How Couples Can Manage Household Expenses With A Large Income Gap

I recently spoke with a couple where one partner made significantly more money than their other half. The person who made more asked me how household expenses should be divvied up. Whether married or unmarried, every couple needs to find an arrangement that works well for them and their relationship.

Too often, assumptions and lack of communication can lead to someone feeling resentful and the relationship being at risk. This is how to manage household expenses with a large income gap.

Communicate

In the earlier example, the partner making more money had previously resorted to covering all the household expenses out of fear of conflict. They assumed that because they made twice as much as their partner, the person making less would be resentful of any contributions they were asked to make. However, the person making more did not feel appreciated for their contributions which had a negative impact on the relationship. Communication was needed to solve this issue.

Income-Weighted Division

After communicating, we found the person making less wanted to contribute their fair share and had no idea how much the partner making more money was paying toward expenses. For this couple, weighting contributions to household expenses by income level made the most sense. So, the person making more began to cover two thirds of expenses while their partner covered the other third.

Define Fairness

In your own relationship, it’s critical to talk through both of your perspectives, values, and ideas of fairness.

Consumption-Based Division

If the ideas of fairness end up being consumption- or use-based, it may end up making sense to split expenses based on that premise. In this example, if you have a home that you both use equally, you would both contribute equal amounts regardless of the income disparity.

Labor-Based Division

In some relationships, I’ve also seen a couple exchange domestic labor for a portion of the household expenses. I’ve seen cases where the person making more paid for all housing costs, while the person making less covered groceries and cooking duties.

Priority-Based Division

In other relationships, I’ve seen couples decide that covering entirely separate expenses according to their personal priorities worked best for them. They maintained entirely separate bank accounts. One person covered all the costs related to their joint children and the other covered everything else.

Revisit

Income levels and priorities can often change over time in a relationship. One or both partners could go through a long stretch of joblessness, get a promotion, switch careers, or go back to school and the previous arrangement might not make as much sense as it once did. It’s critical to discuss your priorities, revisit your joint budget, and agree on the path moving forward at regular intervals.

Consider Your Joint Financial Goals

How you divide your everyday expenses can impact your ability to meet joint financial goals. If you and your partner want to achieve something together, like purchasing a home, it’s critical to discuss how you’ll meet that goal separately from your arrangements around household expenses. What feels fair in your everyday life might be different from what feels fair when saving toward future goals.

Conclusion

Managing household expenses when there is a significant income gap between partners requires open communication, a clear definition of fairness, and a regular reassessment of the financial arrangement. By discussing each partner's perspectives and values, couples can find a balance that works for both parties, whether that means proportionate contributions, weighting by consumption, exchanging domestic labor or maintaining separate financial responsibilities. It's essential to remember that circumstances and priorities change over time. So, revisiting and adjusting the financial plan is crucial to ensure it continues to meet the needs of the relationship. Ultimately, the key to success lies in mutual respect, understanding, and a willingness to adapt as life evolves.

This article was originally published by me on Forbes.com

This informational and educational article does not offer or constitute, and should not be relied upon as, tax or financial advice. Your unique needs, goals and circumstances require the individualized attention of your own tax and financial professionals whose advice and services will prevail over any information provided in this article. Equitable Advisors, LLC and its associates and affiliates do not provide tax or legal advice or services. Equitable Advisors, LLC (Equitable Financial Advisors in MI and TN) and its affiliates do not endorse, approve or make any representations as to the accuracy, completeness or appropriateness of any part of any content linked to from this article.

Cicely Jones (CA Insurance Lic. #: 0K81625) offers securities through Equitable Advisors, LLC (NY, NY 212-314-4600), member FINRA, SIPC (Equitable Financial Advisors in MI & TN) and offers annuity and insurance products through Equitable Network, LLC, which conducts business in California as Equitable Network Insurance Agency of California, LLC). Financial Professionals may transact business and/or respond to inquiries only in state(s) in which they are properly qualified. Any compensation that Ms. Jones may receive for the publication of this article is earned separate from, and entirely outside of her capacities with, Equitable Advisors, LLC and Equitable Network, LLC (Equitable Network Insurance Agency of California, LLC). AGE-7316691.1 (11/24)(exp. 11/28)