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My girlfriend and I are thinking about marriage and having children and I have spent the last days trying to figure out concepts how to handle finances from that point forward. I believe that this is relevant to most people in such a situation not only for us personally.

Our situation is as follows:

  • I make about 3200€ net per month (45h) and my girlfriend makes 2200€ net per month (38,5h). She has a Master's in Biology, I have a PhD in Computer Science.
  • Currently we split all common costs in half (rent, food, gas etc.).
  • Each of us spends about 1200-1400€ per month (including the aforementioned common costs).
  • Each child will cost about 300€ per month (considering that we also get "Kindergeld").
  • After parental leave my girlfriend will likely work part time, making about 1100€ (so not even covering her own costs), while will make 3800€ due to different taxation.
  • Both of us feel very strongly about being financially independent and if possible we both don't want to take money from each other.
  • The ultimate goal for both of us is to work full time, but surely this will not be possible at first.

Now I have been trying to figure out how to split the money that we both earn. From what I can see there are several concepts but none of them really seems ideal to me.

  1. Determine the income ratio (currently 1.73, later 3.2) and pay bills according to this ratio. (She will pay less but also have much less money left over for savings.)
  2. Put all the money in a big pot, pay the bills, and split the rest. (I would basically be giving her more money than necessary to pay the bills. Seems kind of unfair since I have invested a lot more time and money in my education and also have a more stressful job.)
  3. I pay all running costs and she gets to keep whatever she makes. (Unfair because she would actually have much more money left over than me.)
  4. Determine the income ratio before kinds with respect to the same hours (i.e. what would each if make if we worked 40h). Then distribute the income after kids so that this ratio is kept and a) pay bills 50:50 or b) pay bills according to resulting ratio (about 60:40). This seems to be the fairest in my opinion but it drastically lowers the motivation for both of us the increase our own income, while it increases the motivation for each of us to have the partner’s income increased. So this could lead to conflicts.
  5. Pay everything 50:50. (Not possible due to low income in part time.)
  6. We both pay for our own costs and split the costs for the children according to the ratio. (Not possible due to low part time income.)

So my question is: Are there any guides or studies on how to proceed in such a situation? I am well aware that there are different opinions on this subject but I am interested in actual concepts and also studies on how such concepts work out in the real world.

Edit: We are living in Germany, so we can get a combined of 14 months "paid" parental leave ("paid" because only a fraction of the actual income is paid). Each month she would receive about 1450€ and I would get 1800€. The cost for child care varies greatly, so I have no good estimate for that yet.

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    In the USA, in some states, by law, if a couple was to get divorce, property and assets are divided in half unless there was a prenuptial agreement. So even the law pools everything and divides it in half upon divorce. I just have to say that all such couples that I have seen personally, friends or family behaving so, either stop the hair-splitting quickly, or always eventually deteriorate. I really hope both of you the best. – Fixed Point Dec 13 '16 at 21:00
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    Since maternal mortality from childbirth is at least perhaps two or three (or more) orders of magnitude greater than paternal mortality, have you calculated how much you'll compensate your wife for it? Looks like you've thought about a lot of other things. – user2338816 Dec 14 '16 at 12:37
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    Because looking after children is not work ? If you really want to assign a value to this, pay your wife as much as you would pay a nanny (I had a nanny for years, because I like my work and I earn enough to make it worth it, but it ain't cheap.) Then compare incomes ... – Marianne013 Dec 14 '16 at 17:10
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    I think you might be surprised by how much it costs to raise children, especially if you intend to continue working full-time (which means paying for childcare). – user48477 Dec 14 '16 at 18:58
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    Sounds like you don't quite grasp the concept of marriage! If you are not willing to simply share everything as a family unit, why are you getting married? – Lightness Races in Orbit Dec 19 '16 at 12:43

17 Answers 17

126

My suggestion would be that you're looking at this the wrong way, though for good reasons. Once you are a family, you should - and, in most cases I've seen, will - think of things differently than you do now.

Right now, your post above is written from a selfish perspective. Not to be insulting, and not implying selfish is a bad thing - I don't mean it negatively. But it is how you're defining this problem: from a self-interested, selfish point of view. "Fair" and "unfair" only have meaning from this point of view; something can only be unfair to you if you come from a self-centered viewpoint.

Try to think of this from a family-centric viewpoint, and from your significant other's point of view. You're absolutely right to want both of you to be independent financially as far as is possible; but think about what that means from all three points of view (your family's, yours, and hers)?

