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I earn more money than my partner. Am I subsidizing his life?
Welcome to Taking Stock, a space where we can breathe deeply and try to understand what the COVID-19 economy really means to our finances. Each month, personal finance expert Paco de Leon will answer your most difficult and emotionally charged questions about money. This year has forced many of us to re-prioritize our finances, and there is not yet a clear roadmap for getting through the pandemic – but the toll is there to help us understand it together. This month, we’re talking about what’s really ‘right’ when it comes to who pays for what in a relationship, especially when one partner makes more money than the other. Do you have a question or dilemma that you would like to see answered as part of the review? Submit it here or email us at [email protected] DashDividers_1_500x100 Dear Paco, My partner and I are finally considering living together. It’s an exciting decision, but one thing that still bothers me is what’s “right” for us to live together, including the bills and daily expenses, and even which apartment we should be living in. I earn around $ 50,000 (£ 35,122) more than him, and he seems to be pushing for slightly nicer places, saying we could afford it based on our combined income – and why wouldn’t we want to live in a nicer place? – but I think he also thinks my share of the rent should be higher since I earn more money. Personally, I prefer to live in a less pleasant place and save more. And I feel that in general I already pay a lot more than him. I don’t know why this bothers me… but I think it is. Frankly, his quality of life would decline a lot without me. And because his lifestyle is pretty good now, I feel like he’s not as motivated to get that next promotion or move into a higher paying role. Am I supposed to be paying more for everything we do as a couple just because my paycheck is bigger? I know it’s a subjective thing, but how do I organize my feelings about what’s really right between us without a build-up of resentment over time? Am I not generous in thinking about the “investment” each of us puts into this relationship? DashDividers_1_500x100 Dear Earn Plus, Congratulations on this exciting new phase in your relationship. Living together allows you to have new fun experiences together. It also means mundane things – like finding a way to organize your mail, dividing up household chores and all the associated bills. Spend sharing is economical and therefore great, but figuring out how to do it with unequal income requires conversations you may not have had before. I think the best way to approach relationships and money is to first understand your own feelings, anxieties, and money issues. Then, with a compassionate ear, listen and try to understand your partner’s and realize that they may be different from yours. If you both can put the shoe on the other foot, I think you’ll have an easier time agreeing on a method of managing common costs that feels right to both of you. Before you can be on the same team, be on the same page. I don’t think you are lacking in generosity by not wanting to cover more costs. You may just have different ideas of what is right. You and your partner have a shared experience from different angles. To you, just might sound like a 50/50 split. To him, it may seem fairer to distribute the costs according to each of your income. Talk to your partner about how you are feeling and try to figure out how they are feeling. How would he feel and how would he approach this if the situation was reversed? What are your ideas on fairness? How could you divide things where both feel like they are contributing and receiving equally? At what threshold would you both agree that the higher income in the relationship should help subsidize their partner’s lifestyle? How to Cut the Cake There is no right way to deal with money with your partner. I’ve worked with couples who have kept financial lives entirely separate for over 15 years of marriage (and it’s not over yet), and I’ve met couples who combined their finances early on. Here’s how to think about the practicalities of cost sharing. • First, decide which expenses will be allocated and which will be separated. Some couples share expenses that are truly shared, such as rent, groceries, utilities, and the Internet. Other couples decide that common expenses include bills that need to be paid, like expenses for phones and pets, even if the dog entered the relationship as your partner’s pet. • A 50/50 split might work for couples who are just starting to combine their lives. When my wife and I started sharing common expenses, we took this approach even though she earned more than I did. If you choose a 50/50 split, you might choose to be generous with discretionary and fun spending, as it doesn’t feel like a wait anymore. Instead, it feels like a choice you make that benefits both of you. On the other hand, a 50/50 split may not work when a partner earns a lot more. The person who earns less may feel financially strained if they cannot save or allocate enough to pay off their debts. • Selecting what expenses each of you will pay is another method some couples use. For example, one of you agrees to pay the rent and the other pays for everything else. It can work for uneven income, but it can feel a bit free if there is no budget, follow-up, or regular discussions about how you feel. • Another popular method is to set an amount proportional to your income (eg 35% of your take-home pay) for common expenses. With a proportional distribution, the biggest employee pays more, but the amount is relative to his ability to pay. For example, if your take-home pay is $ 5,000 (£ 3,512) per month and hers is $ 3,000 (£ 2,107), and you have both agreed to pay 35% of your salary to cover your joint expenses, you would contribute $ 1,750. (£ 1,229) and $ 1,050, (£ 737) respectively. As long as your partner’s financial situation is not too strained, this method could make both of you feel that you are contributing and winning equally. It also imposes an agreed budget constraint, or price cap, on your apartment search. Consider these options together to assess which one you think is a solution to minimizing financial stress. Planning Silver Dates I am a relentless evangelist of regularly scheduled financial times. For couples, planning payment dates is one way to make sure you prioritize managing your money together, keeping communication open. The benefits of setting aside time to talk and review finances are twofold. First of all, it gives each of you time to prepare for things that you would like to discuss. Let’s say you want to offer a 50/50 expense split, or you want to offer the creation of a joint savings account. You can consider how you want to frame the spending conversation, find savings account options ahead of time, and practice approaching those discussions. Second, when the two of you know well in advance that you are going to be discussing the often sensitive topic of money, you can both prepare to start the conversation calmly and calmly. Juxtapose that with the alternative – after you get home from a long day at work, your partner brings up the topic of money. You might feel ambushed, confused, unprepared to discuss money, and closed off looking for a solution that works for both of you. This is a probable recipe for a money crash. If you check in regularly, share your feelings and listen to each other, you will be able to meet your challenges. You will find that it is easier to tackle more thorny topics, like asking your partner about their career and professional ambitions, because both of you are used to addressing your concerns. Regular, clear communication of this shared experience is a sure-fire way to feel heard, achieve your goals, and dramatically reduce the chances of resentment. You can start on a monthly basis and add more if you need to. Always Communicate Changes Even though my wife and I shared 50/50 expenses for many years, there were times when each of us earned less than the other and the higher income took over the costs. common. We spoke candidly about these times to allay fears. These conversations were about values and details – about mutual reimbursement, income goals, savings plans, and discretionary spending cuts. The important thing to remember is that there is a risk that you will never get ‘your money back’, but communication keeps our fears in check and allows our relationship to grow and our financial plans to stay aligned. . The arrangement you accept today may not be exactly what you will have in a few years. Be open to a changing situation. If you accept a 50/50 split, but the difference between who pays for what continues to grow, being able to communicate and revise your approach can help you get ahead of resentment. It would be so much easier if there was just one right way to allocate expenses. We could all just accept the rules and say our feelings of kindly sitting down because the logic of joint finance has been decided for us. Learning to agree on the sensitive subject of money can help strengthen your relationship. You will continue to work regularly in a long term relationship to sort out your feelings and those of your partner about money. This is where #relationshipgoals are made. Your willingness to face it is impressive. Your financial friend, Paco Tell us how you handle money with your partner here to be featured in an upcoming Refinery29 story. Like what you see? How about a little more R29 goodness, here? Money Diary: a financial agent and eyelash technician Money Diary: a podcast co-host on 35k Money Diary: an occupational therapist on 30k