Check Your Balance
A financial power struggle can be the “most destructive scenario” in coupledom says Rachelle Miller, a relationship coach and family attorney. It happens when the person who makes the most money is perceived to have the most power and control in the relationship, she explains.
And, increasingly, that person is the woman. In fact, when she earns more, she is more likely to be the primary decision maker on money matters and take charge of things like paying bills, budgeting, saving and planning for retirement according to results of a nationwide survey for my newly released book, “When She Makes More: 10 Rules for Breadwinning Women.” The survey, co-conducted with clinical psychologist Brad Klontz, sought to understand how female breadwinners feel about their relationships, career, and finances, compared to women who earn the same or less than their partners. Over 1,000 women responded, half of them earning more than their partners.
This doesn’t come as a huge surprise, and it's arguably healthy and positive to see more women assume the financial reins in their households. But, upon closer examination, I wondered, are these women taking on too much? Is there a power struggle of sorts going on? Just because there’s a disparity in income, doesn’t mean that couples should assume a disparity in how the spending, saving and investing gets decided.
Here are five strategies I gleaned over the last two years spent researching my book on how to strike the right financial balance in any relationship.
Breadwinners: Resist the Urge to Veto
When I interviewed top relationship expert Alison Armstrong, she said that as women we often make the mistake of thinking that the “veto” goes with the money. In other words, whoever makes the money (or more of it) has the power to say no and call the shots over money-related matters.
But that’s no way to manage your finances, let alone steer your relationship. If your lesser-earning partner wants to allocate money toward saving for a new car, for example, your impulse may be to reject the idea, but take a pause and hear him out. (And he should do the same for you if the roles are reversed.) Share in the decision-making by scheduling monthly or quarterly sessions around this and other financial proposals each of you has.
The importance of this tip boils down to respect. When there’s a big income disparity it’s easy for the non-breadwinning spouse to feel neglected over money decisions unless there’s an open and respectful two-way street for communicating.
Allocate the Smaller Income Toward Bigger Goals
It’s not uncommon for the person earning less to feel as if his or her income is not as significant or impactful. This is especially true if that smaller paycheck is paying for things sort of willy-nilly. To address the emotional and practical needs in your financial life together, consider funneling the smaller income towards a clear and important longer-term goal like saving for the next big vacation, funding the family’s retirement account or maximizing the 529 college savings fund. It gives that person’s money far more meaning.
It’s important to remember that just because someone makes less, it doesn’t mean that his or her satisfaction as a “provider” in the relationship no longer hinges on being able to financially provide in a significant way. This strategy fulfills that emotional need, while still addressing the practical necessities in the relationship.
Create Personal Slush Funds
Putting all your money into one shared account — while romantic — can backfire. If there’s one common financial link I’ve discovered among disputing couples, it is the lack of financial autonomy. It’s crucial for each person to feel financially independent in the relationship and creating a personal savings account filled with say, 10 or 15 percent of your own income, is one way to accomplish that.
Otherwise, needing to “ask for permission” to spend money on something personal — which tends to happen when there’s no separation of what’s yours, mine and ours — can make you both feel powerless or trapped, particularly the person earning less.
Sharing access to your online accounts and keeping a comprehensive log of username and passwords — so neither of you ever feels locked out or in the dark — is critical in helping you feel like financial partners. Knowledge is power and if you both have the keys to unlocking the financial knowledge in your relationship, this should go a long way in leveling any related power imbalance.
This technique is not only useful in case there’s an emergency and one of you has to suddenly step in to handle the budget and bill paying; the transparency allows each of you to stay informed at all times and avoid unnecessary arguments, too. No longer will it be valid to fight over not knowing last month’s credit card bill was so high or that you couldn’t see how much was in savings.
Ask for Help
If you’ve volunteered to oversee the finances, don’t forget to ask for help from your partner when you need it. Admit when you’re stuck or feel overwhelmed. For example, a quick text when you’re in the store to ask, “Hey, can we afford this? Should we buy this? Is it worth it? What do you think?” can be all you need to address a concern. Plus it allows your better half to have his voice heard (and vice versa).
And if neither of you have the answers (which is to be expected) and you both feel a bit lost making some decisions (e.g. how much house can we really afford? Should we lease or buy a car? Do we have enough life insurance?), don’t underestimate the value in working with a financial advisor to steer you in the right direction. This is actually a very smart and helpful way to create more financial balance in your relationship because it takes the undue pressure and responsibility off the money manager in the relationship. (It’s been a savior in our marriage!)
Get a professional third party voice to present options and give you objective advice. Find referrals through friends and coworkers. You can also do a local search for certified financial professionals in your area at napfa.org and garretplanningnetwork.com.
Farnoosh Torabi is a personal finance expert and author of “When She Makes More: 10 Rules for Breadwinning Women (Hudson Street Press).”