How to split expenses when your partner earns more

Let's face it: talking about money with your partner, especially in a new relationship, can be awkward. But it's a conversation that needs to be had if you want a harmonious relationship.

Don't believe us? A Westpac study ahead of Valentine's Day this year found that money issues caused arguments for 91% of couples, while a recent study by Finder found that one in five Australians had argued with their partner as a result of financial pressure.

It's difficult for a couple to be on the same wage, but there are ways to ensure fairness as well as financial stability. So, when it comes to splitting expenses, what's the best (and least awkward) way to go about it?

How should you talk to your partner about money?

Rising Tide Financial senior adviser Matt Hale's top tips for keeping things fair for those with unequal incomes revolve around communication and empathy.

"Having regular and open conversations about money can prevent misunderstandings and build trust," he says. "Understanding each other's financial backgrounds and values is crucial."

To kick-start the conversation, Hale suggests partners ask each other what money meant in their household growing up and how they managed finances when they first started earning.

Purpose Advisory lead adviser Sabena Samuel recommends couples discuss finances in a casual setting first to take the edge off the conversation.

"Obviously, you're not going to bring up the topic on the first date," she says, "but it's important to have these conversations early on - perhaps over a glass of wine. It's not the easiest or the nicest conversation to have, but it's crucial."

Samuel also stresses the importance of not judging each other's financial habits. "We all have our own history and relationship with money," she says, "but just as communication is vital in a relationship, money comes a close second."

Wealthadvice.com.au principal Marisa Broome agrees that openness about money avoids resentment. " If you're secretive about it, it will fester and become a big problem. Basically, if you've seen someone naked, you should be open about everything in your relationship!"

Should you split bills evenly or proportionally to income? 

Samuel says that splitting expenses 50/50 might be easier in the early stages of a relationship. "However, as the relationship progresses, especially with significant income disparities, expenses should be split proportionally," she says.

Broome agrees that this is fairer.

"For instance, if one partner earns $50,000 a year and the other earns $300,000, splitting expenses evenly would be unfair," she says. "Instead, proportional contributions ensure both partners have enough to live on without undue strain."

How should you factor in non-financial contributions?

Hale emphasises that financial contributions are just one aspect of a partnership.

"Balancing contributions through non-financial means, such as housework or childcare, is equally important," he says.

"For instance, in my household, my partner works part-time and takes on a significant portion of childcare and household responsibilities. This division of labour reflects our  unique contributions to the family, making the partnership equitable even if the financial contributions are unequal."

What if you have children? 

Broome points out that couples should plan for periods when one partner might take time out of the workforce for childcare.

She recommends setting up a separate account for the non-working partner, ensuring they have financial independence.

"This is especially important for maintaining equality and preventing resentment," she says.

Shadforth Financial Group senior financial advisor Kael Plummer, who recently became a parent himself, underscores the importance of mapping out the financial impact of having children.

He advises couples to consider the ongoing costs of childcare, potential loss of income during parental leave, and the varying parental leave benefits offered by different employers. This detailed planning helps adjust the budget to accommodate the new family member without causing undue financial stress.

What about super? 

Superannuation is an often overlooked aspect of financial planning in relationships.

Hale points out that super splitting, where one partner transfers some of their superannuation to the other, is a strategy that can help balance future financial security, especially if one partner takes time off work. While not all super funds offer this option, it's worth investigating and discussing as a couple.

Broome is also a strong advocate for focusing on superannuation in relationships when faced with significant income disparity.

She emphasises the importance of thinking about superannuation early on. "I don't think anyone in their 20s even thinks about super, except they get a statement from the super fund every year. And that's a real shame, because if you start contributing just an extra $50 a month to your super, it's going to be powerful by the time you retire. It's only a tiny amount-like two cups of coffee a week-but it makes a huge difference."

Broome also advises young couples to consider their broader financial goals. "If you're saving up to buy a house, maybe you don't put the extra $50 a month into your super because buying a house is a priority. But once your mortgage is a little bit under control, then you should start thinking about how to diversify your wealth."

How to best split expenses with your partner

Open communication

This is the key to financial harmony. Don't be afraid to discuss financial backgrounds, values, and expectations early. Approach financial planning with empathy, understanding each other's financial habits, and learning from each other.

Split proportionately

Often fairer than splitting 50/50, especially with significant income disparities. Our experts suggest viewing finances from a household income perspective first and planning accordingly.

Separate and joint accounts

Maintain separate bank accounts for personal expenses and a joint account for shared expenses. More on that here (link to merging accounts story).

Superannuation splitting

Consider super splitting to balance future financial security, especially if one partner takes time off work.

Non-financial contributions

Recognise and value non-financial contributions like housework, emotional support, and childcare.

The impact of children

If you have kids or plan to have kids, talk about the financial impact of having children, including the potential loss of income and childcare costs.

Professional advice

Don't hesitate to seek professional financial advice to navigate complex financial situations and strategies.

Keep up communication

Schedule regular discussions about finances to keep both partners informed and on the same page.

Get stories like this in our newsletters.