Exactly what it means will depend on the two of you separately and together, but I would encourage you to start with a few basics that make it likely you'll find a common ground:

  1. First of all, ensure your significant other has a retirement account of her own that is funded as well as yours is. This will both make life easier if you split up, and give her a safety net if something happens to you than if you have all of the retirement savings. I don't know how your country manages pensions or retirement accounts, but figure out how to get her into something that is as close to equal to yours as possible.

  2. Make sure both of you have similar quality credit histories. You should both have credit cards in your own names (or be true joint owners of the accounts, not just authorized users, where that is possible), and both be on the mortgage/etc. when possible. This is a common issue for women whose spouse dies young and who have no credit history. (Thanks @KateGregory for reminding me on this one)

  3. Beyond that, work out how much your budget allows for in spending money for the two of you, and split that equally. This spending money (i.e., "fun money" or money you can do whatever you like with) is what is fundamentally important in terms of financial independence: if you control most of the extra money, then you're the one who ultimately has control over much (vacations, eating out, etc.) and things will be strained. This money should be equal - whether it is literally apportioned directly (each of you has 200 a month in an account) or simply budgeted for with a common account is up to you, whatever works best for your personal habits; separate accounts works well for many here to keep things honest.

  4. When that money is accounted for, whatever it is, split the rest of the bills up so that she pays some of them from her income. If she wants to be independent, some of that is being in the habit of paying bills on time. One of you paying all of the bills is not optimal since it means the other will not build good habits. For example, my wife pays the warehouse club credit card and the cell phone bill, while I pay the gas/electric utilities.

  5. Whatever doesn't go to spending money and doesn't go to the bills she's personally responsible for or you're responsible for (from your paycheck) should go to a joint account. That joint account should pay the larger bills - mortgage/rent, in particular - and common household expenses, and both of you should have visibility on it. For example, our mortgage, day-care costs, major credit card (which includes most of our groceries and other household expenses) come from that joint account.


This kind of system, where you each have equal money to spend and each have some household responsibilities, seems the most reasonable to me: it incurs the least friction over money, assuming everyone sticks to their budgeted amounts, and prevents one party from being able to hold power over another. It's a system that seems likely to be best for the family as a unit. It's not "fair" from a self-centered point of view, but is quite fair from a family-centered point of view, and that is the right point of view when you are a family, in my opinion.

I'll emphasize here also that it is important that no one party hold the power, and this is set up to avoid that, but it's also important that you not use your earning power as a major arguing point in this system. You're not "funding her lifestyle" or anything like that: you're supporting your family, just as she is. If she were earning more than you, would you cut your hours and stay at home?

Trick question, as it happens; regardless of your answer to that question, you're still at the same point: both of you are doing the thing you're best suited for (or, the thing you prefer). You're both supporting the family, just in different ways, and suggesting that your contribution is more valuable than hers is a great way to head down the road to divorce: it's also just plain incorrect. My wife and I are in almost the identical situation - 2 kids, she works part time in the biological sciences while spending plenty of time with the kids, I'm a programmer outearning her significantly - and I can tell you that I'd more than happily switch roles if she were the bread earner, and would feel just as satisfied if not more doing so. And, I can imagine myself in that position, so I can also imagine how I'd feel in that position as far as how I value my contribution.

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    This is exactly what we do, with one addition: each month, we both deposit a fixed sum (€100) on a personal account. The sum is equal for both of us, even though the incomes are not. This way, we both have some "free spending money" - although it's mostly used to buy gifts for the other person so they don't see what/where was bought before or how much it cost afterwards. When we needed money to build a house, we both "gave back" an equal part of this personal sum. – Konerak Dec 14 '16 at 9:00
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    We use the term "pocket money" for the personal monthly bit. Over 15+ years this has worked well, and one thing we've found is that we're progressively less bothered about what comes from that pot (e.g. in theory clothes are "pocket money" purchases, but if one of us picks something minor up when shopping for joint purchases it's not worth worrying about). More important is keeping on top of your total finances so that you don't overspend – Chris H Dec 14 '16 at 10:21
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    In additon, this actually is fair from a selfish point of view, iff you also split the work equally (which you really need to do) and value all types of work equally (which, while not common on the market, should really be done for families). That is, all work. That includes household stuff, kids stuff as well as working for money. If one stays at home, that one earns less, but doesn't work less and should thus get the same amount of free personal spending money. – Nobody Dec 14 '16 at 14:31
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    One thing that struck me from OP: He is thinking like an engineer - everything has fixed value or cost (300/month/kid?) and won't vary. Guess what - none of my three kids costs the same amount per month, because they are at different stages of life, have different interests, needs, and problems. Some of my major monthly bills are relatively stable, but some vary wildly over the course of a year. – GalacticCowboy Dec 14 '16 at 15:38
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    @Joe: I have accepted you answer because it makes the most sense to me and because you managed to build the bridge from my point of you to what seems to be the generally accepted convention. Thank you! – Chris Dec 16 '16 at 7:28
82

