Did you know that it’s becoming more common for the women to be the breadwinner in their household? In fact, nearly 50% of women are earning as much or more than their husbands according to TD Ameritrade’s Breadwinners Survey. Talk about a reversal of marriage income disparity.
Even with the results of the survey, it’s hard for me to count the number of mixed-gender couples I know where the woman makes substantially more. Maybe they just don’t talk about it?
Let’s not forget about the gender wage gap that exists between women and men. That being said, women breadwinners exist.
This is a post written by my dear friend Mrs. Miller of Millers on Fire. I love the fact that she earns more than her husband and that they make it work. Personally, hubby makes more than me- this is our marriage income inequality.
But I know he would love to be in a position where I earned more than him.
As our FI plans constantly change and adapt, there was a point where he was going to stay home with our little one while I continued to work. We shared parental leave when she was born and he loved being home with her for 4 months.
But I realize that not every relationship is as open about money as ours is. So I really appreciate Mrs. Miller’s take on marriage income disparity, female breadwinners, and how to navigate these issues in your relationship.
Okay, back to Mrs. Miller.
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I earn twice as much as my husband
Recent conversations about income inequality and the wage gap prompted a conversation about wives who earn more than their husbands. Although it’s not typical, it’s becoming more common. There are interesting dynamics couples face when wives earn more than their husbands.
The income disparity in our marriage is something we talked about early on in our marriage. In fact, we actually discussed it openly while we were dating. It was important to me that we were candid about our financial philosophies and positions.
When we began dating we shared costs. Sometimes he paid for dinner and other times I did. We split costs for high ticket activities like concerts or snowboarding. While planning for the wedding, we equally contributed to the wedding. He sold his stocks and I used money in my savings account.
Once married, we discussed our goals. I knew that splitting things evenly didn’t seem fair. Dividing household expenses based on income also wasn’t the right move for us. In the end, we pooled both of our incomes together in order to pay for expenses, save for our goals, and build wealth.
Avoiding marriage income inequality pitfalls
When one spouse outearns the other, financial imbalance and income inequality can lead to difficult conversations if one person feels powerless. If one person in the relationship earns significantly less than the other, this can lead to tense conversations, marital issues, and possibly resentment if not addressed head-on.
Neither spouse should feel insecure about their income. When the wife is the breadwinner it can bring particular feelings of self-awareness not just with her spouse but also from the outside.
Having honest conversations about money, financial goals and household responsibilities are key to avoiding common pitfalls.
Not being realistic about marriage income disparity
Conversations about money can be stressful and sometimes embarrassing. Nevertheless, these conversations are key to avoiding unrealistic financial expectations.
Rather than splitting living costs 50/50, I recommend couples consider dividing living expenses by percentages.
For example, if rent is $1,500 and one spouse earns $4,000 and the other earns $2,000 splitting $1,500 in half, will leave the lower earning spouse with less for other financial obligations including saving for retirement.
If one spouse brings home 25% of the household income, consider making their portion of the living expenses 25%.
In the Miller household, we don’t divide living expenses that way. Instead, we have one pot of money. We prioritize maxing out our retirement accounts. Because we have a shared financial goal of financial independence, this allows us to grow our savings and investments faster.
The merging of income may not be an option for you but find a fair system that will work and benefit each of you.
Not talking about financial goals
When I first learned about the FI/RE journey it was obvious we had to make changes to the way we were spending and saving money. When I presented the idea of early retirement to my husband he was right on board.
Who wouldn’t be interested in retiring before the age of 65?
Once we had a clear goal in mind, we began to discuss the necessary changes we had to make in order to achieve early retirement.
First, we had to decrease our discretionary spending, then we went full throttle on paying off our debt, and lastly, we had to increase our investing.
Since we had a common goal it was easier to come up with joint ideas on how to reduce our expenses. Neither one of us wanted to cut out all discretionary income.
It was important for us to enjoy the journey to financial independence. I was willing to cut down on my clothes and shoe shopping and he was willing to reduce the amount he spent dining out.
