Part of planning a prenuptial agreement is deciding, if not in writing at least orally, how expenses and bills should be paid. There are many variations which I will list and then I will list the one I favor the most and why I think it helps to foster a healthy marriage.
- One spouse pays it all. Sometimes when a spouse has all the earning power, it makes sense that they pay for everything. It might be that the spouse wishes to take care of the other spouse and the relationship has always been so.
- The expenses are split 50/50. Whatever bills that come in, be it the mortgage, car payment, child care, credit cards, utilities – they are all divided equally between the couple. They each pay half.
- Everything is separate. The couple will keep all their finances separate. There would be no joint accounts, be it credit cards, car payment or mortgage. Everyone pays what their name is associate with. No muss. No fuss.
I have seen variations of all of these and they work for some people. The plan that I believe works the best is none of the above. The plan I believe works is based on paying equal percentages. How it works is this: each spouse has their own separate individual accounts and they have one shared joint account. Paychecks are deposited into their respective individual accounts. Household expenses are paid from the joint account.
The trick is determining how much of each spouses’ salary is deposited into the joint bank account. If both spouse deposits an equal percentage into the joint account, it should be enough to pay for all the bills. Note that equal percentages is not the same as equal amounts as described in example 2 above. If Mary makes $1000 and she has to contribute $500 while her husband Bill makes $10,000 and he also contributes $500, they are contributing 1/2 of the expenses but not equal percentages. That is because $500 of Mary’s salary is a bigger percentage than $500 of Bill’s salary.
Why is equal percentages more fair than an even split of all expenses? It is because contributing equal percentages leaves both partners with the same percentage of their income to themselves. It gives them the same spending power and it spreads the burden. When the power dynamics of a marriage is closer to equal, it provides for a more harmonious marriage. There is no inequity because each spouse is contributing to an equal percentage of the upkeep of the household.
Given that almost half of all marriages end in divorce and a majority of those that get divorced is due to arguments over money, a scheme that will equalize and benefit both parties financially in a marriage will hopefully make the marriage last and avoid the most common cause to divorce.