Justanothermum and Mum2Girlz speak a lot of wisdom.
Money is always a difficult topic and different couples both manage and view joint income differently. I think it’ll always be contentious and subjective.
With that in mind, from the way you explain the situation it doesn’t seem to me that money is the issue.
I have more questions than answers.
Did your wife want to give up her career? Which, in the most respectful way, you dismiss quite easily. The ways she’s spending money require effort and planning. I just replaced two bathrooms and they’re projects. I imagine a kitchen takes even more mental labour. Could she be bored and frustrated in her current activities and need more? Is there space in your lives for some form of additional education? Whether a night class or learning a new language on an app? Or some other new challenge like learning / progressing a sport?
I know generally, buying things can be a good way of feeling like you’ve achieved something. Again, it could indicate that some form of achievement is missing.
Which makes me wonder, the things being changed are the environment she spends her time in and could be a way of her controlling her world - ‘if I’m in this house / car all day I’ll make it the way I want it’. Could she be feeling powerless in her world and need more control over her life? I’d say autonomy comes pretty high in our human needs.
On that point, could you be a bit money obsessed too? You dismiss her career based on salary but not everyone defines their contribution by salary. Satisfaction and use of skill come into it too.
How do you view joint income? If she stays at home then your salary is it (assuming no other money sources). Do you see this as yours? You say, ‘give her a monthly budget’’, ‘I could simply refuse to pay’. That sounds to me that you class the money as yours for you to give to her as you choose. An assumption, but if so, how does she feel about it? It doesn’t sound very equal to me. Yet I’m assuming you agreed to her giving up work to raise the kids?
Finally, if it is just about the money, and there’s no deeper issue, as well as the suggestions of speaking to a financial advisor or counsellor, how about suggesting a part-time job? I’ve earned my own money from 11 years old, always had part-time jobs or full-time jobs, until I just didn’t go back after mat leave, and I’m doing an MA to transition to a new career. I’ve got to admit I’m very conscious my appreciation of money is dwindling as I’m not earning it. (Don’t get me wrong stay at home parenting is the hardest of all of the jobs I’ve had, and I couldn’t do it full-time forever. However, I am distanced from earning money vs spending it.)
One last point. I’ve felt quite uncomfortable throughout this talking about her / she when it comes to money. There’s a danger that she is minimised and treated like a child. It is harks back to the 1950s bulls*** about how to placate a little wife. That’s obviously not how it’s meant, you’ve come here asking for help clearly from a place of love and care. But if this was me, and strangers were suggesting to sit me down and put me straight I don’t think I’d feel loved and cared for, or respected. So clearly, again maybe reflected in you coming here first not speaking to your wife, tread carefully. Being made to feel powerless if you don’t earn money can have lasting affects on self-worth (ones I’ve just realised I’m working through myself).