Openly talking about money is one of the healthiest aspects of a good relationship. And it’s especially important when salaries are imbalanced. According to experts, when you make less money than your partner it’s important to understand how this affects both of your money mindset.
“For some couples, this might not be an issue while for others it will be a point of contention,” said Kelly Palmer, financial planner, CFA, and founder of The Wealthy Parent. “Sitting down with your partner and discussing a framework for how to manage your finances, whether jointly, or separately is key,” she explained. “You must create a fair, not necessarily equal, game plan to reach your mutual financial goals.”
Doing so, however, can be more easily said than done if you don’t know how to approach the conversation. That’s why having these money talks and emphasizing the emotional aspects of your connection are important steps that can bring financial harmony and strengthen your partnership.
Discuss Your Financial Goals and Priorities
Talking about money can be uncomfortable for many couples, say experts, but it’s an essential step in managing finances if you make less than your partner. “The single most important thing you should do if you have a major income disparity with your partner is talk about it,” said Ann Martin, director of operations of CreditDonkey.
Take the time to have an open and honest conversation about your financial goals and priorities. Discuss things like saving for retirement, paying off debt, and any large purchases you may want to make in the future. By having this conversation, you can work together to create a financial plan that aligns with both of your goals and values.
Work Together on a Shared Budget
Creating a budget is crucial for any couple, but it becomes even more critical when there is an income disparity between partners. Working together can help you both plan your finances as a team. By listing your expenses and setting priorities together, you ensure both have a say in money matters. According to experts, having these open conversations about handling shared expenses is necessary to keep things clear. Figure out who’s covering what and how you’re splitting the bills.
You can do this by sitting down together and making a list of all your shared expenses like rent, groceries, and utilities. Then, determine how much each person will contribute based on their income. This way, both partners are contributing equally to the shared expenses, even if one makes more than the other.
Create a Joint Account
There are equitable ways to make this arrangement work, said Martin, but she notes that any arrangement that is built on unspoken assumptions is going to lead to misunderstandings and resentment.
“One very simple way to resolve this issue is to make proportional contributions to a joint account to cover joint expenses,” she encouraged. “This can be the account that pays the mortgage, the utility bills, the property taxes, etc. If you make $100,000 and your partner makes $50,000, then you’ll contribute $2 for every $1 that they do, but you’ll be spending the same percentage of your income on home expenses.”
Consider Individual Expenses
Aside from looking at joint expenses, it’s essential to plan for individual expenses as well. Both partners should have some money set aside for personal expenses like hobbies, clothing, or gifts for friends and family. When one partner makes less than the other, it’s crucial to discuss how much each person can comfortably spend on themselves without causing financial strain.
Be Mindful of Your Spending Habits
When one partner makes significantly less money than the other, it’s important to be mindful of your spending habits. It’s easy to feel the pressure to keep up with a higher-earning partner, but this can quickly lead to overspending and financial strain. Remember that it’s okay to have different incomes and lifestyles, and it’s crucial to spend within your means.
Focus on Contribution Over Numbers
Experts say it’s okay not to feel bad about earning less, noting that financial imbalances can happen and don’t define your worth. Instead, they recommend focusing on the other ways you contribute to your relationship – offering emotional support, sharing household responsibilities, and personal growth.
“I encourage couples, especially young families, to look beyond the numbers on a paycheck and consider each partner’s overall contribution to the family,” said Palmer. She added that one partner may have taken a step back to care for young children and this certainly won’t be reflected on a paystub but is undoubtedly very valuable. “It’s also important to recognize an income discrepancy is not permanent so if you are currently earning less than your partner but believe you should be earning more, then perhaps it’s time to make a change.”
Speaking on the topic of contribution, Martin also emphasizes that while every relationship is different, she says it’s a bad idea to expect the lower-earning partner to make up the difference in finances with extra labor. “This is different if the lower earner only works part-time, but if you’re both spending 40 or more hours per week at work, an even split of the remaining duties is much more fair, regardless of who’s getting paid more.”
Remember There Are No Simple Solutions
“Money is often seen as the root of many relationship issues,” said Carter Seuthe, finance expert and CEO of Credit Summit. “In my experience working with couples, it’s one of the top elements that can make or break a long-term relationship.”
He notes that without honest communication, expectations are inevitably not going to be met and distrust can start to build. “There isn’t one simple answer to what a person should do if they make less money than their partner,” he observed. “Each couple is different, and what it ultimately boils down to is communicating with one another so that money expectations and goals are set according to the couple as a unit.”
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