etc I pick up more of the tab because I want to. We are both happy with this system.

In terms of unemployment or sickness, we each have at least 12 months of living expenses in an EF, and if things were so bad that that was not enough, I would happily pick up the slack and vica versa.

Me being the more frugal one, my SO never feels the need to spend money to do things together. She's able to max out a Roth IRA, do 30% of salary to 401k, and still have enough leftover to spend $20k/yr. I can see how she would be in a place of tremendous disadvantage if I wanted to live in a big house, take expensive vacations, split expensive meals out, etc 50/50.

We also don't have kids, so it's not like she earns less money because she is doing more chores or raising the family, in turn allowing me to earn more.

I can see both sides of the argument, but to me it sounds like the "one pot is the only way" crowd is MUCH more narrow minded.
You sound like you have a relationship where it would work whichever way you arranged the finances which is great.  I think what winds up the 'one pot' crowd much more is when someone has an entrenched 'I earn more so I should be allowed to spend more / have more of a say'  attitude.  I'd say someone with that attitude is much more likely to believe in separate pots, but just because you have separate pots doesn't mean you have that kind of attitude.

Malkynn

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Re: Spouse A and Spouse B income differences
« Reply #54 on: December 05, 2017, 11:23:46 AM »
Ugh.

I hate this topic because there really is no right answer.
What works for one couple is what works for one couple and has no relevance to any other couple.
In our situation, I make a lot more money, but I was in school for over a decade, brought a lot of debt to the relationship, and have a highly variable income, so therefore donít actually contribute much to our shared living expenses because we try to maintain everything on the one predictable income.

What do we do?
All of our accounts are separate and we are responsible for totally separate bills, and have totally separate investments. It happened this way because we got together as fully financially established professionals and thereís no benefit to us trying to mash our accounts together at this time.

That said, I would still say that we have combined finances, at least philosophically, because we consider it all a shared pot. We are very much aligned in terms of our financial goals, so weíre unlikely to have much disagreement about what we want to spend on.

Generally, I make more spending decisions and feel less obligated to clear spending before doing it, because finances are kind of my territory and Iím trusted to spend in line with our shared values. Otherwise we generally consult each other before spending over $100 on anything. We donít have a specific discretionary amount, we discuss and agree on all spending, even if itís sometimes after the fact.

Itís a system that works for us because it works for us, it would be disastrous for some other couples.

This really is a marriage dynamic question, not a financial one, and there really are no rules as to how it should be handled.

FIRE Artist

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Re: Spouse A and Spouse B income differences
« Reply #55 on: December 05, 2017, 12:00:51 PM »

I don't think having separate finances is such a new invention. At least where I'm from (western Europe) prenuptial agreements have always been common among people with any kind of assets, ordinary farmers as well as the aristocracy.



It may not be new for people who have inherited wealth, but for joe and jane average middle class worker, it really isn't any older than two income families, which only gained heavy traction post sexual revolution, and even then, salary discrepencies between partners has been huge due to gender pay gaps, expectation of women taking career gaps to raise kids etc., so the economics of separate finances didn't really work.  Heck, it used to be women couldn't get credit cards without their husband's consent, having their own career or not. 

It sounds like for many young couples who are doing the separate finance thing today, they tend to have similar earning potential and therefore things are pretty much equal anyway, and it also sounds like these couples tend to not have children as readily so division of labour is not a concern.  (I am however surprised by the person who suggested that a career break for child rearing would be something the person who took the break would be expected to save up for.  Sounds a little naive to me).

I have always agreed that older couples who have already earned and saved the bulk of their life assets independently should have pre-nups and keep most assets separate, especially if either partner comes into the relationship with children (adult or dependent age) from a previous marriage, the pre-nup protects their future inheritance as well as ensuring their new partner can maintain their shared living standard in old age after a partner dies.  I know as a middle age SINK, who would hope to meet a partner to share my retirement with, I wouldn't likely enter into a partnership without a pre-nup. 


BTDretire

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Re: Spouse A and Spouse B income differences
« Reply #56 on: December 05, 2017, 12:50:14 PM »
Just consider yourself lucky to have support from two spouses!
Love them the same no matter what income the have.