You remind me a lot of myself as I was thinking about marriage. Luckily for me, my wife was much smarter about all this than I was. Hopefully, I can pass along some of her wisdom.

Both of us feel very strongly about being financially independent and if possible we both don't want to take money from each other.

In marriage, there is no more financial independence. Do not think in those terms. Life can throw so many curve balls that you will regret it. Imagine sitting down with your new bride and running through the math. She is to contribute $X to the family each month and you are to contribute $Y. Then next thing you know, 6 months later, she has cancer and has to undergo expensive and debilitating treatment. There is no way she can contribute her $X anymore. You tell her that is okay and that you understand, but the pressure weighs down on her every day because she feels like she is not meeting your expectations.

Or alternatively, everything goes great with your $X, $Y plan. A few years down the road your wife is pregnant, so you revisit the plan, readjust, etc. Everything seems great. When your child is born, however, the baby has a severe physical or mental handicap. You and your wife decide that she will quit her job to raise your beautiful child. But, the whole time, in the back of her mind she can't get out of her head that she is no longer financially independent and not living up to your expectations. These stresses are not what you want in your marriage.

Here is what we do in my family. Hopefully, some of this will be helpful to you.

  1. Every year my wife and I sit down and determine what our financial goals are for the year. How much do we want to be putting in retirement? How much do we want to give to charity? Do we want to take any family vacations? We set goals together on what we want to achieve with our money. There is no my money or her money, just ours. Doesn't matter where it comes from.

  2. At the beginning of every month, we create a budget in a spreadsheet. It has categories like (food, mortgage or rent, transportation, clothing, utilities) and we put down how much we expect to spend on each of those. It also has categories for entertainment, retirement, charity, cell phones, internet, and so on. Again, we put down how much we expect to spend on each of those. In the spreadsheet, we also track how much income we expect that month and our totals (income minus expenses). If that value is positive, we determine what to do with the remainder. Maybe we save some for a rainy day or for car repairs. Maybe we treat ourselves to an extra fancy dinner. The point is, every dollar should be accounted for. If she wants to go to dinner with some friends, we put that in the budget. If I want a new video game, we put that in the budget.

  3. Once a week, we take all our receipts and tally up where we spent our money. We then see how we are doing on our budget. Maybe we were a little high in one category and lower than expected in another. We adjust. We are flexible. But, we go over our finances often to make sure we are achieving our goals.

Some specific goals I'd recommend that the two of you consider in your first such yearly meeting:

  1. If you are in debt, figure out how you will get out of debt.
  2. Save an initial emergency/rainy-day fund. This doesn't have to be big (ours was $1000 USD).
  3. Once you are out of debt, make that emergency fund grow. Your target should be 3-6 months of expenses. Since you are budgeting, you will know exactly what your expenses are in a month, so multiply by 3-6 and you have your target.

You get out of life what you put into it, and you will get out of your finances what the two of you put into them. By being on the same page, your marriage will be much happier. Money/finances are one of the top causes of divorce. If you two are working together on this, you are much more likely to succeed.

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    Just a suggestion about your monthly routine, consider making savings a prioritized category. Don't do savings as an afterthought ("we determine what to do with the remainder"); rather, make sure to always set money aside in savings before paying other bills. (Pay yourself first.) In this case, if you have money left at the end of the month, you don't have to feel the least bit guilty about spending it, or you could put some extra into savings. That said, your budget almost sounds too detailed. Consider just having a fixed "fun money" category for each of you, to spend as you please. – a CVn Dec 13 '16 at 20:06
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    "we take all our receipts and tally up where we spent our money" Oh my god. You really should try a banking app such as mint. I think it would save you a lot of hassle. – Sarumanatee Dec 14 '16 at 16:43
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    +1 There is no my money or her money, just ours. Having four children and being the only one providing an income I can assure you that were we to split money based on hours of work, I'd get the lesser part. – Lieven Keersmaekers Dec 14 '16 at 17:59
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    @Sarumanatee, I'm a computer security professional. I know too much about computers to trust those sorts of apps :) – mikeazo Dec 15 '16 at 22:26
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    @LaurencePayne, you completely missed my point. I never said it would bankrupt them. – mikeazo Dec 18 '16 at 18:17
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I started out thinking like you but I quickly realised this was a bad approach.

