Household Finances Revisited

Almost a decade ago I shared a process that my domestic polyfamily and I had been using (by then, for around four years) to manage our household finances. That post isn’t really accurate any more, so it’s time for an update (there’s a link if you just want the updated spreadsheet):

Dan, wearing a WordPress Pride "rainbow flag on black" t-shirt, sits on a park bench alongside a French Bulldog (with her tongue sticking out) and a young boy (throwing a peace sign, wearing a pink cycle helmet and a blue school uniform).
Our household costs have increased considerably over the last decade, not least because children and pets are expensive (who knew?).

Sample data

For my examples below, assume a three-person family. I’m using unrealistic numbers for easy arithmetic.

  • Alice earns £2,000, Bob earns £1,000, and Chris earns £500, for a total household income of £3,500.
  • Alice spends £1,450, Bob £800, and Chris £250, for a total household expenditure of £2,500.

Model #1: Straight Split

We’ve never done things this way, but for completeness sake I’ll mention it: the simplest way that households can split their costs is by dividing them between the participants equally: if the family make a £60 shopping trip, £20 should be paid by each of Alice, Bob, and Chris.

My example above shows exactly why this might not be a smart choice: this model would have each participant contribute £833.33 over the course of the month, which is more than Chris earned. If this month is representative, then Chris will gradually burn through their savings and go broke, while Alice will put over a grand into her savings account every month!

Photograph of the Statue of Lenin in Independence Square, Minsk: Government House #1 stands behind a large metal statue of Vladimir Lenin, looking to his right.
“Land, Bread, Peace… and Spreadsheets!”

Model #2: Income-Assessed

We’re a bunch of leftie socialist types, and wanted to reflect our political outlook in our household finances, too. So rather than just splitting our costs equally between us, we initially implemented a means-assessment system based on the relative differences between our incomes. The thinking was that somebody that earns twice as much should contribute twice as much towards the costs of running the household.

Using our example family above, here’s how that might look:

  • Alice earned 57% of the household income, so she should have contributed 57% of the household costs: £1,425. She overpaid by £25.
  • Bob earned 29% of the household income, so he should have contributed 29% of the household costs: £725. He overpaid by £75.
  • Chris earned 14% of the household income, so they should have contributed 14% of the household costs: £350. They underpaid by £100.
  • Therefore, at the end of the month Chris should settle up by giving £25 to Alice and £75 to Bob.

By analogy: The “Income-Assessed” model is functionally equivalent to splitting each and every expense according to the participants income – e.g. if a £100 bill landed on their doormat, Alice would pay £57, Bob £29, and Chris £14 of it – but has the convenience that everybody just pays for things “as they go along” and then square everything up when their paycheques come in.

Photograph showing a detached white house clad in scaffolding, under a clear blue sky.
You know what else is surprisingly expensive? Having the roof of your house taken off.

Over time, our expenditures grew and changed and our incomes grew, but they didn’t do so in an entirely simple fashion, and we needed to make some tweaks to our income-assessed model of household finance contributions. For example:

  • Gross vs Net Income: For a while, some of our incomes were split into a mixture of employed income (on which income tax was paid as-we-earned) and self-employed income (for which income tax would be calculated later), making things challenging. We agreed that net income (i.e. take-home pay) was the correct measure for us to use for the income-based part of the calculation, which also helped keep things fair as some of us began to cross into and out of the higher earner tax bracket.
  • Personal Threshold: At times, a subset of us earned a disproportionate portion of the household income (there were short periods where one of us earned over 50% of the household income; at several other times two family members each earned thrice that of the third). Our costs increased too, but this imposed an regressive burden on the lower-earner(s), for whom those costs represented a greater proportion of their total income. To attempt to mitigate this, we introduced a personal threshold somewhat analogous to the income tax “personal allowance” (the policy that means that you don’t pay tax on your first £12,570 of income).

Eventually, we came to see that what we were doing was trying to patch a partially-broken system, and tried something new!

Model #3: Same-Residual

In 2022, we transitioned to a same-residual system that attempts to share out out money in an even-more egalitarian way. Instead of each person contributing in accordance with their income, the model attempts to leave each person with the same average amount of disposable personal income at the end. The difference is most-profound where the relative incomes are most-diverse.

