Dealing with money issues can be challenging for any couple, but it can be especially difficult when there is a sizable financial disparity between you and your partner or spouse. If one of you has significantly more income, assets, debt, or expenses, it can strain even the healthiest relationship if not addressed with care, honesty, and respect. What’s the best way to handle your finances when one of you earns or owes a lot more money?
Start Talking About Finances Early and Often
Before you get married or move in together, you should be discussing your individual and joint finances. That includes your respective financial situations (income, assets, debts, expenses), financial history, values, habits, goals, and lifestyle expectations.
If you’re already married, start the conversation now. You both need to be open and honest. You cannot effectively manage your finances if you don’t have the full financial picture individually and as a couple.
Once you’ve had your first discussion, agree on how often you will check in with each other about financial issues. You should have meetings at regular intervals and as needed when your finances change.
Create a Fair, Not Necessarily Equal System for Paying Expenses
Dividing joint expenses equally may not feel right when there is a big difference in income. Instead, you should consider an arrangement where you each contribute proportionally based on your respective incomes and ability to pay. This way, both of you pay your fair share without being stretched too thin.
Consider Separate and Shared Bank Accounts for Financial Independence
Some couples pool their money in a joint account, while others keep it all separate. However, a hybrid approach can offer the best of both worlds. You each contribute to a joint account to pay shared expenses, but also have a separate account for your personal spending and goals. This gives you some independence and freedom to spend your individual funds without feeling guilty.
Establish Shared Longer-Term Goals
Do you want to buy a home, travel, retire early, or pay for your child’s college? Setting goals that are important to both of you helps you work as a team, regardless of who contributes more financially.
Address Power Dynamics in Your Relationship
When one partner earns or owns more, it can lead to a power imbalance and negative emotions affecting decision-making. The higher earner may resent supporting the other person or feel stressed about having to make more money. The lower earner may feel insecure, guilty, or defensive about spending money. It’s important to acknowledge these emotions, but also focus on your joint efforts rather than keeping score on who brings what to the table.
Get Help if Needed
Bringing in a neutral third party can help you address conflicts and work with your partner more effectively. For example, a financial expert like a daily money manager (DMM) can guide you in creating a budget, tracking your finances, and developing strategies to manage your finances together. A DMM can also help mediate tough conversations between you and your partner as an impartial party.
Financial planners, financial counselors, and accountants can also offer advice on improving your finances, investing, and long-term planning.
In some cases, there may be deeper relationship issues underlying your financial conflicts. In that case, therapy or marriage counseling may be advisable.
If you want assistance with managing the day-to-day finances of your household, I’m here to help. Contact me for a free consultation.
