# Splitting finances fairly: based on Nett or Gross?



## variety (9 Apr 2010)

Every month we do our budget, and every month I feel as though it's unfair (to me, of course ). 

I'm looking for the answer to one main question: *should we be sharing costs based on Nett or Gross income?*

Incomes (rounded): 
Him: Gross €4,500
Him: Nett €2,900 (after pension, BIK, and a multitude of other pre-tax contributions)

Me: Gross €1,750
Me: Nett €1,600

Basically, all expenses come to €3,000 (including rent, groceries, entertainment, spending money, bills, insurances, etc etc etc), so everything left (about €1,500 give or take) is 'savings'.

We currently work it out that, as our total nett income is €4,500, expenses are exactly two thirds of this (ie 66.6%), so I contribute 33.3% and he contributes 66.6% towards the expenses.
Which leaves me with €600 savings and him with €900 savings every month.

I just feel that his pre-tax savings and contributions are giving him a HUGE upper hand. I contribute to a pension (from nett income), but it's fairly crippling.

Don't get me wrong, our savings really are OUR savings, and we can each dip into them for any reason at all; but I feel weirdly dependent on him as they're seen as HIS savings (we have separate bank accounts and separate savings accounts), which I'm not happy with. 
We've spoken about this over and over and over, and I can see that economically what we're doing does make sense, and he's very practical, and I don't want to change what we're doing financially for emotional reasons. Help!

Sorry for rambling on there at the end.
Again, I want to know, *should we be sharing costs based on Nett or Gross income?*

We're married, in rental accommodation, no loans and no kids. Lots of savings.
Thanks, in advance, guys!


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## fizzelina (9 Apr 2010)

Firstly you are mixing up Net and Gross salary - your Net salary is what you take home.
Secondly - I am surprised at your question since at the moment he is contributing twice what you are to the running of your household - the fact that he gets to save more is because he earns more! It's not as if he is earning more and you are splitting the 3k monthly costs in half and then coming out worse since you earn less. You have been doing it fairly in my opinion and if he is contributing 2/3 of monthly costs then he is entitled to save the rest.
To answer your actual question - it should be based on Net salary (what you take home, not net as you have in your post since you confused them) The reason for this is Gross is unfair since some people have more levies (eg public servants) Take home pay is the way to base it. 
Thirdly a word of advice if I may? You say you have spoken about this over and over. It sounds like you are over analysing, making it unfair on him that he earns more and saves more. You are making an issue out of money when there should not be one there - your situation, both working, contributing 1/2, 2/3 based on salary it seems fair and the feeling weirdly dependant is an issue you have and not one you should be focusing on so much, at the risk of causing difficulties in the relationship.


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## variety (9 Apr 2010)

Hi Fizzelina, thanks for pointing out the silly mistake re gross and nett - have changed it now.

When I said talking about it over and over, I just mean that every time (once a month) we sit down and do the budget, I query whether the method is fair or not. Then once I'm (again) satisfied that it makes economic sense to split it this way, we don't discuss it again until the next month. Tedious, I know.

We have no relationship issues (well, other than the niggly issues that every couple has), and certainly no financial issues. We've been together for almost 11 years, and happily married for 5 of them. But thanks for the concern.

We are both in private jobs.


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## annR (9 Apr 2010)

Hi
What do you mean by this

>>I just feel that his pre-tax savings and contributions are giving him a HUGE upper hand.<<


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## fizzelina (9 Apr 2010)

That's really good to hear variety  
So the reason for your query is that his Nett is his take home *after *his pension came out whereas your nett still has the pension to come out? So could you adjust your Nett to be Nett post pension and then re-jig the % to make it fairer for you since both your Netts are not like with like (his is post pension and yours is pre pension)? eg say you pay €300 pension out of your €1,600 nett, you could say you have available nett of €1,300 and pay a lower % than 33%.


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## variety (9 Apr 2010)

annR said:


> Hi
> What do you mean by this
> 
> >>I just feel that his pre-tax savings and contributions are giving him a HUGE upper hand.<<


 
I guess I mean that he has additional savings and contributions on top of the savings left after expenses. I know it's silly, since we do share the ultimate savings, but like I said, having it in two separate savings accounts just makes it _seem_ unfair. It's just a grumpy thing, really. When I start reading it like this it definitely if fickle. Oh well...



fizzelina said:


> So could you adjust your Nett to be Nett post salary and then re-jig the % to make it fairer for you since both your Netts are not like with like (his is post pension and yours is pre pension)?


 
That's a great idea, thanks. I'll definitely suggest that.


