One spouse making considerably more than the other can create real tension in a relationship. Here’s how to address income inequality logically and fairly.
If income inequality has become an issue in your home, don’t despair; there are ways to work to a mutually satisfactory outcome for the both of you. For those couples who choose to keep separate bank accounts, there is a way to handle your finances in a fair and equitable manner. Financial expert Suze Orman says this is the most common topic that arises with couples. The most common question she gets is, “How should we split the bills?”
Forget the 50/50 myth, which often leads to financial frustrations, and think more along the lines of basing financial responsibility according to income. For example, if you make $3,000 a month and your partner makes $7,000, and your household expenses are $3,000 monthly, Orman suggests you split the bills 30/70. Her reasoning is that this way, each spouse is responsible for an equal percentage of expenses instead of equal dollar amounts. She says, “If you split them 50/50, $1500 of your money is 50% of what you make; $1,500 of what the significant other is making is essentially 20% to 25% of what they’re making. Is that fair? No!”
So realistically, with the 50/50 method, if you are the one making considerably less money and you were paying half the bills, your monthly discretionary income would be a mere fraction of your partner’s. This creates the typical societal issue of “the rich get richer, while the poor get poorer” within a household. This is definitely not conducive to a harmonious existence in the home.
For those couples who combine all of their money into one account, income disparity will not be as big of an issue unless you set yourself up for resentment along the way. This can come from one spouse taking on a position of power because they earn more, or the lesser-earning partner feeling unnecessarily inadequate about not making as much.
Who the primary breadwinner is doesn’t matter so much as how couples come together to work through income inequality issues. Creating a solid financial plan together will help alleviate many of the issues that arise from this inequality. To get an even distribution of financial power, each party must assume and agree on the same financial goals that will be pursued. Make sure to create a discretionary financial fund with equal amounts available to each of you. This is money you can spend independently without discussing it with your partner.
How do you and your spouse or partner handle income inequality issues? Share your stories, ideas and suggestions below.