Fight less by dividing your finances fairly

Money is a personal matter, and it can cause a lot of conflict in your relationship. This is particularly true when one or both partners feel that the household finances aren’t divided fairly.

We consider whether you can prevent disagreements by splitting your expenses proportionately, and we find out how a joint financial plan can help bring harmony to your home.

Tip: Debt can also cause friction in a relationship. Consider debt consolidation to reduce this stressor.

Should you consider proportionate contributions?

Giles Maynard, wealth manager at Carrick Wealth, says that the cornerstone of financial cooperation is having an understanding of who is responsible for what.

“This relates to all of the expenses in the household. You need to take into consideration the income-earning capacity of both individuals to make it fair, balanced, and sustainable,” says Maynard.

To apply this to a practical example, imagine you earn R7,000 and your partner earns R3,000. If your joint expenses are R6,000 and you approach this 50/50, you will contribute R3,000 (42% of your available funds) and your partner will contribute R3,000 (100% of their available funds). 

This will allow you to still have money available to invest, insure your assets, and save for big-ticket items. However, your partner won’t have anything left, and they won’t be able to grow their finances. 

This could lead to resentment and cause friction in your relationship. You may feel an additional household item is affordable, but your partner may feel differently without the same financial buffer.

In this situation, you could agree to reduce your joint household expenses to less than R6,000, which would secure your partner some breathing room at the end of each month. However, this will prevent you from enjoying the standard of living that you can afford.

Therefore, it may be better to stick with the R6,000 budget, but have you each contribute 60% of your earnings, which is R4,200 for you and R1,800 for your partner. Alternatively, the higher income earner may be willing to increase their proportion, allowing their partner to grow their finances.

Have a joint financial plan

Maynard says that couples must have a clear financial plan with long- and short-term goals. More often than not, it helps to have the guidance of a wealth manager or financial adviser.

“An adviser can help you draw up a plan, and they can serve as a third party or referee, offering a neutral and objective perspective on your joint finances,” says Maynard.

He explains that having a financial plan will also give you a reference point as to how expenses will be split, and you’ll both be working towards clear, common, and specific goals. This can mitigate confusion or tension that would have otherwise led to arguments.

“Transparency and honesty are a huge part of helping couples avoid fights. Tension often arises because one party is not being as open and honest as they should be,” says Maynard.

Overspending on credit can lead to unmanageable debt. Do you need debt consolidation?