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Ask HN: How do you and your spouse handle big income differences?

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Re: Ask HN: How do you and your spouse handle big income differences?

#171

Post by jdc0589 »

dougmwne wrote: post #149

My partner and I have been together 15 years. We have always had separate finances and split expenses evenly. We always lived well below our means and never spend more on housing than the person with the lower salary could afford. We have gone back and forth a few times who was making more, anywhere from 2x to one person not having a job for awhile. We are free to spend our own money as we see fit. For any shared pur…

This is pretty similar to my situation. Unmarried partner of 7 years, made similar income for a while, but I'm ~2x now.

The number one reason it works for us is we also both live well below our means (house payment is ~4% of combined income, low COL area & bought 8 years ago) and are generally frugal people (think thrift stores, buying used stuff when its logical, mostly eat at home, etc...). If one of us was extravagant constantly and the other wasn't it would probably cause issues in general. We are 100% transparent with each other about how much we are putting away in savings.

We split everything evenly by default via a shared Credit Card and bank account (very low running balance in that bank): eating out, vacations, etc... I own the house from before we met, so that's not split evenly out of fairness since I'm building equity and she isn't technically. So, I pay 70% of the cost (100% of maintenance costs) and build equity, and she gets to save a ton on housing.

The separate finances has become an issue exactly one time, recently, and we have what we think is a pretty fair solution. We are ready to live somewhere we both really like, in a nicer (but small) house with more privacy. We are still looking at stuff below our means, but it will be ~4x current housing costs. The plan is if we find something we love on the cheaper side, we just split it evenly, the end. If we find something perfect that's a bit more of a stretch we will start splitting it unevenly in both down-payment and mortgage payments (60/40 or something) and will have a separate legal agreement outside of the title stating the ownership split.

The summary is: it works for us because other things about each of us keeps us from spending a ton, so the income gap is largely irrelevant. Personality wise, I'm the one that will go extravagant on something every now and then so it works out (think: replacing a broken dishwasher with a really nice one that isn't on sale, not "15k vacation")

Re: Ask HN: How do you and your spouse handle big income differences?

#172

Post by csomar »

No one can give you advice on this. We miss a lot of the details.

> and she was worried that I was taking advantage of the situation

We don't know how serious these events were.

> In the end, we decided that the buyout money would go to retirement and not be touched.

Is this a shared account or her account.

> she would put in a rainy day fund for home improvements or traveling etc.

Is that her fund or a shared fund?

> This arrangement kind of worked until it came time to use that rainy day funds and she started feeling that we were spending her money.

Is that a surgery or a buy a boat situation?

Re: Ask HN: How do you and your spouse handle big income differences?

#173

Post by schwartzworld »

ericmay wrote: post #153
futureshock wrote: post #151

Earlier quoted context omitted.

I am bristling a bit at the suggestion that split finances lead to divorce. I honestly don’t think it changes anything fundamental. You either agree on your priorities and approach to life and finances, and therefore spend your money in a roughly compatible way automatically, or you don’t. Keeping money in one pot does not automatically align or keep you aligned. It’s either a problem or it’s not. Doesn’t matter wher…

I bet split finances is a risk factor leading toward a divorce though. This is probably a higher risk factor if your incomes significantly diverge. If one spouse is making 2.5x the other one and they’re splitting their budget (if they budget… lack of one is probably another risk factor) like college roommates that screams “problem” to me. One spouse is basically living a whole different life. It just isn’t going to w…

Having split finances doesn't necessarily mean going Dutch on everything. When my wife made more than me, she carried more of the bills. Now that I earn more, I carry a bigger percentage of the necessities. We're still a team, but we have our own bank accounts.

Re: Ask HN: How do you and your spouse handle big income differences?

#174

Post by royaltjames »

futureshock wrote: post #151
downut wrote: post #46

Earlier quoted context omitted.

42 years in and it is still one pot of money. My wife makes the money now, and has for 15 years. But we have swapped a half dozen times over the years. For instance when the child was born and she took 3 years off, or I got a relocation and she took a few years off. I can cook and clean and do all the work around the house and whatever meta overhead needs to be done, so it has worked out fine. Right now she is sick o…

I am bristling a bit at the suggestion that split finances lead to divorce. I honestly don’t think it changes anything fundamental. You either agree on your priorities and approach to life and finances, and therefore spend your money in a roughly compatible way automatically, or you don’t. Keeping money in one pot does not automatically align or keep you aligned. It’s either a problem or it’s not. Doesn’t matter wher…

Split finances leading to divorce sounds more like a symptom of incompatibility rather than causation.

Staggering that I have newlywed friends who still haven't - even after 4 years - decided on kids or not, finances, everything big. AND NOW WE WAIT...

Re: Ask HN: How do you and your spouse handle big income differences?

#175

Post by ericmay »

schwartzworld wrote: post #173
ericmay wrote: post #153

Earlier quoted context omitted.

I bet split finances is a risk factor leading toward a divorce though. This is probably a higher risk factor if your incomes significantly diverge. If one spouse is making 2.5x the other one and they’re splitting their budget (if they budget… lack of one is probably another risk factor) like college roommates that screams “problem” to me. One spouse is basically living a whole different life. It just isn’t going to w…

Having split finances doesn't necessarily mean going Dutch on everything. When my wife made more than me, she carried more of the bills. Now that I earn more, I carry a bigger percentage of the necessities. We're still a team, but we have our own bank accounts.