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## annR (9 Apr 2010)

I'm not sure what the underlying problem is . . . whether you need more disposable income for yourself or whether you don't feel secure in the longterm because the savings are seen as his savings  .. or what . ..   

In any case the fact that the finances are so separated does seem to be causing you an issue . .  .you can still keep the same economic arrangement but have just 1 savings account not 2 separate ones -  just have one big one and then feed other savings accounts from that to take advantage of interest rates etc.  Would you then feel like they are properly joint savings rather than seen as 'his savings'?  Who sees them as 'his savings' anyway, you or him?

Also,I suppose I'm still wondering what exactly all his pre tax savings and contributions are because that seems to be the thing that you find most unfair.  Is it mostly pension contributions?  Or share options etc?  Whatever it is, it's not going into a black hole, since you're married they're probably joint assets/savings eventually anyway?  

Definitely if you are paying your pension out of your net income that should be counted as Fizzelina says, then you would have to pay less expenses.


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## ontour (9 Apr 2010)

The answer to whether it should be net of gross is either or neither.  You have created a way of managing money that is neither right nor wrong. 

Personally I can see the validity of subscribing to one of two schools of though.

1. Equality and financial independence
You share the costs based on equality.  Rent, heat, maintenance etc. get split 50:50 as you each have equal use of the rented property.  You fund your own car loan, clothes, saving etc from your remaining disposable income. That way, if you have a better job or work harder, you reap the benefits of your endeavours.

2. One pool of earnings
You view all the earning as the total income in to the household and it doesn't really matter who earns it.  You put all the money in a joint account and pay the bills and expenses from there, you save in a joint account.  If one person needs a new car, as a married couple you agree if you can afford it as a couple.  There is no 'his money' and 'her money'.


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## goingforgold (9 Apr 2010)

This may not answer your question but I think you should count yourself very lucky that you have such a strong financial position and it seems you are happy in your marriage so I would say keep doing what you are doing. No loans and lots of savings is not something you hear a lot these days! Congratulations.


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## Danielle24 (9 Apr 2010)

*Hi*

If you feel that this is going to be a problem long term could you increase your own salary somehow, ie do an evening course, career change, possible promotion. No offence but if he's earning substantially more and splits the bills with you he should be entitled to enjoy a little of his hard earned cash, you seem to think it's unfair that he doesn't split the money with you 50/50 though in terms of salary percentage its 33/66%, I think its a bit selfish to be honest, if you're not happy with your earnings do something about it.


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## variety (9 Apr 2010)

I know it's coming across as though I'm "just being selfish" - I can't seem to explain my way out of it, so maybe that really is what it is and I need to get over it (???).

@Danielle24, this is a new arrangement. Previously I earned 6 times his salary (and we did split the income 50:50 then, I might add!), and have been forced to downgrade. I have 2 degrees, 2 postgrads and a masters, along with many other accredited certificates, and a pilot's licence. It's not currently a viable option to improve my income. I think we're at this stage (ie: 66:33) because we've earning significantly less than we used to, and he's used to having lots of his income left over.


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## Billo (9 Apr 2010)

Don't get me wrong, our savings really are OUR savings, and we can each dip into them for any reason at all; but I feel weirdly dependent on him as they're seen as HIS savings (we have separate bank accounts and separate savings accounts), which I'm not happy with. 
We've spoken about this over and over and over, and I can see that economically what we're doing does make sense, and he's very practical, and I don't want to change what we're doing financially for emotional reasons. Help!

I think you are in danger of getting on Mr Variety's nerves. 
I pity the poor man.


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## tenchi-fan (9 Apr 2010)

It's sorta sad to hear that kind of bickering. You should split bills 50-50 if you really want to be fair. Otherwise, base things on your take-home pay


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## niceoneted (10 Apr 2010)

Seeing as you say you both have taken a reduction in salary could you perhaps look at the expenses. I think 3000 a month is quite high but when you don't list any it's hard to know. 
I think the divide is fair at the moment. When you were on 6 times his salary it is 50:50 so that was very unfair on him as you were able to save more ie it was in your favour. Now you have a lower wage you want a lower portion too which you are getting. 
Never mind about the money issue just enjoy life.


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## tenchi-fan (10 Apr 2010)

variety said:


> I know it's coming across as though I'm "just being selfish" - I can't seem to explain my way out of it, so maybe that really is what it is and I need to get over it (???).
> 
> @Danielle24, this is a new arrangement. Previously I earned 6 times his salary (and we did split the income 50:50 then, I might add!), and have been forced to downgrade. I have 2 degrees, 2 postgrads and a masters, along with many other accredited certificates, and a pilot's licence. It's not currently a viable option to improve my income. I think we're at this stage (ie: 66:33) because we've earning significantly less than we used to, and he's used to having lots of his income left over.



