Thursday, February 26, 2009

Thin wallet, fat wallet: Income disparity in couples

Couples are disparate in many ways. Sometimes this opposition makes for a fascinating life, sometimes it's a battleground. Income is one of those fraught areas. When partners are both earning an income, and one person has significantly more money than the other, there are three typical approaches:

1. Throw the money into a pool and share everything.

2. Split living expenses 50/50, each partner retains any surplus. In this case, the person earning less ends up with less discretionary income.

3. Split living expenses in proportion to income ("from each according to his means"); retain surplus. The Thin Wallet has about the same ratio of expenses to discretionary income as the Fat.

Because the issue of money sends its tentacles into other aspects of a relationship (work, aspirations, values), the best plan for the Wallets should be up to them. Le Duc and I, small-business owners, fell into the first approach when I joined his business decades ago. If one of us has a standout year, that might be acknowledged by a litt
le splurge for the star.

Observations about living with income disparity:

1. For both partners, personal discretionary money is essential, even if it's $10 per week. You should have some money you don't need to account for.

2. If one partner has vastly more than the other, some at-home philanthropy is wise. My friend Laura's partner funds the exotic trips that she could not afford on a nurse's salary.

3. If one partner is emotionally withholding, money will be the red herring. You will fight endlessly about it or live with simmering resentment- and it's not the real issue. A woman I know is the partner of a wealthy man who insists he choose every item in, as he says, "the house I paid for."

4. Both partners need to be aware of the tendancies inherent in the situation.

It's tempting for the lower-income person (especially early in a relationship) to try to keep up with the wealthier one, a fast lane to debt and resentment.
Or the lower-income partner may have to reign in the high-earner, because that income may not always flow abundantly.

Regardless of the relationship's stage, living as a Thin Wallet/Fat Wallet couple takes ingenuity and maturity, facing awkward moments with goodwill and trust.

Do you have experience with wide income disparity? How do you or those you know manage the gap?


13 comments:

Frugal Scholar said...

So much wisdom here. I wish all the people struggling with this issue would find their way here, because you get it all in.

For me, DH and I have roughly the same income and always will. We also are lucky in having a common spending/savings profile. In fact, we're both "pathologically frugal." So each of us always tries to get the other to be more extravagant.

We're lucky also in that our desired splurges are the same--in our case, trips abroad, especially to Paris.

A disparity in income and in values can cause problems.

Karen said...

Very interesting.

I HATE not making ANY money. It grieves me to have no economic value to this family. Luckily, my husband is generous and takes good care of my follies. And he takes me on nice trips.

materfamilias said...

Karen: You have huge economic value to your family! I know you mean you don't earn outside the home, but you need to be careful how you articulate this frustration, even to yourself, imho. I'm sure your husband, as mine always has been, is well aware of how much richer (in every sense) your family life is because you're willing to set career-building aside during these child-rearing years. That said, I instantly recognize a sentiment I always struggled with. Luckily, Pater has always left all the family money management to me and always acknowledged my contribution as at least equal to his own. Now that I'm working full-time, we continue our practice of putting all funds in a shared pot which I manage. I spend way more discretionary money than he does (although he makes much, much more than I do)because of our different needs/personalities, but our basic values around money are similar enough that we're generally able to negotiate without too much "money talk."
So far, I'm pleased and relieved to see that my kids have been able to work out what seem to be fair and realistic shared approaches to their budgets and money management, altho' each one's is different and none of them pool their funds the way we do.

Duchesse said...

materfamilias: That's just what I was going to suggest to Karen!

There are other issues in the case of one wage earner and one contributing through home-making labour. As I've never done that, I'm not the best person to write about it.

materfamilias said...

sorry -- hope I didn't horn in too much -- it rather looks like it on a revisit, but it's an issue I feel strongly about: All mothers are working mothers! I was earning more than Pater when we met and prided myself on financial independence, so it was something my fierce little feminist 20-something self hammered out before staying home with the kids (altho' I was able to work part-time, teaching music at home, so I did at least have some money passing through my hands only). OH dear, and here I go again. I'll stop now, and apologize once again! ;-)

Duchesse said...

ma: No. Don't stop.

re Karen's words "Luckily my husband is generous and takes good care of my follies". It could be my reading, but it seems with that phrase you are not acknowledging your contribution, Karen. The ah, vintage feminists like materfamilias and me will react to that! It is absolutely hard work (unless you have a raft of household help I don't know about, then I will revise that opinion :) )

Imogen Lamport said...

Great post Duchesse - always a tricky subject money!

I think that the mother, such as Karen (or myself) needs to appreciate what you bring to the table.

I'm sure Karen does the cooking, lots of the cleaning and tidying, looks after the kids (husband travels lots, so imagine if he had to pay someone else to look after them what he'd be out of pocket).

I think that many women who don't work outside the home have issues with not bringing in income as we've been brought up to work so we feel 'less than' in a way, and often forget the invaluable contribution we make.

My business, when I first started brought very little to the communal table, it now brings the nights out, the trip to LA we are about to take, and pays many of the bills.

Karen said...

What it is, is that women of my generation were told we could go out there and do it all! We got degrees, started careers, and eventually made a great income for one lady on her own. I used to take care of all my own needs with my own salary. As soon as I had my first child I left the corporate world to be a mom, and I always was so grateful that I could raise them and be with them every single day.

But there STILL is that little twinge of anger at the irony of being out in the world making real money, then later being "provided for" by a man. For everything!

I always wonder, without any economic power, what would I do if I got dumped? If my husband died and I needed more than his life insurance could provide?

The imbalance leaves me insecure. I do recognize my contribution. I really do. I work so hard at home. But how's that going to matter if I had to go earn money?

Thanks Mater and Duchesse for your comments. You know where I'm coming from.

Imogen Lamport said...

Karen - too right - scary thought - it's hard being a 'kept' woman for that very reason!

Though of course Kjell sounds great and unlikely to dump you!

Duchesse said...

Karen: I look at it as two agreed-to forms of contribution that blalance one another. However, I advise (no, nag) all young women to acquire a skill by which they can support themselves and their dependents if they have to- and to keep that skill current, unless they have their own wealth.

Karen said...

Duchesse, my mom urges me to do the same. I'd make a damn good cleaning lady or daycare worker if I had to...

s. said...

I have money, Mr. s. doesn't. It causes plenty of headaches.

And, most of my "feminist" friends talked a good talk but were more than happy to settle down with wealthier men who pay for what I consider to be the grownup stuff - mortgages, electricity, children's education - while the wives' income become shoes & jewellery money.

Duchesse said...

s.: I think one can still be a feminist and relieved to have someone contributing to the financial obligations and goals. Few of the women my age have worked for shoes and jewelry money, however. One woman married Mr Big but because of his business acumen and values, her pay went into investments.