You are a team, aren't you? Are you equals or is one of you an inferior of lower value? I think you'll generate more shared happiness by acting as a team of equals.

I'd pool your resources and share them as equals. I'd open a joint account and pay both your incomes directly into it. I'd pay all household bills from this. If you feel the need, have separate personal savings accounts paid into (equally) from the joint account.

Major assets should be in joint names. This usually means the house.

In my experience, it is a good idea to each have a small amount of individual savings that you jointly agree each can spend without consulting the other, even if the other thinks it is a shocking waste of money. However, spending of joint savings should only be by mutual agreement.

I would stop worrying about who is bringing in the most income. Are you planning to gestate your children? How much is that worth? - My advice is to put all this aside, stop trying to track who adds what value to the joint venture and make it a partnership of equals where each contributes whatever they can.

Suppose you fell ill and were unable to earn. Should you wife then retain all her income and keep you in poverty? I really believe life is simpler and happier without adding complex and stressful financial issues to the relationship.

Of course, everyone is different. The main thing is to agree this between the two of you and be open to change and compromise.

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    I just saw this answer as well as its deletion. Too bad, it was really a great answer. – JoeTaxpayer Dec 13 '16 at 15:09
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    @JoeTaxpayer: OK I'll undelete it. I worry that it consists mostly of my personal opinion rather than the "guides or studies" the OP sought. – RedGrittyBrick Dec 13 '16 at 15:14
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    A very good anwser. so that is how we are handling it right now. Everyone is keeping a small fixed value (for gifts, hobby etc.) from his earnings and everything else is moving on our joint account. In our marriage we had never an argument about money that way. – Wa Kai Dec 13 '16 at 15:48
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    @RedGrittyBrick If this answer consists mostly personal opinion (which I think it does), it is because that's really what the question is. These types of questions are maybe not well suited to the site, but personally (ironic, I know), I think this particular issue is important and relevant enough to be allowed anyway. – Grade 'Eh' Bacon Dec 13 '16 at 16:08
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    That assumes 2 broke people with no obligations. Seriously. If one of the partners has significant assets, giving them up is not sensible. German law, for example, defines the standard case not as a split of assets, but an equal split of GAINS during a marriage. – TomTom Dec 14 '16 at 16:40
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I haven't seen this addressed anywhere else, so I'll make a small answer to add on to the great ones already here.

Money isn't the only way a person can contribute to a relationship. Time and effort are valuable contributions. Who runs the household? Who cooks, cleans, does laundry? How will you share these duties?

My husband and I have a couple of rules. One of which is that we don't keep count. "I did dishes, so you do laundry". "I made coffee last time, so now it's your turn". "I paid this, so you pay that". That's not allowed.

I happen to make ~4x as much as my husband, but I work 4x the hours (he's part time at the moment). So, he does the dishes, he cooks, he does laundry, he runs the household. Do I value him less? No! I value him more, because he is part of the team, and he feeds me coffee while I work (we have our own business).

Even though I make so much more than him, we still split everything down the middle. Because his contribution to this relationship, to this household, is so much more than just money. And I value him. I value his contribution.

At the end of the day, you are a team - and if you split hairs over finances, you'll find yourself splitting hairs over everything.

  • Community Property states bake this into divorce laws by presuming that staying home and cooking, cleaning, doing laundry and raising children are equally worth going out and earning money. – RonJohn Nov 24 '17 at 21:14
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Now I have been trying to figure out how to split the money that we both earn. From what I can see there are several concepts but none of them really seems ideal to me.

There is nothing fair or unfair in such arrangements. It is what you both agree. You can try and make this as scientific as possible. But then there is no golden rule.

For example, your girlfriend makes 2200 now and due to child, she is making 1100. The child is both of your responsibility; so you need to compensate half of her salary loss. 550 and she takes the other half. If you hire a nanny to look after you kinds, it would say cost you 500. But your girlfriend is doing that job, so she should get additional 500 from common pot. Plus due to loss of few years in looking after the children, she has a lost opportunity in career growth. i.e. she may indefinitely make less money than she can...

