Personal Finance

Splitting the bills in a marriage

  • Last Updated:
  • May 16th, 2017 11:20 am
Deal Addict
Dec 16, 2005
4788 posts
2546 upvotes
ace604 wrote: Not really a reply to you per se, but this brings up another reason for the higher earner to pay all the bills ... income-splitting (now, not later). You can lower the marginal tax rate on any non-registered savings/investments this way.

e.g. In a 75/25 household, if you split expenses 50/50 or 75/25 and expenses are say 20, then either:
a) 75 pays 10 and 25 pays 10 for 50/50 splt, or
b) 75 pays 15, and 25 pays 5 for 75/25 split

INSTEAD, if you are truly thinking as a 50/50 team trying to maximize your potential, you should do:
c) 75 pays 20, 25 has full 25 available to save/invest and pay lower marginal tax rate on any of those non-registered income/gains

Not sure I saw this mentioned yet in this thread.
C is essentially what I do.

I did mention above regarding spousal rrsp. For example, if you are truly a 50/50 or some other split, your wife may buy her own rrsp and you buy your own rrsp with the remaining money you each have.

This means neither will likely max out the higher income earners rrsp credit. Better to pool the money and put money where it makes the biggest impact.

For me, I don't pool money because I earn enough to max everything out.

Another example is, I had 2 rental units before the marriage. I changed the ownership so she claims the rental income. Taking advantage of her lower tax bracket. Now, if she leaves me... She got all my cash in her rrsp and my 2 condos... Lol
Deal Addict
Dec 11, 2007
1838 posts
397 upvotes
Markham
Our approach is that regardless of how much one of us is making right now, we both work hard to put the family in a better place. Thus the founding principle of our budgeting is that each of us gets exactly the same amount of personal spending $ per month, regardless of income.

Our budgeting is not based on who takes care of what bill or who takes care of which credit card, but based on whose income cash flow is directed where for what needs. The funding distribution is adjusted whenever there are changes in income or funding needs (cost of living adjustments, budget changes, etc)

We basically have
1. Joint checking account - day to day expenses slush fund, gets funded with a pre-set amount every month based on our budget. I fund 80% of it currently.
2. Long term capital expenditures & emergency savings account - she funds it every month 100%, used for big purchases / vacations / emergencies
3. Investments - we each fund it with a pre-set amount per month
4. Individual checking accounts - for personal spending, pay goes in here, and after distributing the cash flow for 1, 2, and 3, what is left is our personal amount (equal amounts)

Even personal expenditures will get paid out of the joint account. Twice a month we'll move money over from #4 into #1 based on personal spending.
Deal Guru
User avatar
Aug 8, 2012
10198 posts
3983 upvotes
BC
fogetmylogin wrote: This is a good point/plan. It requires similar financial goals though. If he/she thinks saving 1/3 of her 25% is sufficient and decides to spend the rest there will of course be conflicts. Someone asked how common it is for couples to make the same. In Ottawa I would guess it is very common. I wonder actually how common a 75/25 split is in this day and age?
Yes, it only works with a "50/50 team approach".

If the other spouse is risk averse and doesn't want to invest "their money" then you want them paying all the bills so you can save more to invest :D
POLL: How frequent is your RRSP-matching?
Plastiq: Pay any bill with credit card for 0-2.5% fee (help meet min spending and keep old cards active!)
Rewards program transfer times (e.g. SPG->Aeroplan, Marriott->SPG, Amex MR->SPG...)
Sr. Member
Jun 8, 2007
981 posts
244 upvotes
Mississauga
jeff1970 wrote: For fairness, I'd think the best way of doing this is to pro-rate it. So whatever after-tax income is for each spouse, so if one is $40,000 and one is $60,000 after tax, the one with $40G pays 40%, the one with $60G pays 60%. It should keep 'free' money pretty close.

Wish you the best.
This is what my wife and I do. Shared expenses (mortgage, utilities, home insurance, etc.) get added up and we do a split based on after-tax income. The rest is personal account and we do what we want.

It actually works out really well because I'm really careful with my money and she likes to spend. But she makes substantially more than I do as well. Some people would think "Damn. You shot yourself in the foot." Not really. She spends a LOT of PDI, so I actually end up saving more than she does. A bit crazy, but it happens. And because it's not a joint account, she has the freedom to spend what she wants and I don't feel like I'm subsidizing her spending. I can be cheap af and it doesn't affect her.
Jr. Member
Apr 16, 2017
151 posts
156 upvotes
One account, one everything.

No such thing as separates in a marriage. Either you're fully in, or you're already one foot out.
Deal Guru
User avatar
Aug 8, 2012
10198 posts
3983 upvotes
BC
Cerenity wrote: Our approach is that regardless of how much one of us is making right now, we both work hard to put the family in a better place. Thus the founding principle of our budgeting is that each of us gets exactly the same amount of personal spending $ per month, regardless of income.

Our budgeting is not based on who takes care of what bill or who takes care of which credit card, but based on whose income cash flow is directed where for what needs. The funding distribution is adjusted whenever there are changes in income or funding needs (cost of living adjustments, budget changes, etc)

We basically have
1. Joint checking account - day to day expenses slush fund, gets funded with a pre-set amount every month based on our budget. I fund 80% of it currently.
2. Long term capital expenditures & emergency savings account - she funds it every month 100%, used for big purchases / vacations / emergencies
3. Investments - we each fund it with a pre-set amount per month
4. Individual checking accounts - for personal spending, pay goes in here, and after distributing the cash flow for 1, 2, and 3, what is left is our personal amount (equal amounts)

Even personal expenditures will get paid out of the joint account. Twice a month we'll move money over from #4 into #1 based on personal spending.
3. Is where you can play shell games to achieve income-splitting if you have a lower income spouse by make it so they invest more in non-registered.

e.g. You put $800 into expenses, they put $200.
You put $200 into investments they put $200.