We both made sacrifices in order to reach a financial goal. Whether your goal is to own a home, take month-long vacations each year, or finally own a Tesla Model X be sure not to leave your spouse behind.
You don’t have to give up on your individual goal but discussing financial goals as a couple will deepen your partnership and accelerate making your family dreams come true.
If you outearn your spouse, be careful not to give more weight to your financial goals. You may earn 70% of the income but decision making should be pretty close to 50/50.
Not being transparent about your spending with your spouse
If you earn more money than your partner you may feel entitled to spend more money than your spouse. In fact, you may feel that you shouldn’t have to explain your purchases to your loved one. The truth is, this may foster feelings of resentment and cause distrust.
Financial infidelity is betrayal. Financial secrecy can have huge impacts on a relationship. It’s important to have open dialogues about money to ensure you are on the same page about spending and purchases.
Income disparity shouldn’t mean power imbalance
Be sure not to control your spouse’s spending. Marriage is about teamwork and compromise. According to the Breadwinners Survey, 32% of millennials believe that the more money you contribute to the relationship, the more say you should have over spending decisions. (Insert palm to forehead emoji here.)
Income disparity shouldn’t equate to a power imbalance. One of the pitfalls we avoid is not communicating openly about money. We make decisions together.
My husband and I have the same amount of spending money each month. Like Maria, I hate what my husband spends his fun money on.
But in the end, it’s a way for each of us to use that money any way we want. Judgment free.
Sometimes, I will treat myself to a spa day but most of the time I just tuck that money away in my brokerage account. Although I have made my share of mistakes, I have learned the power of investing.
Whatever amount discussed it should feel fair to both. Although I earn more than my husband it didn’t feel fair to me to spend more than he did.
Okay now this might be a tricky one for some. This is how we deal with wealth and the marriage income disparity.
Those of us on the FIRE journey are saving and investing about 40% or more, of our income in order to quickly achieve financial independence and possibly retire from the traditional workforce early. The higher one’s savings rate, the faster you can achieve your goal.
At the start of our FI/RE journey, I calculated that if we each contributed the maximum to our retirement accounts every year, we could invest about $61,000. According to my calculations, we would reach our FI number in about a decade.
However, if we invested more, we could accelerate our journey.
Making the maximum contributions to retirement accounts was fairly easy for me as a high-income earner but it ate up a lot of my husband’s income. It would require most of his paycheck to go into a retirement account.
I couldn’t contribute any more to tax-advantaged accounts and it made cents (see what I did there) for him to take advantage of the pre-tax savings rather than me investing into a brokerage account.
After we’ve invested in our tax-advantaged accounts, I also contribute to an after-tax brokerage account. I have some individual stocks but most of my brokerage account is made up of index funds.
Mr. Miller has the ability to work overtime and also earns a bonus. We agree that he use the majority of that money to fund his own taxable brokerage account. He prefers to pick stocks.
Our investing styles are different. This was a sticking point for us at the start. I prefer to invest in index funds and he prefers to actively invest. In the end we each get to do what feels most comfortable for us with our individual taxable brokerage accounts.
For the record, I’ve outperformed him 3 of the last 4 years! (Love ya babe!)
Our situation may not be typical. We shared costs pretty evenly while we were dating but once married it didn’t make sense to do that.
Tackling debt, increasing savings, and contributing to both of our retirement accounts is important to us.
Once we learned about a path to early retirement we drilled down on our financial goals and began mindfully investing in our future. We set a clear financial goal. The dream is to one day reach financial independence together and make work optional.
I am the financial house manager and maintain the “Miller Family” spreadsheets. Although we do have separate investment accounts, we talk about our goals often. We have joint checking and savings accounts and make big financial decisions together.
At the beginning of our marriage, we’d have financial meetings, but now everything is automated and very little changes. When there is a financial change or a goal needs updating we talk about it during a “State of the Union” check-in.
Simply, financial independence is our goal. We each have investing accounts in our own names and discretion over how we invest it but in the end, the accounts belong to both of us. It works for us.
In our household, there is marriage income disparity. I make twice as much as my husband does and we’re okay with that.