So one gets into all kinds of theories and analysis and any arrangements will have some or the other gaps.

So my suggestion, don't get too scientific about it. Just talk it out as to what you both feel how this should be and arrive it. It is something every individual has to agree.

It also make sense to have the large assets [or assets that matter], like house, car etc in clear title and who gets what in case you decide to separate. Other should be incidental.

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    Yes, communication here is key. Looking for outside validation is fine, but the final verdict on what is 'fair' is defined only by you and your spouse. – Grade 'Eh' Bacon Dec 13 '16 at 16:09
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I started this off as a comment to Joe's answer, but it got rather messy in that form so I'll just post it as a separate answer instead. I suggest that you read Joe's answer first.

I believe you are overthinking this.

First, you really should be discussing the matter with your girlfriend. We can provide suggestions, but only the two of you can decide what feels right for the two of you. Strangers on the Internet can never have as complete a picture of your financial situations, your plans, and your personalities, as the two of you together.

That said, here's a starting point that I would use as input to such a discussion:

  1. All income is created equal. In marrying and having children, even more so than merely living together, you become a team. Like in sports, just because one team member doesn't do the same kind of work as another doesn't mean they aren't contributing to the team's success. Stop thinking about what's fair for you personally or even your girlfriend personally, and start thinking about what is fair for you as a team. As a further consequence of this, things like parental leave or reduced work hours is something you should discuss together, including the financial implications.
  2. Decide up front on an amount of personal money. This is for each of you to spend as you please. Some of it might go into savings (both short term and long term) and another portion may be allocated as "fun money", hobby expenses, personal trips, and so on. This money is for each of you to decide how to spend, without having to account for it to the other. You can discuss with each other how you spend it, as long as it is not judgmental. I would suggest that you allocate an equal amount for both of you and make sure it ends up in personal accounts.
  3. Everything else goes into a joint account, shared between both of you. Decide up front how to handle temporarily reduced (sick days, etc.) or increased (bonus payments, etc.) income; does the person who earned it get to keep any extra money as part of their personal allotment, or does it go into the joint pile? Figure out the mechanics of how to get the correct amount into the joint account.
  4. All bills that you both benefit from are paid out of the joint account, with both of you sitting together doing the handywork of paying them. This includes utilities, living costs, food, child care, vacations together, car expenses (assuming that you both use the car, assuming of course that you have one), etc. Doing it together ensures transparency, as well as that (hopefully) either one of you can do it should one of you be unable to for any reason.
  5. Bills for things that benefit only one of you are paid out of the personal money. That's the "fun money" part. This could be magazine subscriptions that only one of you read, club memberships, cell phones, etc. Make sure to make reasonable allocations for this as well as savings when deciding on how much to allocate to personal money.
  6. Decide together what to do with whatever remains in the joint account at the end of the month. It could go into joint savings, or be split up between you, or be used to pay down debt, or whatever else you both feel is reasonable, as long as you decide together what to do with it.

As you can see, a common theme to all of this is transparency and communication. There is a reason for this: a marriage without proper communication can never work out well in the long term. I don't know about Germany specifically, but disagreements about money tends to be a major reason in couples splitting up. By setting your lives up for transparency in money matters from the beginning, you significantly reduce the risk of this happening to you.

Scott Hanselman discusses a very similar way of doing things, but phrases it differently, in Relationship Hacks: An Allowance System for Adults.

10

I won't answer in a detailed manner because most people at this site like answers with certain bias' on these questions, like pool resources always relative to which partner is asking.

If you follow the above advice, you are hoping things work out. Great! What if they don't? It will be very messy. Unlike most of my peers, I did NOT follow the above advice and had a very clean exit with both of us feeling very good (and no lawyers got involved either; win-win for both of us with all the money we saved).

One assumption people make is the person with the lowest income has the strictest limits. This is not always true; I grew up in poverty, but have a very high income and detest financial waste. I can live on about €12,000 a year and even though my partner made a little less, my partner liked to spend.

Counter intuitive, right? I was supposed to be the spender because I had a large income, but I wasn't. Also, think about an example with food - sharing expenses. Is it fair for one partner to split whey protein if one partner consumes it, but the other doesn't (answer: in my view, no)?