2 degrees and 3 postgrads basically? maybe spend less time in college and more time gaining valuable experience to improve your salary


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## giles (12 Apr 2010)

On first reading your post you sounded very selfish - he is paying most of the bills yet you still want more money. However on reading the last few posts, when you were the bread winner you shared the money 50/50. His unwillingness to return the favour makes him selfish.

So you have two options - convince him to agree to a 50/50 split or the next time your earning more than him don't be so generous. It sounds petty I know but I believe in treating others as they treat you


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## fizzelina (13 Apr 2010)

tenchi-fan said:


> 2 degrees and 3 postgrads basically? maybe spend less time in college and more time gaining valuable experience to improve your salary


 Well done on being so well educated Variety and pay no attention to this comment!


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## rgfuller (13 Apr 2010)

We're in a similar situation (though with mortgage instead of renting) and I know exactly what you mean about the gross/net proportionality. 

What we do is split the mortgage payment in a proportion to our Gross salary, then split all houshold bills 50:50 (TV, Phone, Internet, Electricity, Gas, Insurance). 

We pay for our own entertainment and take turns doing the weekly shop, we also run and pay for our own transport, this works for us, and it allows us to change/control our own pension contributions (when we feel we can afford to) without affecting the shared costs ratio.


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## Phibbleberry (13 Apr 2010)

giles said:


> when you were the bread winner you shared the money 50/50. His unwillingness to return the favour makes him selfish.


 
I may be misunderstanding the OP's original post here, but my reading of it was that when she was earning 6 times what she is now, they split it down the middle completely - him taking the bigger hit because of the salary differential.
Now she is earning less and yet he is taking the brunt of 66% versus her 33% so I would have thought that he has acted fairly throughout by not wanting to keep it at 50/50 seeing as she wasn't willing to let him only contribute 33% when she was on the higher salary.

I'm not casting dispersions either way -each to their own, its something I think most couples struggle with regardless of salary or % differential of same but I think 50/50 is the fairest way to do it and then for the higher earner to subsidise slightly if need be (i.e take the other out to dinner if by splitting mortgage/bills doesn't leave them with enough to share the cost of the odd cinema trip/night out, but you have plenty to cover yourself with mates as well as you both, as a couple).

Does that make an ounce of sense?!?!


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## annR (13 Apr 2010)

> Previously I earned 6 times his salary (and we did split the income 50:50 then, I might add!),


 
she said they used to split the income not the expenses 50:50.


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## iliketobake (14 Apr 2010)

When we moved in together first we used to transfer the same certain percentage of our salaries (take home) into a joint account out of which all bills, mortgage, etc. were paid.  Personal expenses including car tax and insurance were paid by ourselves.  Anything left in the joint account at the end of the month went into joint savings for hols, home improvements, that kind of thing.
Now we have 2 kids and he earns a bit more than I do.  I could earn more by moving jobs but my job works for us as a family with hours and flexibility.  My husband and I have the same qualification and he doesn't work any harder than I do.  So we now keep a set amount of euros each and everything else goes into the joint a/c.  We also pay everything relating to both of us or the family out of this a/c.  So we both have the same individual personal disposable income.  Car taxes and insurance and petrol are now paid out of the household a/c as the bigger car is usually used to transport the kids and both cars are available to both of us.  
It means we are seeing ourselves as making an equal contribution (not just financial) to our family and both have equal opportunity to spoil ourselves, spend frivolously, save, whatever we want guilt free with our own money.


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## variety (19 Apr 2010)

Thanks to all the constructive replies (particularly fizzelina and iliketobake). 
Update: we have opened a joint account which we will each pay our contributions to the expenses into. This went down surprisingly well, since he was always adamant he didn't want a joint account, but maybe that's so I can't see what he's spending his extra money on (!) 

And we have calculated what my pre-tax pension contributions would be (since I pay from my gross salary) and added them to the shared expenses. 

Much much happier now. I feel expenses are equal now.

@AnnR - pre-tax contributions are mostly pension to pension, but also to health, and a myriad of share options. We are married, but not under the Irish system. We have a ante-nuptial contract that favours him (since he had more assets entering the marriage). Like I said before, there is nothing at all wrong with our relationship, but financial advisors are always saying to plan for the worst but hope for the best, so just trying to cover all my bases in the event that something goes drastically wrong.