With the example family above, that would mean:

  • The household earned £3,500 and spent £2,500, leaving £1,000. Dividing by 3 tells us that each person should have £333.33 after settling up.
  • Alice earned earned £2,000 and spent £1,450, so she has £550 left. That’s £216.67 too much.
  • Bob earned earned £1,000 and spent £800, so she has £200 left. That’s £133.33 too little.
  • Chris earned earned £500 and spent £250, so she has £250 left. That’s £83.33 too little.
  • Therefore, at the end of the month Alice should settle up by giving £133.33 to Bob and £83.33 to Chris (note there’s a 1p rounding error).

That’s a very different result than the Income-Assessed calculation came up with for the same family! Instead of Chris giving money to Alice and Bob, because those two contributed to household costs disproportionately highly for their relative incomes, Alice gives money to Bob and Chris, because their incomes (and expenditures) were much lower. Ignoring any non-household costs, all three would expect to have the same bank balance at the start of the month as at the end, after settlement.

By analogy: The “Same-Residual” model is functionally equivalent to having everybody’s salary paid into a shared bank account, out of which all household expenditures are paid, and at the end of the month everything that’s left in the bank account gets split equally between the participants.

Screenshot showing a sample filled verison of the spreadsheet.
Our version of the spreadsheet has inherited a lot of hacky edges, many for now-unused functionality.

We’ve made tweaks to this model, too, of course. For example: we’ve set a “target” residual and, where we spend little enough in a month that we would each be eligible for more than that, we instead sweep the excess into our family savings account. It’s a nice approach to help build up a savings reserve without feeling a pinch.

I’m sure our model will continue to evolve, as it has for the last decade and a half, but for now it seems stable, fair, and reasonable. Maybe it’ll work for your household too (whether or not you’re also a polyamorous family!): take a look at the spreadsheet in Google Drive and give it a go.

Dan, wearing a WordPress Pride "rainbow flag on black" t-shirt, sits on a park bench alongside a French Bulldog (with her tongue sticking out) and a young boy (throwing a peace sign, wearing a pink cycle helmet and a blue school uniform).× Photograph of the Statue of Lenin in Independence Square, Minsk: Government House #1 stands behind a large metal statue of Vladimir Lenin, looking to his right.× Photograph showing a detached white house clad in scaffolding, under a clear blue sky.× Screenshot showing a sample filled verison of the spreadsheet.×

Means-Assessed Household Finances (Socialism Begins At Home!)

In 2023 I published an updated version of this blog post. See that post for the latest tips on managing polyfamily finances in a socialist manner.

For the last four years or so, Ruth, JTA and I (and during their times living with us, Paul and Matt) have organised our finances according to a system of means-assessment. I’ve mentioned it to people on a number of ocassions, and every time it seems to attract interest, so I thought I’d explain how we got to it and how it works, so that others might benefit from it. We think it’s particularly good for families consisting of multiple adults sharing a single household (for example, polyamorous networks like ours, or families with grown children) but there are probably others who’d benefit from it, too – it’s perfectly reasonable for just two adults with different salaries to use it, for example. And I’ve made a sample spreadsheet that you’re welcome to copy and adapt, if you’d like to.

How we got here

JTA and Ruth at the supermarket after shoping before Murder... At The Magic College
That’s a long receipt!

After I left Aberystwyth and Ruth, JTA, Paul and I started living at “Earth”, our house in Headington, we realised that for the first time, the four of us were financially-connected to one another. We started by dividing the rent and council tax four ways (with an exemption for Paul while he was still looking for work), splitting the major annual expenses (insurance, TV license) between the largest earners, and taking turns to pay smaller, more-regular expenses (shopping, bills, etc.). This didn’t work out very well, because it only takes two cycles of you being the “unlucky” one who gets lumbered with the more-expensive-than-usual shopping trip – right before a party, for example – before it starts to feel like a bit of a lottery.

Our solution, then, was to replace the system with a fairer one. We started adding up our total expenditures over the course of each month and settling the difference between one another at the end of each month. Because we’re clearly raging socialists, we decided that the fairest (and most “family-like”) way to distribute responsibility was by a system of partial means-assessment: de chacun selon ses facultés.

JTA and Paul pack bags at the checkout, before Christmas 2010.
Another enormous shopping trip.