OR ... shell game ...

You put $1000 into expenses they put $0.
You put $0 into investments they put $400.

Same cost each, but you have legally put more investing into the lower income spouses name (which is a good thing for non-registered and marginal tax rates).
Registered is another story since you can gift money for TFSAs and use spousal RRSPs.
POLL: How frequent is your RRSP-matching?
Plastiq: Pay any bill with credit card for 0-2.5% fee (help meet min spending and keep old cards active!)
Rewards program transfer times (e.g. SPG->Aeroplan, Marriott->SPG, Amex MR->SPG...)
Banned
Jul 18, 2016
2014 posts
780 upvotes
fogetmylogin wrote: Someone asked how common it is for couples to make the same. In Ottawa I would guess it is very common. I wonder actually how common a 75/25 split is in this day and age?
I wish. :) However, with two young kids ( 2 and 4), and a self-employed wife, getting to a point where we both earn the same, is rather tricky.

I think it really depends on your family structure. In my case, with kids and wife who stays more with the kids and earns less, mixing all the money together, paying the bills and savings plans, and dividing in two the difference, seems to work better. In fact, so far, after covering all bills and savings plans, there is nothing left, so ....
Deal Fanatic
User avatar
Dec 27, 2009
6928 posts
4093 upvotes
Ottawa, ON
Our money is all joined, so really everything all goes into the accounts and bills paid from that, etc.
Deal Fanatic
User avatar
Dec 27, 2009
6928 posts
4093 upvotes
Ottawa, ON
fogetmylogin wrote: This is a good point/plan. It requires similar financial goals though. If he/she thinks saving 1/3 of her 25% is sufficient and decides to spend the rest there will of course be conflicts. Someone asked how common it is for couples to make the same. In Ottawa I would guess it is very common. I wonder actually how common a 75/25 split is in this day and age?
We are an Ottawa couple:) I think if both were government employees you could be right. As it is, he just retired from 28 years in the military (so collecting immediate pension) and now working for federal government. I work in the private sector. He is bringing in about $135K (between job and pension), but I only make ~$59K. We just pool our money, there is no "his" and "mine".
Deal Expert
Aug 22, 2011
32036 posts
17917 upvotes
Ottawa
LightYagami wrote: One account, one everything.

No such thing as separates in a marriage. Either you're fully in, or you're already one foot out.
Speak for yourself...what's mine is hers and what's hers is hers.
Deal Addict
Nov 13, 2013
2052 posts
931 upvotes
Ottawa
Chickinvic wrote: We are an Ottawa couple:) I think if both were government employees you could be right. As it is, he just retired from 28 years in the military (so collecting immediate pension) and now working for federal government. I work in the private sector. He is bringing in about $135K (between job and pension), but I only make ~$59K. We just pool our money, there is no "his" and "mine".
He has essentially two salaries though and I assume you followed him around and probably raised the kids hurting your current earning power. I was more thinking of newly married couples or those considering these issues for the first time. Different generation also.That said your many years of marriage make your advice count double in this area!

Maybe it is just the part of town I live in and it might be different in Kanata but Ottawa seems to be very much a both parents working town. Much more than my experience in Toronto for example. Strange as it is probably a lot easier to get by on one salary here than in most other Canadian cities.
Sr. Member
Aug 15, 2013
807 posts
408 upvotes
Guelph
LightYagami wrote: One account, one everything.

No such thing as separates in a marriage. Either you're fully in, or you're already one foot out.
Exactly.

Looking at responses here, I feel am a bit old school. I earn 90% of our income. Wife barely works outside of the home, but i barely work at home so am good with that. Everything is joint. I decide on all matters concerning money as wife is not interested in taking any financial decisions or even paying any bills. In fact, I have created a instruction sheet for her with information on all our accounts, insurances, savings etc., in case something were to happen to me.
Jr. Member
Dec 20, 2006
120 posts
54 upvotes
Mississauga
My preference is individual bank accounts with a joint bank account/credit card for joint expenses (mortgage, taxes, food, gas, car maintenance, home improvement/repairs, daycare, etc.) with monthly contributions based on income ratio (e.g. 1:1, 2:1, 3:1, etc.) This is the fairest approach IMO.
[OP]
Newbie
May 7, 2017
86 posts
35 upvotes
Interesting a fairly even split on joint, ratio or put it all in one pot, but he up votes are all for those that said share it all evenly.
Deal Addict
Dec 11, 2007
1838 posts
397 upvotes
Markham
ace604 wrote: 3. Is where you can play shell games to achieve income-splitting if you have a lower income spouse by make it so they invest more in non-registered.

e.g. You put $800 into expenses, they put $200.
You put $200 into investments they put $200.

OR ... shell game ...

You put $1000 into expenses they put $0.
You put $0 into investments they put $400.

Same cost each, but you have legally put more investing into the lower income spouses name (which is a good thing for non-registered and marginal tax rates).
Registered is another story since you can gift money for TFSAs and use spousal RRSPs.
Yep, thank you. That's what we do more or less. We just haven't taken it all the way to 100% expenses for me.

My money funds both our TFSAs and spousal RRSP. Hers funds her non-reg

Top

Thread Information

There is currently 1 user viewing this thread. (0 members and 1 guest)