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Money in Relationships; Equity over Equality

Money in Relationships

Depending on the generation that you were born in, this topic might spark a variety of thoughts and feelings when it comes to sharing finances with your significant other.

Why should we talk about financial equity?

Money is often the topic of conversation and unfortunately conflict in many households. Gone are the days when one partner worked and the other stayed home full time to care for the children. While some couples may still operate in these traditional roles, the majority of households are in a typical situation requiring both spouses to work to contribute to the finances.

This poses an important question however, as not all jobs are paid equally and some spouses may take ownership over different responsibilities within the household. This may include the likes of cooking, cleaning, managing finances, caring for children and general running of the home. When a baby arrives, there is usually a period of time during which one parent will need to stay home unpaid.

One partner may work full time in a six figure job, while the other works part time while caring for the children. Alternatively, a couple without children might find that both partners work the same hours, but one gets paid more than the other. In this situation, some partners might decide to pool all of their money together. Others may consider a 50/50 arrangement to ensure that each partner is contributing financially at the same level as the other.

How can we level the financial score?

A new approach is emerging in relationships which calls for financial equity instead of equality. Rather than splitting household expenses down the middle, or expecting each partner to contribute the same to household chores, each partner can contribute in a way that works for them both, which is not just limited to the financial aspect of the relationship. Often it can be accepted by one partner that the other might work more within the home, but money may still be the source of debate, especially for the partner who is not able to earn, save or invest as much as the other person.

If we are thinking about financial equity, one very important aspect to consider is superannuation. In the case where one partner stays home to care for the children and doesn’t work for a set period of time, or works part time hours while taking on additional caring responsibilities, there may be a way to ensure that their super isn’t affected. This allows both people to reach their saving goals, just as they would if they continued working at the same level that they were prior to starting a family.

What is the best approach to money management?

At the end of the day, every couple needs to decide what is right for them, however it’s an important conversation not to be overlooked. If both partners are contributing a hundred percent of their efforts towards achieving their goals, neither should suffer financially as a result.

Perhaps for example, one partner can contribute to the other partner’s super fund while they are earning less money than the other, or the partner who is contributing more to the household chores can pay less expenses to ensure that they have the same level of discretionary income as the other.

Whatever agreement is made between partners, having this discussion around financial equity ensures that both individuals are satisfied with their situation and can adequately plan for their retirement without harbouring any negative feelings in the future.

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