My advice based on your questions:

  1. Balance the frugal vs. spendthrift mentality rather than income ratios. If you're both frugal, then focus on income ratios - but one may be more frugal than the other and the thought of spending €300 a month on housing is just insane to a person like me, whereas to most it's too little. Are you both exactly the same with this mentality - and be honest?

  2. Common costs that you both agree on can be easily split 50-50 and you can often benefit from economies of scale (like internet, cell phone).

Both of us feel very strongly about being financially independent and if possible we both don't want to take money from each other.

  1. This is so healthy for a relationship. My partner and I split and we both still really love each other. We're headed in different directions, but we did not want to end bitterly. What you wrote is part of why we ended so well; we both were very independent financially.

  2. Kids are going to be a challenge because they come with expenses that partners don't always agree on. What do you and her think of childcare, for instance? You really want to know all this upfront; again a frugal vs. spendthrift mindset could cause some big tensions.

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    Imho your anwser fits perfectly for a relationship, but not for a marriage. If you are trying to find the financially best way out of a marriage beforehand, maybe you shouldn't marry at all. – Wa Kai Dec 13 '16 at 15:43
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    There are a lot of legal issues to consider. Just because the two of you agreed upon this arrangement does not mean a judge couldn't change it. I'm speaking mostly from a US prospective. But here at least, your spouse could even come back years later and ask a judge to invalidate the agreement. – mikeazo Dec 14 '16 at 0:10
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    "had a very clean exit" One could read this answer to be that you planned to fail, and did a good job doing so. – NPSF3000 Dec 14 '16 at 0:40
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    @WaKai Is it really healthier to burn the ships and force each other to stay together? If both have a clean, constantly-open path to exit, the marriage seems like it would be much more consensual. Trapping each other in the marriage seems like it would be more likely magnify any resent that occurs. Different people work differently, the poster here described a healthy marriage, amenable split, and ongoing love: which seems like a more favorable outcome than a lengthy, uncomfortable marriage due to financial handcuffs. – Knetic Dec 16 '16 at 0:35
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    @Knetic You are right, different people work differently! It's symptomatic that you call it a trap, because you only focus on the financial part. There is a lot more to it, e.g. time. The time for keeping the house and/or caring of the children. So everything should get a label with a prize on it... e.g. 1 hour housekeeping is worth $25... Yeah, you could do it that way and write down every little piece of effort you brought into the marriage or you just live your life with the knowledge, that everyone is doing his/her best for the family. – Wa Kai Dec 16 '16 at 9:32
5

I think you have succumbed to a category error. The rational course forward is to classify all property as either his, hers, or family's. Each contributes a portion of wages to the family. Each logs hours spent performing familial duties and is "paid" in virtual dollars into their family account at market rates for that service. At any point actual plus virtual dollars are summed to assess the value of the family and percentages are allocated to each party on this basis. Put this into a pre-nuptual agreement.

At the time of the inevitable divorce you leave with yours, she leaves with hers, family's assets are divided as described, and division of children should be as King Solomon suggested.

Or you could do what I did: Put all your property (and debts) into one pot. Make sure each partner can competently manage bookkeeping and investments. Accumulate a family net worth sufficient to divide in two and each have financial independence. (I'm working on this last step.)

5

My own personal point of view. I earn about twice what my wife to be earns. We are planning on getting married next year.

I ultimately do all the finances (basically because she hates that kind of thing) not because I'm in charge or whatever. To work out how we do this I wrote a spreadsheet:

         |    Me         |    Wife (to be!) 
---------------------------------------------
income   |  x * 2        |         x
bills a  |               |
bills b  |               |
etc...   |               |
savings  |               |
Spending | income - bills|   income - bills
         |   - savings   |       - savings

At the top it has my monthly pay in one column and her's in another. I add all our bills (against me initally). At the bottom I have a total of both of our "spending money". Spending money is wage - bills - savings

I then move money out of my column into her column. My goal is that we pay all the bills and save a decent amount and have roughly the same amount to spend each month. So each persons spending money should be roughly equal. I then fine tune this as things change (if we get a pay rise we alter it, if a bill goes up or down we alter it)

To manage this we have 4 accounts, a joint account to pay bills (both give a set amount to each mont), a savings acount (both give a set amount to each month) and our own accounts (where we get paid and where our spending money lives).

Like everyone else says, this seems fair to me. I don't earn more, we both earn "an amount" and this should be split equally.

