We do it the same way as Rachel631: each pay a percentage of total household bills based on income, and keep the rest of our cash separate.
So when DH was earning 70% more than me, he paid 70% of the household budget. Thus I kept most of my income to save/spend as I pleased. Household budget is calculated after we both put 15% of our pre-tax income into retirement savings, and the budget includes long- and medium-term goals (like vacations and house savings).
This system works best for us, and I feel it has made our marriage much stronger and helped avoid all of the financial problems other couples have. We have NEVER, not once, had a disagreement about money. Here is why I like this system:
1. We never stress over how the other spends their money. Sure, I still discuss big purchases with DH, and he with me, but in the end it is totally my call if I want to buy an expensive new dress or if he wants a new iPad. Him buying an iPad doesn’t upset me, because it has NO impact on my ability to buy things or our future savings together.
2. We maintain our independence — my money is MINE, his is HIS. If I want extra spending money, I pick up extra work (which also benifits him bc then I contribute more to the household budget). We are loose with this idea, however. If our household ever needs extra cash, we are not stingy with our separate money.
3. It allows us to buy gifts for each other. I got DH a very expensive xmas gift, which I had to save for. My saving for it, sacrificing my own wants for his gift, gave that gift more meaning. He’s doing the same for my anniversary gift this year.
4. It’s fair. If one person does earn oodles more money than the other, then that person pays oodles more into the houshold budget.
I also like the idea of dumping all income into a joint account, paying bills, then each getting $X equal spending money. But the problem with that system is that you are giving up independence, the sense of having earned your spending money yourself (which surely works for many people, but not for us).
If one person is working their ass off to earn a ton of money, and the other has an easy job, or is in school, it’s not really fair for them both the have the same amount of spending money, imo. Similarly, if I had bought a house before meeting DH I would view that as MY investment, and would not want to just hand it over to him immediately.
Anyway I don’t think it really matters what system you use OP, provided you discuss it regularly (at lease once a month) and are each in agreement. If paying rent to your husband works for you guys, do that. But it sounds like you have reservations about that arrangement.