We started out with what we called “75% means-assessment”: in other words, a quarter of our shared expenditures were split evenly, four ways, and three-quarters were split proportionally in accordance with our gross income. We arrived at that figure after a little dissussion (and a computerised model that we could all play with on a big screen). Working from gross income invariably introduces inequalities into the system (some of which are mirrored in our income tax system) but a bigger unfairness came – as it does in wider society – from the fact that the difference between a very-low income and a low income is significantly more (from a disposable money perspective) than the difference between a low and a high income. This was relevant, because ‘personal’ expenses, such as mobile phone bills, were not included in the scheme and so we may have penalised lower-earners more than we had intended. On the other hand, 75% means-assessment was still significantly more-“communist” than 0%!

When I mentioned this system to people, sometimes they’d express surprise that I (as one of the higher earners) would agree to such an arrangement: the question was usually asked with a tone that implied that they expected the lower earners to mooch off of the higher earners, which (coupled with the clearly false idea that there’s a linear relationship between the amount of work involved in a job and the amount that it pays) would result in a “race to the bottom”, with each participant trying to do the smallest amount of work possible in order to maximise the degree to which they were subsidised by the others. From a game theory perspective, the argument makes sense, I would concede. But on the other hand – what the hell would I be doing agreeing to live with and share finances with (and then continuing to live with and share finances with) people whose ideology was so opposed to my own in the first place? Naturally, I trusted my fellow Earthlings in this arrangement: I already trusted them – that’s why I was living with them!

Louis Blanc
Louis Blanc had the right idea, but his idealism was hampered by the selfishness inherent in any sufficiently-large group. Had he brought socialism to his house, rather than his country, he might have felt more successful.

How it works

We’ve had a few iterations, but we eventually settled on a system at a higher rate of means-assessment: 100%! It’s not perfect, but it’s the fairest way I’ve ever been involved with of sharing the costs of running a house. I’ve put together a spreadsheet based on the one that we use that you can adapt to your own household, if you’d like to try a fairer way of splitting your bills – whether there are just two of you or lots of you in your home, this provides a genuinely equitable way to share your costs.

Means-assessed household finances sample sheet. Click to see the actual sheet.
Click on the sheet to see a Google Drive document that you can save a copy of and adapt to your own household.

The sheet I’ve provided – linked above – is not quite like ours: ours has extra features to handle Ruth and I’s fluctuating income (mine because of freelance work, Ruth’s because she’s gradually returning to work following a period of maternity leave), an archive of each month’s finances, tools to help handle repayments to one another of money borrowed, and convenience macros to highlight who owes what to whom. This is, then, a simplified version from which you can build a model for your own household, or that you can use as a starting point for discussions with your own tribe.

Start on the “People” sheet and tell it how many participants your household has, their names, and their relative incomes. Also add your proposed level of means-assessment: anything from 0% to 100%… or beyond, but that does have some interesting philosophical consequences.

Then, on the “Expenses” sheet, record each thing that your household pays for over the course of each month. At the bottom, it’ll total up how much each person has paid, and how much they would have been expected to pay, based on the level of your means-assessment: at 0%, for example, each person would be expected to pay 1/N of the total; at the other extreme (100%), a person with no income would be expected to make no contribution, and a person with twice the income of another would be expected to pay twice as much as them. It’ll also show the difference between the two values: so those who’ve paid less than their ‘share’ will have negative numbers and will owe money to those who’ve paid more than their share, indicated by positive numbers. Settle the difference… and you’re ready to roll on to the next month.

Now you’re equipped to employ a (wholly or partially) means-assessed model to your household finances. If you adapt this model or have ideas for its future development, I’d love to hear them.

JTA and Ruth at the supermarket after shoping before Murder... At The Magic College× JTA and Paul pack bags at the checkout, before Christmas 2010.× Louis Blanc×

Conference Preparations

Right now, Three Rings seems to be eating up virtually all of my time. It’s hardly the first time – I complained about being incredibly busy with Three Rings stuff just a couple of years ago, but somehow right now it’s busier than ever. There’s been the Milestone: Jethrik release, some complications with our uptime when our DNS servers were hit by a DDoS attack, and – the big one – planning for this weekend’s conference.

Checking the timetable while I wait for inspiration to strike me about what to say about the "engagement" responsibilities of a Three Rings Administrator.
Checking the timetable while I wait for inspiration to strike me about what to say about the “engagement” responsibilities of a Three Rings Administrator.

