Splitting finances fairly: based on Nett or Gross?

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variety

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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!
 
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.
 
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.
 
Hi
What do you mean by this

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

That's a great idea, thanks. I'll definitely suggest that.
 
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.
 
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'.
 
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.
 
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.
 
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.
 
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.
 
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
 
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.
 
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.
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2 degrees and 3 postgrads basically? maybe spend less time in college and more time gaining valuable experience to improve your salary
 
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 ;)
 
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.
 
giles said:
when you were the bread winner you shared the money 50/50. His unwillingness to return the favour makes him selfish.
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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?!?!
 
Previously I earned 6 times his salary (and we did split the income 50:50 then, I might add!),
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she said they used to split the income not the expenses 50:50.
 
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