  • very similar to how my household runs – Rozwel Dec 15 '16 at 23:52
5

I can only share with you my happened with my wife and I. First, and foremost, if you think you need to protect your assets for some reason then do so. Be open and honest about it. If we get a divorce, X stays with me, and Y stays with you.

This seems silly, even when your doing it, but it's important. You can speak with a lawyer about this stuff as you need to, but get it in writing. Now I know this seems like planning for failure, but if you feel that foo is important to you, and you want to retain ownership of foo no mater what, then you have to do this step. It also works both ways. You can use, with some limitations, this to insulate your new family unit from your personal risks. For example, my business is mine. If we break up it stays mine. The income is shared, but the business is mine. This creates a barrier that if someone from 10 years ago sues my business, then my wife is protected from that. Keep in mind, different countries different rules.

Next, and this is my advise. Give up on "his and hers" everything. It's just "ours". Together you make 5400€ decide how to spend 5400€ together. Pick your goals together. The pot is 5400€. End of line. It doesn't matter how much from one person or how much from another (unless your talking about mitigating losses from sick days or injuries or leave etc.). All that matters is that you make 5400€. Start your budgeting there.

Next setup an equal allowance. That is money, set aside for non-sense reasons. I like to buy video games, my wife likes to buy books. This is not for vacation, or stuff together, but just little, tiny stuff you can do for your self, without asking "permission". The number should be small, and equal. Maybe 50€.

Finally setup a budget. House Stuff 200€, Car stuff 400€. etc. etc. then it doesn't matter who bought the house stuff. You only have to coordinate so that you don't both buy house stuff.

After some time (took us around 6 months) you will find out how this works and you can add on some rules. For example, I don't go to Best Buy alone. I will spend too much on "house stuff". My wife doesn't like to make the budget, so I handle that, then we go over it. Things like that.

4

Unlike the others here, I will try to give you a direct answer that will meet your definition of fairness as well as give both of you incentive to maximize your earnings in the future.

You currently have 5400€ between you and 2600€ expenses leaving you 2800€.

You currently keep 1900€ and she keeps 900€ at the end of each month splitting 68/32.

If you marry and have a child, your combined income will go down to 4900€ while your expenses will increase by 300€ to 2900€ leaving 2000€.

You could continue to split 68/32 leaving you 1360€ and her 640€. If you use this split you will lose 540€ and she will lose 260€. That's a 28% loss for you and a 28% loss for her from your end of month take home. So far it sounds reasonably fair. What about the future?

For each raise, the person getting the raise keeps 66% of their raises. If you get the majority of the raises, you keep the majority of the benefit, but both benefit from the increase. Any future increases in expenses can be split as negotiated based on who benefits from those increases. That's basically what you are doing now considering that adding a child will cost a lot of her time, not just your money.

3
  • First, you shouldn't marry someone (let alone have kids with) if you're not prepared to spend some money for the greater good of your couple/family.
  • As a parent, you'll realize that money still is an important resource, but time, free time, sleep and health are at least as important.
  • You might earn more money than your spouse, but you'll be awfully glad to have someone at your side when you're stuck at work and the Kindergarten is closed, your kids are ill or they need to go to the swimming classes.
  • “I make myself rich by making my wants few.” is a quote by Henry David Thoreau. It is extremely important to save money with a family, because bad things happen and bad things will happen. This blog helped me a lot.
  • I probably gave more than 50k€ to my girlfriend (now wife) over the course of our relationship (7 years now). It's perfectly fine, because I had great experiences/trips with her, we have a wonderful daughter and I still have 2 free evenings per week. Those are far more important to me than more money on my account.
3

Some basic thoughts, mostly on fairness. I guess the answer doesn't really fit this site, it's more about ethics, but this fits the question which isn't really just about money either.

  • When you are a family, I think you really can't value the time of anyone more than the time of someone else, unlike the market does. You seem to do this at least a little with your "I invested more into my education" argument.
  • When you are a family, I don't think any parent can work significantly less than the other, with work being everything which needs to be done for the family as a whole. You might do different jobs, like one does more parenting and the other earns more money, but the total should be similar. Take note that "work" here differs from its usual meaning. If someone earns much more money than needed, then the hours that person spends making more money than needed don't count as work, they are the way that person prefers to spend their free time. How the fruits of that time should be shared is another, more difficult question which probably needs more individual answers.

