Every couple gets to the point in their relationship when they have to have “the talk” - how should we combine our finances? And this question is further complicated by the fact that men and women earn differently, making it difficult to discern what’s actually fair. When it comes to relationships and finances, most modern-day families are dual-income households. Given the dramatic rise in inflation, dual incomes (and maybe even multiple incomes) will become increasingly prevalent. With that reality, questions around how to combine finances and handle wage inequity in a relationship continue to be a hot topic of conversation.
When discussing wage inequity, there are a few things to keep in mind. Through the myriad of different relationships that exist, there is wage inequity irrespective of whether they are queer or hetero - most couples tend not to make the exact same income. Even with the national average of dual-income households being close to $82,000, Women also earn 0.82 cents on every dollar a man earns due to the gender pay gap, so wage inequity in a relationship is confounded by societal dynamics at play. Wage inequity can be seen simplistically when really there are other non-monetary benefits that a partner might be contributing (childcare, great health insurance, etc.) that aren’t always factored into calculations but can still contribute to the household.
Given that there can be inequity, there are a few different models for how couples might tackle their finances in relationships:
This is where couples put everything into one joint banking, investment, etc account and spend together from there. One Zeta community member said, “We have focused less on wages and more on functions. All the money goes in one place, then taxes, bills, refinancing, etc. gets divvied out.” This model is the most traditional model and requires couples to communicate about their finances early and often. At Zeta, we see that 30-40% of couples do this.
This type of model involves more of an interdependent approach. A Zeta couple who follows this approach explains that they, “set aside a fixed sum into joint checking each month (split equally) to cover shared expenses (rent, utilities, mortgage, groceries) and also set aside equal amounts in a joint brokerage. The remainder goes into our personal checking and brokerage accounts.” In this model, couples can either choose a fixed contribution amount from each of their paychecks or a variable amount if one person earns more. This approach works well for couples who prefer some financial independence from their partners for many reasons - for example, they saw money fights with their parents or they have spending or investing patterns that they’d rather not have to coordinate with their partner on
Typically couples who want more control over exactly what’s spent or deeply value their independence will pick this path. Although it’s interesting to hear that it’s sometimes the lower earner who doesn’t want to combine. Some families still choose to manage money separately, as one Zeta couple put it “ 8 years into this relationship, we’re parents and still manage money separately,” saying they’d be willing to combine anytime but their partner chooses to be “financially independent.”
Irrespective of how you combine your finances across bank accounts, the state also has an opinion on who actually owns your shared assets and liabilities. For example, community property states will typically split a household down the middle in a divorce unless you have a pre or postnup stating otherwise. Many couples can find these topics difficult to discuss but being aware of the division of assets in the eyes of the government in the case of separation for any reason is critical to financial well-being. This can help in establishing economic equality within a relationship.
Talking with your partner about what type of approach works for your relationship, can ensure the health and longevity of your partnership. We find that once you have an agreed upon approach, you want to operationalize or set up a system around it so there’s less stress and anxiety around managing money. At Zeta, this is exactly what we’re solving for by making shared money easier to co-manage. We offer modern-day Joint Accounts that are focused on building a collaborative experience around money management. And for couples who want some independence, we launched Personal Accounts for all our active joint account users. No matter what approach you and your partner choose, being aware of economic inequality and gender wage gaps can help your relationship thrive.
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