I interpreted split finances as each person pays "their half". If your spouse who presumably makes more than you (not you specifically) pays a lot more and backstops purchases, having your own bank accounts is more of a habit than a practical necessity right? We used to have our own bank accounts too, but then I or my wife would transfer money to one another and we eventually just asked "what's the point of that?" if no matter what happens we're sharing our expenses... Obviously that's what works for us and doesn't apply to everyone, but just wanted to shed some context on what I thought split finances meant.

Re: Ask HN: How do you and your spouse handle big income differences?

#176

Post by throwaway23236 »

As others have said, it's our money. We work together to decide savings plans, goals, etc.

I am the sole income earner between the both of us and we just communicate what to spend money on. We each have our own accounts, but almost all of the money goes into the joint checking and savings accounts for us to use.

Re: Ask HN: How do you and your spouse handle big income differences?

#177

Post by professoretc »

readthenotes1 wrote: post #80
downut wrote: post #46

Earlier quoted context omitted.

42 years in and it is still one pot of money. My wife makes the money now, and has for 15 years. But we have swapped a half dozen times over the years. For instance when the child was born and she took 3 years off, or I got a relocation and she took a few years off. I can cook and clean and do all the work around the house and whatever meta overhead needs to be done, so it has worked out fine. Right now she is sick o…

We split the money because my now ex would have squandered it all otherwise

That's the missing ingredient that can make merged finances work: both partners have to have the same respect for money and not spending it unnecessarily. My wife grew up in a wealthy household where the attitude was something like "Who cares if you break/lose it, you can always buy a new one/pay someone to fix it." Whereas my family was fairly frugal, always tried to make do with what we had before buying anything, etc. This has caused some friction since she's been staying home while I've been working.

Re: Ask HN: How do you and your spouse handle big income differences?

#178

Post by frumper »

agent008t wrote: post #162
silisili wrote: post #88

When you are married, there is no 'her money' or 'your money'. There is just your collective money. I'd take such squabbling as a huge, waving, in your face red flag. Evaluate it carefully. Question why one would want money they don't want the other touching. Is she planning to live large while you beg for money under an overpass? Or is she thinking of a future without you? Because those are pretty much the two scena…

Suppose your wife did get a job. Would the money she earns also go into the same collective pot? Would that not be somewhat demotivating / mess up the incentives for her? Also, it seems in your kind of a scenario it would be difficult to avoid the 'unlimited vacation policy'-type problem, where ultimately it is still at the final discretion of one party. So realistically, there is still some portion of the pot that s…

Everyones money goes into the pot, that's what it's there for. The problems you're describing aren't a shared financial pot though. You're describing the problems when one person has control and allows the other to have access. Both people should have control and the ability to do everything, that's the whole point of collective. Good communication and trust avoid problems.

Re: Ask HN: How do you and your spouse handle big income differences?

#179

Post by silisili »

agent008t wrote: post #162
silisili wrote: post #88

When you are married, there is no 'her money' or 'your money'. There is just your collective money. I'd take such squabbling as a huge, waving, in your face red flag. Evaluate it carefully. Question why one would want money they don't want the other touching. Is she planning to live large while you beg for money under an overpass? Or is she thinking of a future without you? Because those are pretty much the two scena…

Suppose your wife did get a job. Would the money she earns also go into the same collective pot? Would that not be somewhat demotivating / mess up the incentives for her? Also, it seems in your kind of a scenario it would be difficult to avoid the 'unlimited vacation policy'-type problem, where ultimately it is still at the final discretion of one party. So realistically, there is still some portion of the pot that s…

You make a lot of good points.

You're right about demotivating/incentives...it's what in the end kept her from working. She wanted to work part time while raising the kid...we sat down and talked cost of another car, marginal tax rates, etc...and decided we'd lose a ton of money by going that route.

It really depends on your relationship. If I am controlling the money, giving allowances, then yeah that would be bad. I'm not, we both have credit cards we are free to use and is what we pay for everything with. For any large purchases, we discuss together before touching cash.

There are a lot of different dynamics between people and how they set up finances. Doing allowances for both parties is fine, if that's what you prefer. But realize it's just that - personal allowances. In the end, you both own half the total pot, no matter how you pretend to divy it up.

Re: Ask HN: How do you and your spouse handle big income differences?

#180

Post by strikelaserclaw »

mooreds wrote: post #72
matthewwolfe wrote: post #37

It’s weird to be married and imagine a scenario where my wife and I are arguing hers vs mine. I make approximately 4x more than my wife and we treat all money as shared. Bills are paid from a shared checking and if she wants to buy something she’s more than welcome to. I think one of the most important aspects of a healthy marriage is being financially aligned. My wife and I are both similarly frugal so it works out…

> I think one of the most important aspects of a healthy marriage is being financially aligned. This! I will say I don't think that this aspect is static, just like other aspects of a healthy marriage. You have to keep working to ensure you are both aiming at the same goals. > And she elevates me in so many other ways. Finances is just one piece of a big pie that is marriage. Yes! Money is the most easily divisible,…

same, i actually earn much more since i married her since she evens me out and keeps me grounded and happy.
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