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## annR (19 Apr 2010)

iliketobake said:


> When we moved in together first we used to transfer the same certain percentage of our salaries (take home) into a joint account out of which all bills, mortgage, etc. were paid. Personal expenses including car tax and insurance were paid by ourselves. Anything left in the joint account at the end of the month went into joint savings for hols, home improvements, that kind of thing.
> Now we have 2 kids and he earns a bit more than I do. I could earn more by moving jobs but my job works for us as a family with hours and flexibility. My husband and I have the same qualification and he doesn't work any harder than I do. So we now keep a set amount of euros each and everything else goes into the joint a/c. We also pay everything relating to both of us or the family out of this a/c. So we both have the same individual personal disposable income. Car taxes and insurance and petrol are now paid out of the household a/c as the bigger car is usually used to transport the kids and both cars are available to both of us.
> It means we are seeing ourselves as making an equal contribution (not just financial) to our family and both have equal opportunity to spoil ourselves, spend frivolously, save, whatever we want guilt free with our own money.


 
This makes a lot of sense to me, I think it's nearly easier when you decide you are both a unit and each contributing in your own way rather than splitting hairs over money, but maybe it comes into play more when there's children.  
Compared to this, we have a fairly strange arrangement, or maybe not.  My husband earns a lot more than me but I won't be changing jobs anytime soon because my location suits us with the baby in the creche nearby.  I pay the creche fees, all the household stuff, baby and most groceries - I take on as much as I can.  This is because I am more of a spender than my husband and this limits the cash available to me to spend on handbags and shoes (but I still have some left over ).  My husband pays the mortgage and his own car tax and then saves the rest - he doesn't really spend any money so this way I know that we are saving.  We split holidays - one of us pays the accomodation and the other pays the rest.  I manage everything - he just has to save.  It works for us because we don't have to have spending diairies etc we just make sure the savings are being put away.  If we don't have enough it's up to me to cut my discretionary spending to cover everything to protect our savings rate.  That's when I start making stews and lunches for work etc my husband just continues on as normal.


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## buzybee (24 Apr 2010)

I would like your arrangement, only paying a third of the expenses.  I earn half what my husband has.  I have 25K gross and work full time.  We have a 1 yr old baby.   

I pay for big grocery shop at wkend, and baby creche fees.  The rest is for me for petrol, discretionary saving/spending.  Husband pays the mortgage and other big expenses eg. health insurance, heating, bills etc.  He might pay for small groceries during the week, he works near the grocery store. He also saves a portion of his money.  We have separate accounts.

We have a small mortgage, as husband saved up for the house.  He probably has loads more than me to save, but that is just his good luck that he earned more than me.   I have small house which I have let.  I collect all the rent from this, and I pay all the mortgage on this when it is idle.  I might give husband money if he does work on my house.

I pay a larger portion for hols, as I'm the one that wants hols, husband doesnt care about hols.

We have a car each, we are each responsible for saving a certain amount of money each week towards changing our own car.  We generally try and have one newish car and one old car.  Husband has old car so is due to change soon,  mine is only 4 yrs old so I will keep mine.


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## setesh (27 Apr 2010)

I don't think this has anything to do with money at all.


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## txirimiri (27 Apr 2010)

Hey there, glad you have sorted out something that works for you both. I have been with my hubby for 8 years. We have a joint account, out of which comes all bills, mortgage, holidays, childcare etc etc. We pay into that proportionally depending on our earnings (started off as 50/50, then went to 66 (me)/33 (him), now back to 50/50 and will soon be 60 (him)/40 (me).) Always worked out on net income (i.e. take home pay) as I am a civil servant so pay levies, higher pension contributions et al, so he sometimes has higher take home pay even when his gross salary is lower. Anything either of us has left over is ours to do what we like with. 

Tbh, we do it for day to day handiness (i,e, both contributing according to our means and both having spending money without having to justify spending to eachother) but on a long term basis, it is all our joint money. For instance, my pension will prob be better than his but it would never occur to me to think of it as 'mine' - it belongs to us as a family. Similarly, I tend to save whereas he tends to spend and we are going to use my savings to do some work on our house - again, I see that as an investment for our family that I can happily facilitate due to a period of higher earnings and due to being more frugal than my very generous hubby! Maybe the difference between my outlook and yours is linked to having kids - I tend to see us as a unit with everyone contribtuing to the family as their first priority and contributions not just being measured in financial terms. I had been planning to take a career break and then it would have been my husband contributing 100% to the joint account and my contributuion would have been to be full time at home with our sons and we would have just cut our cloth accordingly. I don't think I would have felt that it was his money and not mine


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