222 | Managing Money as a Couple When One Partner Makes More

It can be hard to navigate a situation where one person makes more money in the relationship. And it’s a pretty common situation for lawyers.

The trick when you’re managing your finances with a partner, especially in this situation, is to manage them in a way that feels fair to both people.

In this episode, let’s talk about three approaches to consider if you’re in a relationship where one partner makes more than the other.

• • my experience with making more than my husband at the beginning of our marriage

  • my favorite approach for married couples to manage their finances
  • why it’s not a good idea for unmarried couples to put all their money in a joint account
  • my favorite approach for unmarried couples to manage their finances
  • an alternative approach for couples to manage their finances

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You’re listening to Wealthyesq. We are a community of lawyers who believe that true wealth is having control of our time. I’m Rho Thomas, and as a busy wife, mom and former Biglaw associate, I know all too well the tension between the culture of the legal profession and pretty much everything else you want to do in life. That’s why each week, I’m bringing you the information and tools you need to improve your money mindset and manage your money to create true wealth. Because ultimately, it’s not about the money. It’s about the freedom and flexibility the money affords.

Hey, friend. Welcome back to the show. I hope you’re doing well and having an amazing day so far. Today, we are talking about what to do, or like, how to manage your money. As a couple, when one partner makes more than the other, this is actually a really common situation. I have seen it really often with my couples clients. Typically with my couples, one spouse is an attorney and the other isn’t, and the attorney is usually the breadwinner. So far, I have only worked with married couples, like with both of those people in the partnership coming on the call together, not because of any rule of mine or anything like that, but typically, when my clients aren’t married, like even if they’re in a relationship, they will hire me just for themselves, because their finances are separate from their partners. But I have seen this situation a lot, where I’ve dealt with this situation a lot, and so I have some thoughts for you. So we’re talking about how to manage your money as a couple when one partner makes more. This was actually my situation for the first three and a half years or so of my marriage. When my husband and I got married, I was in my first year of practice. He was still in school. I was making $135,000 a year. And since he was in school, he wasn’t making anything. And then when he graduated, he went to residency, and he was making about $40,000 a year. So you know, there was a disparity there in our income still for that three years while he was in residency. And even with that pay disparity, we put everything together and we managed our finances together. So our whole paycheck came into our joint account, and then we would get a set amount each month that we could spend however we wanted to. We decided on an amount that we would both get, and that amount has changed over the years. That our finances have changed like it was lower earlier on, and we’ve increased it, but on the first of the month, that amount is transferred from our joint account into our two individual fun money accounts automatically, and it’s ours to spend however we want to. I really believe, barring some exceptional circumstances, like if one spouse has an addiction or, you know, some sort of issues like that, I think this is the best, cleanest way for married couples to manage their money. Just put all the money in a joint account, pay all the bills, all the stuff for the kids, all the debt payments, all the general living expenses, all that pay it out of that joint account. But then each partner gets a set amount, set amount of money to spend however they want to, no questions asked. However, I also understand that some couples, even when they are married, don’t want to put all their money into a joint account for whatever reason, and I don’t think it’s a good idea for unmarried couples to manage their money this way. Marriage gives you some legal parameters for how assets will be divided up. If the relationship doesn’t work out, you’re kind of protected there, and when you’re not married, you don’t have that same protection. Now you could maybe create some kind of agreement about how things would end, like if the relationship ends, this is what we would do, kind of like a prenup. But I’ve heard of situations where an unmarried couple breaks up and one partner takes all the money out of the joint account, and the other has no recourse with a married couple. If that happened, like, there’s a joint account, one spouse takes it all. You know, during the course of the divorce, the court would likely order that person to pay the other spouse half, or to give that other spouse some other assets that would be equivalent in value, or something like that. So that’s why I say it’s not a great idea to put everything together when you’re not married, you are missing some of those legal protections that automatically apply when you are married. So for those couples, the ones who aren’t married and the ones who are married but don’t want to manage their finances in a joint account, another option that I have seen work well is for spouses to split expenses proportionately to their income. So for example, let’s say one partner makes $100,000 the other partner makes 50,000 the total household income is 150 but one partner, right? The first partner is bringing in two thirds of that, and then the second partner is bringing in 1/3 So then, when we’re talking about expenses, partner one would pay two thirds of the expenses, and partner two would pay 1/3 for example, let’s say you’ve got a mortgage. Your mortgage is $1,500 partner one would put in $1,000 which is two thirds, and partner two would put in $500 which is a third and with this approach, typically, I’ve seen people have a bills account that both partners have access to and can transfer their portion in, and then the bills are paid out of that account. So it’s not everything coming into this account, like the first option that we were talking about, the first approach, it’s just what’s needed to pay the bills. Another way I’ve seen this handle is one partner will be the one to pay the bill, right? Like with the mortgage example, partner one maybe pays it, and then the other partner will give that partner the one paid it their portion, so partner one pays the mortgage, but then partner two gives them $500 for their portion of it. This proportionate split helps to manage that pay disparity a little bit. It helps things to feel more fair, because what’s tough is the situations where partners make different amounts and they’re still trying to split the bills, 5050, and the partner who makes less is struggling, trying to keep up, while the partner who makes more has all this extra and is balling out of control. That leads to a lot of resentment and tension in the relationship, so the proportionate way of splitting helps that a little bit. Similarly, when you’re in this situation, it is crucial for both partners to be open and honest with each other about what they can afford. Because if we’re living in a place that the partner who makes more can afford, but me paying my portion is most of my income, that’s not going to be a good situation either, right? So we want to make sure that we’re still being open and honest about what we can afford. So even when we’re talking about what’s proportionate, we need for the proportions to make sense for each person’s income. But this is a decent approach. It’s not my favorite for married couples, because it can be a little messy, but it is my preference for unmarried couples. Another approach that I’ve seen is where people will split up the bills. So this partner is responsible for the mortgage and that partner is responsible for the light bill, and this partner is responsible for this other bill. And just explaining things like kind of dividing it like that. I think that can work too, especially in the situation that we just talked about, where maybe one partner can afford this place, but the other person can’t, like, if the partner who can afford it really wants to live here, and they want the partner who can’t afford it to be there with them, this is probably the approach they need. To take, right? But this one is my least favorite, because I think it’s the messiest. Like, how do we determine which partner is responsible for which bills? How do we make sure that the total amounts each partner is responsible for is fair? That kind of thing. Like, I think it’s just a little bit messier than the first two approaches, but it can work. So those are my thoughts on managing your finances when one partner makes more than the other. I hope that they are helpful for you. Please feel free to reach out if you have any questions. All right, so that is it for this week’s episode. If you haven’t done so already, please subscribe to the podcast. Leave a review. Both of those things show the podcast platforms that this podcast is valuable so that it gets shown to more people. And as always, I appreciate your support. As we close out, friend, I pray that you take the information you learn here, apply it in your life and open up to the realization that wealth is available to you. As you do that consistently, week after week, you’ll continue to take steps to regain control of your time, build wealth and live the life of freedom and choice you deserve. Talk to you later.