Doing money together is one of the largest causes of couples not staying together. With a little help, you can start to apply the math and science and leave your opinions out of it.
If you agree with the old split the bills in half system, but one person makes more money than the other, then the lower income individual is getting “taxed” more? Even our national tax system is set up to have people that make more, pay more tax. Check out 2020 marginal tax rates from the IRS:
- https://www.irs.gov/newsroom/irs-provides-tax-inflation-adjustments-for-tax-year-2020
Marginal Rates: For tax year 2020, the top tax rate remains 37% for individual single taxpayers with incomes greater than $518,400 ($622,050 for married couples filing jointly). The other rates are:- 35%, for incomes over $207,350 ($414,700 for married couples filing jointly);
- 32% for incomes over $163,300 ($326,600 for married couples filing jointly);
- 24% for incomes over $85,525 ($171,050 for married couples filing jointly);
- 22% for incomes over $40,125 ($80,250 for married couples filing jointly);
- 12% for incomes over $9,875 ($19,750 for married couples filing jointly).
Many people come from divorced households that one partner had issues with how much money was spent. A lot of the divison of household income comes from this experience. One way to combat that is to have one joint bank account that joint expenses are paid from. This leaves the extra money with each individual to do with it what they wish.
Do you “share” expenses with your significant other? How do you split them? Do you add up all of the expenses and then divide that by 2? You get half and I get half. Here is a good joint budgeting website for more insight:
https://adamhagerman.com/share-expenses-living-together/
Another great idea is to have a budget for the items that come up every year but people act like it is a surprise. Take Christmas for example. You know it is coming, so there should be a dollar amount that you set aside for that each month. This way when Christmas comes around, you don’t have to charge it on your credit card.
The zero based budget is one of the most popular budgets. This is where you tell all of your money where to go until there is zero left. You do it intentionally and factor in all of your expenses.
That car you want to upgrade, that annual HOA, that extra friend birthday present, that girl party you want to splurge on a _____? All taken care of, with a sinking fund.
If you are in a pattern or habit and you aren’t sure where to start, you can take a finance class. Dave Ramsey has an entire Financial Peace University that helps people reset and feel confident in their spending choices. Some people agree with Influencer’s and some do not. The point is to start SOMEWHERE. You can figure out who you like later, just pick one and begin.
I don’t work or make money from Dave Ramsey, but I couldn’t find any great articles from Susie Orman. I personally went through Financial Peace University (FPU) in 2015 right before I decided this career was for me! I do volunteer to teach FPU and love what it stands for. Although not perfect, it is a great place to begin your journey to financial freedom.
Science tells us that individuals and couples are both happier when there is not a stress on money. Math tells us that if you live within your means it is possible. The hard part is getting your mind and spirit to work together. It is possible. The biggest clue is to not close your eyes. Do the work each month and it will get easier and before you know it, you will be adult-ing so hard!
You are not alone. Reach out to someone (even me) if you need help.
5Fs 