Thursday, December 8, 2016

Hypothetical Questions: How should disparate earners split expenses in a relationship?

You buy the PBR, I'll buy the axe

Hypothetical Questions is a feature where Frugal Bagel and Practical Cranberry Nut Roll discuss other people's personal finance and relationship questions from advice columns, online forums, and social media.

How should disparate earners split expenses in a relationship?

Context: A forum poster expresses his frustration that his girlfriend, who earns one-tenth of what he earns, insists on splitting all expenses 50/50.

Frugal Bagel
Questions about splitting expenses in a relationship come up a lot, but the income disparity makes this an extreme case. They just have completely different standards of living. He can't invite her to do the things he likes to do, like nice restaurants and travel, because she can't afford to pay half. They can't move in together, because he's unwilling to live in a place she could afford, and she turned down his offer to live in his condo rent-free. He also says he offered to help her get a better-paying job with his connections, but she didn't like that idea, either.

Practical Cranberry Nut Roll
Yeah, I wouldn't want to owe him either. But i can see why he's frustrated.

Frugal Bagel
Right, I see both sides.

As a frugal blogger, my bias is always toward the lower earner teaching the higher earner how to be frugal, rather than the other way around. And as a woman, I definitely relate to having baggage about not wanting to be "taken care of" by a partner, especially a male partner. The letter-writer did come off a little condescending when describing his girlfriend's situation, which made me totally sympathetic to her digging in her heels about equality.

At the same time, as the higher earner in my relationship, I'd also be frustrated if my wife insisted we only live in a place that she could afford on her own.

Practical Cranberry Nut Roll
Yes, but you're married and they are not.

Frugal Bagel
Yeah, we have totally joint finances. But we kind of backed into that with devices like: Croissant moves into my house, but pays me a nominal amount of rent. And: I loan her money to pay back her student loans at a 0% interest rate, then use the money she pays me to buy dishes for our shared kitchen. She had to kind of agree to let me subsidize her a little bit so that we could live in a nice place and save money in the long run.

So, I think part of his frustration is wondering, "How can we ever move forward in our relationship (living together, marriage etc.) under these rigid conditions?"

At the same time, I totally understand her not wanting to become dependent on him. I've never been in the position of having my housing expenses subsidized by a partner, but it would make me worry about things like: what if we break up, and I get stuck with half of a lease or a contract I can't afford? Or I just get used to a lifestyle I can't afford?

It also sounds like the girlfriend in this particular letter considers it important to make it on her own and not have to have that asterisk of, like, "well but my boyfriend was covering my rent."

Practical Cranberry Nut Roll
I think the housing is actually the easiest - she figures out how much she's willing to pay for housing, and pays him that much. Even if it's not half the mortgage. She isn't going to own the house anyway.

She still gets credit for covering her own rent, since it's an amount she would have paid anyway, just for a different place. He's not paying for her housing, he's paying for the upgrade.

Frugal Bagel
We haven't heard from her, so we don't know if she would feel like that's charity or something, that he's renting it out for under market value. He would have to make it very clear that it's worth it to him to rent for under market value because he wants the right kind of roommate (i.e. only her).

in general, I think that if she's a fiercely independent person, he'll do better putting things in terms of what he wants than in terms of helping her. "It's worth it to me to pay twice as much to go to Paris if you will be there" comes off better than "I want to treat you/help you afford a trip you could never take on your own."

Practical Cranberry Nut Roll
Yep. Trips, I think, are even easier. If they break up, she can just not go on trips. She's not stuck with any ongoing expenses, and you don't really get used to the lifestyle you live on a trip; it's self-contained.

Frugal Bagel
True! It's like Elizabeth Warren says in All Your Worth. If you are spending a lot on luxury, and you income suddenly goes down, it's actually a lot easier than if you were overspending on necessities. You can recover quicker by just not spending on the luxuries. You're not locked in, the way you are with leases and things.

Practical Cranberry Nut Roll
For dates, I think they could institute a "whoever thinks of it pays for it" sort of system, where she can suggest making fancy meals at home and he can suggest a weekend in Paris.

Frugal Bagel
Good idea. It's another way of doing 50/50, but instead of 50/50 on the cost of each date, you're alternating who "hosts" the date, and the host can pick a level of expense they're comfortable with. Personally, I'd advocate this system even if you're not navigating a huge income disparity; it's just nicer. It feels good to treat, and it feels good to be treated, but it doesn't feel good to be sitting down with a calculator divvying up the bill at the end of the night.

I don't know if either of them would be satisfied with these suggestions. He definitely painted a picture of a pretty stubborn partner. But he also seems kind of to miss the point. The question he actually asked in his advice is "How can I show her that I'm willing to pay for everything?" - showing that he doesn't really understand the problem. She knows he's willing, but she's not willing to take it.

He needs be willing to live like he's poor sometimes, gladly; and to let her solve her own problems unless she asks for help, or her solution is causing him significant needless hassle. And she needs to be willing to let him treat sometimes, even if it's for an unimportant luxury; and to sacrifice principle for practicality in situations where it's in both of their long-term best interest. If they're both serious about the relationship, they both need to be willing to give up some control over their finances and their lifestyle choices to accommodate the other.

So I guess like many relationship problems it comes down to meeting each other halfway.

Practical Cranberry Nut Roll
Hrmph. I like problems where one person is 100% right.

Frugal Bagel
I know! It seems like at the moment, both the letter-writer and the girlfriend think they're 100% right and the other person is 100% wrong, so they're both 100% wrong about that...???? (It's a stretch.)

Practical Cranberry Nut Roll
Sure, sure.

Psst! Want more from me today? I have a new Key Episodes up for Switched at Birth!

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