The Three Rings 10th Birthday Conference is this weekend, and I’ve somehow volunteered myself to not only run the opening plenary but to run two presentations (one on the history of Three Rings, which I suppose I’m the best person to talk about, and one on being an awesome Three Rings Administrator) and a problem-solving workshop. My mind’s been on overdrive for weeks, and I’m pretty sure I’m not even the one working the hardest (that honour would have to go to poor JTA).

Still: all this work will pay off, I’m sure, and Saturday will be an event to remember. I’m looking forward to it… although right now I’d equally happily spend a week or two curled up in bed under a blanket with a nice book and a mug of herbal tea, thanks.

In other news: Matt P‘s hanging out on Earth at the moment, (on his best behaviour I think) while Ruth, JTA and I decide if we’d like to live with him for a while. So far, I think he’s making a convincing argument. He’s proven himself to be house trained (he hasn’t pooped on the carpet even once) and everything.

Checking the timetable while I wait for inspiration to strike me about what to say about the "engagement" responsibilities of a Three Rings Administrator.×

Who’s Your Daddy?

This morning I took a cycle out to the post office to put in the mail redirection forms (which they wouldn’t let us fill in online, and – in fact – they rejected once I got to the post office because I’d used blue ink in one place on the form, rather than black… but that’s another story) in anticipation of the Earthlings‘ upcoming house move, and on my way out of the garage our neighbour came over.

“We’ll be sorry to see you go,” she said, gesturing at the “TO LET” sign at the end of the driveway.

“Hmm?” I responded. It took a while to sink in that she was talking to me: apart from an occasional “Hi” or “Bye” on the way in to or out of the house, we’ve never spoken to one another before.

To Let sign outside Old Earth.

“Oh yeah,” I said, after a pause, “We’re moving over to the other side of the city: we kind-of wanted a bigger place for the four of us.”

“Oh,” she continued, “I suppose it might be a little small in there for four. It’s a shame, though: you’re the best tenants we’ve ever had.”

Something in my head snapped, and unraveled, and it took a little time before I managed to re-assemble her sentence into something that made sense to me.

“You… own this building?” I asked, pointing back at our house. We’d never met our landlords (at least, I thought we hadn’t): everything had always been arranged through our letting agency.

There was another twang in my head as something else snapped. Then moments later, half way through my next thought, I realised how incredibly racist I was being. You see: our contract had stated that our landlord’s name was Mr. Patel, and that’s a name that in my mind had associated itself with a certain tone of skin colour. And it had, for a moment, seemed inconceivable that the plump white woman in front of me could possibly be part of the family of the imaginary Mr. Patel that had taken up residence in my head. As I worked to reprogram my brain with this new information (and perhaps a little less capacity for runaway assumptions), she continued:

“The previous tenants have all been awful,” she said, “The last lot broke all of the windows. The ones before that tried to burn the place down!”

This actually went some way to explaining the state of the building, with it’s various weakened and damaged parts.

“Well thank you,” I said,  “I hope you get some more great tenants next time.”

“Yeah,” she replied, “I was going to say that to your dad this morning when I saw him leaving.”

“My… dad?”

“Yeah: he left here earlier; just a bit before your girlfriend left. Sorry: is he not your father?”

Every string that still remaining intact in my brain snapped simultaneously. This woman had just blown my poor little mind. I investigated:

“Dark-haired chap, with a beard?” I queries, miming the shape of a beard because for some reason that made sense to me – you know, in case she’d never seen a beard before.

“Yeah, that’s him.”

“Wow. No, that’s JTA. He’s… like four years younger than me.”

“Oh God!” she said, “You can’t tell him I said that…”

But it was too late: the blog post was already half-written in my mind, taking up the void that had been cleared during the earlier series of mental implosions. This one’s for you, pops.

My "father" updates the Earthlings' "Jump Track", a metaphor borrowed from the Battlestar Galactica board game to represent our readiness to "jump" to our new home. It looks like moving now has a 25% chance of us leaving 3 people behind. Also, it looks like the Galactica has put on weight since it's last step.
× ×


Apparantly I’m acquiring a roommate.

My friend Kit already spends more of his life at my house than at his own. Today I found his electric shaver plugged in in my bathroom. I questioned him about it, and apparently I have a suitable electrical outlet whereas he doesn’t, and this is the only reason, but I’m not so sure.

If he thinks he’s going to get to share my bed he has another thing coming.