OurTown

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Re: Spouse A and Spouse B income differences
« Reply #57 on: December 05, 2017, 03:12:03 PM »
We do a quasi-separate setup with the expenses divided up pro rata.  We also had really, really good luck with a cash allowance, like real paper money.  Since I don't spend as much I would often give her what I had left over so she could get something nice.  A gift, my choice.  Gifts are an act of kindness. 

We kind of fell of the cash allowance wagon over time but I think we are going to start doing it again in the new year.

stoaX

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Re: Spouse A and Spouse B income differences
« Reply #58 on: December 05, 2017, 03:21:59 PM »
Just consider yourself lucky to have support from two spouses!
Love them the same no matter what income they have.

Perfect advice.  Thanks for my laugh for the day!

Slinky

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Re: Spouse A and Spouse B income differences
« Reply #59 on: December 05, 2017, 04:24:23 PM »
Funny how these always go the same way.

Separate finances people: This is how we do it, and it works for us.

Joint finances people: This is how we do it, it works for us. Oh, and those separate-finances people are WRONG, don't understand marriage, have serious relationship issues, aren't a "team", and need to do things our way if they want any chance of a lasting marriage.

Like seriously, what's up with that? It happens like clockwork in these threads.

I don't get why people get so hung up on logistics. I understand that money can bring out a whole host of issues that have nothing to do with money itself, but if your marriage is good, it really doesn't matter which way you do things. I have my own accounts. What of it? I didn't stop being my own person when I got married, I joined a team. I manage myself and my own stuff. He manages his. We work together on the mutual stuff. Ideally, we split things 50/50, but in circumstances where there has been a big income disparity we talk it over and agree on a different plan. If something unexpected happens, you back each other up. You support each other and help each other achieve your goals and dreams. You put each other first. Marriage is marriage. Bookkeeping is just paperwork.

Imma

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Re: Spouse A and Spouse B income differences
« Reply #60 on: December 05, 2017, 04:47:11 PM »

I don't think having separate finances is such a new invention. At least where I'm from (western Europe) prenuptial agreements have always been common among people with any kind of assets, ordinary farmers as well as the aristocracy.



It may not be new for people who have inherited wealth, but for joe and jane average middle class worker, it really isn't any older than two income families, which only gained heavy traction post sexual revolution, and even then, salary discrepencies between partners has been huge due to gender pay gaps, expectation of women taking career gaps to raise kids etc., so the economics of separate finances didn't really work.  Heck, it used to be women couldn't get credit cards without their husband's consent, having their own career or not. 

It sounds like for many young couples who are doing the separate finance thing today, they tend to have similar earning potential and therefore things are pretty much equal anyway, and it also sounds like these couples tend to not have children as readily so division of labour is not a concern.  (I am however surprised by the person who suggested that a career break for child rearing would be something the person who took the break would be expected to save up for.  Sounds a little naive to   


I don't know about other places, but in the area my family were from (poor farmers who did own their own land) it was traditional to have a prenup. Generally fathers would gift their daughters some land when they married and that land was supposed to go back to her family if she died without issue. It would normally pass to her children and not her widower, because he was no blood relative and also expected to remarry. Sons would be able to work outside the home and earn their own money to start a family, daughters were given this as a reward for their work at home. It's also quite common to keep any inheritances out of the joint assets. Maybe this tradition is why prenuptial agreements are common and accepted in this country.

It is true that my s/o and I are financial equals. I don't think keeping incomes separate works when one spouse is really rich and the other one is poor, but I think joint finances will not completely solve all the problems caused by that huge income difference. We both have the same career prospects. We have the same life goals. I did come into the relationship with more savings and I gave him an (interest free) loan so we could both contribute to our home equally. We did write that down in case of divorce, but I don't really care about that money (5k) as long as we're together. I generally save/invests more, he invests in his business, I think we talk about money a lot more than many couples that have joint finances  We don't have kids for medical reasons, but we'd pay the child costs 50/50 out of our joint account. We keep stuff separated but we're not penny pinchers.

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Re: Spouse A and Spouse B income differences
« Reply #61 on: December 05, 2017, 04:56:20 PM »
I've always earned ~50% more than my spouse, and that number was more like 2x when he was paying child support. But we're equally frugal, and most of the things we want to do or buy together are things we can both afford. I do buy more clothes than him, and spend on some activities that he's not interested in, but that's never an issue since it's my money. We have a joint checking account that we contribute to equally for household bills. All other accounts are separate, and we don't monitor or comment each other's expenses.