So when both work the same amount, it seems appropriate that both get the same mount of money, doesn't it? That is, the scheme of

  1. Put all money in a shared pot.
  2. Pay for all the family's needs from this pot
  3. Divide the rest equally

(as already contained in your question and in some other answers)

is fair by this logic. Pay attention to hidden money: for example the one who works more for money might automatically get a pension funded this way. This is hidden money which already goes to only one partner, so when dividing equally, you'll need to take that into account (or just include "equal pensions for both" in the family's needs directly).

0

This would be my suggestion:

I would approach the problem thinking about the loss of monthly income you (as a couple) will be facing due to your wife's change to a part time job and divide that loss between the two of you. This means that if she goes from 2200 to 1100 monthly, you'd be losing 1100 per month.

To share this loss, you could repay your wife your part of the loss (550) so both of you are 550 euro down.

However, this 550 loss is a bigger burden for your wife than it is for you, so this amount could be adjusted to make up for this inequality.

To make calculations simple and avoid developing a complicated model, you could give the 800 euro above your 3k to your wife for as long as she has to work part time.

0

What equal percentage of both you and your girlfriend's income will cover the essential household expenses?

Although we earned different amounts, both of us turned over half our income over to the household. Between us this percentage slice from each of our earnings neatly covered all the essentials. The amounts contributed were different, but the contributions where nonetheless equal.

Beyond this the financial relationship was fast and loose.

0

The bottom line is choosing the right partner. If your partner works as hard as you do, than everything should be split, irregardless of who makes more.

Unfortunately, my bf, now by separated husband, borrowed money from me before we were married. I saw a lack of work ethic in him from the beginning, loved him anyway and married him but decided to keep my money separate as a result. This was a beginning with lack of trust and knowing I would be the higher earner, harder worker, and better provider. Down the road he won a lawsuit and got about $700k. I saw about $25k of this money to pay bills created with the intention of him paying them off when he got the money, and because he pilfered it away, we lost our house and it ended in my leaving....

I'm still doing ok because I work hard for what I have. He is struggling. We were never on the same page, never discussed finances because of his lack of work ethic and my mistrust of how he would decide how the money would be used.

Sadly, who you decide to be your partner is the most important decision here...It should be based on mutual respect, both working hard to achieve a common goal, and communicating the budget every year, perhaps even each month....

I'm the terrible example.

-1

I think the problem is that you've made a math error.

This child would not be costing you 300 per month, it will be costing you 1400 per month. 1100 of this is in a donation of salable hours rather than cash, but helpfully you have a number right there as to how much someone is willing to pay for these hours so the math is still doable.

So, if you are indeed splitting your expenses fifty-fifty, you should chip 1100 into the pot to match your wife's contribution. It would make the most sense, I think, to have your part of this contribution cover some of your mutual expenses, and if any is left over, save it up for the day that your child would cost more than that 300 in a month - when you need extra clothes, or have to replace something they destroyed, or want to pay for extra opportunities (camps, educational games, lessons), or a a savings that can be used for major future expenses (higher education, first car, milestone celebrations, safety net when starting out).

Of course, if your family is indeed a priority, you might consider making an equal investment in your family - say, half your income (1800) to match half her time going into the building of the family. After all, the decision to start a family should be an investment of time and value, not just a minimum bid for expenses. And again, any extra can be spent on mutual expenses, saved up for future costs, or left as your child's "savings" for major expenses or safety net.

I suppose I should mention that you perhaps could get away with covering half her contribution (550 per month, on the face of it), as that should also "balance" out the monthly expenses. Even this much would be enough to put her back into the green on her covering her own costs. Of course, in this case you might want to take into account that while she's working 38,5 hours per week now, running a household is, I've heard, more closely equivalent to a 60-hour week, plus or minus being "on call" for a further 100 hours a week. Trying to calculate the absolute minimum payment on your part to match the investment of hours on hers is likely to be a bit more tricky than just matching the salable hours not worked, if you're set on income ratios and splitting costs "as they are".

Also, you might want to rethink your criteria for sharing income completely or what makes certain divisions of costs "unfair". You mention one reason it would be unfair is that you have a "more stressful job" - well, your job may well be more stressful than her job now, but it is likely to be less so than raising a child (her new job). As for investment of time and energy for your education entitling you to a larger amount of pay, again, raising a child is likely to be a larger investment of time, money, and anxiety than your education, but her pay (or even share of the costs) doesn't seem to be balanced in response. I'm not gonna tell you what is fair, that's for you to work out, just suggesting you really think it through before deciding what would be fair or not.

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