A Thoughtful Guide to Managing “Our” Money If One Partner Has Lost Income to COVID-19
Who says talking finance can't be romantic? Read on for some enduring insights just in time for Valentine's Day.
Bobbi Rebell, CFP®
Personal Finance Expert at Tally
February 8, 2021
First comes love, then comes marriage, then comes opportunities to conquer challenges together. For many couples, 2020 ushered in a whole year of unprecedented challenges. Women in particular experienced major setbacks. Most of the 9.8 million jobs lost since last February belonged to women.
These job losses have dramatically shifted the money dynamics in many relationships and may be causing some couples to question whether they should change how they manage their money together. Times of adversity can make relationships stronger if navigated properly, so let’s look at some money management advice for couples financially impacted by COVID-19, just in time for Valentine’s Day.
Does it still feel fair? That’s the question people need to ask themselves and figure out with their partners in weeks and months following a job loss. When one partner no longer has an income, one or both partners may begin to feel a shift in how they want to spend, save, and manage their money together. One of the best ways to avoid the relationship feeling financially unbalanced is to have open conversations about expectations surrounding job searches, spending, and household responsibilities.
Today, couples are evenly split between fully merging their finances (39%) and keeping finances separate (39%). Only 22% of couples use a Yours-Mine-Ours approach or system that allows for individual spending and paying shared expenses from a joint account, according to a recent study of 20,000 couples by Zeta, a budgeting app for couples.
As much as we like to focus on the romantic part of our relationships, eventually, we must face the fact that our relationship is also a financial partnership. It is essential that both partners discuss the change in circumstances before resentment and misunderstandings build up.
Chances are, the unemployed partner isn’t happy that they’re unemployed. While it may feel unfair at times to the one who is employed that they are the only one contributing financially, they need to remember that their partner is facing challenges right now too. Figuring out a plan for how you can work together can strengthen your relationship even further.
Losing Income Doesn’t Mean You Lose Your Say in Money Decisions
Speaking of fairness, one way to make sure the relationship stays balanced is to not strip the partner who lost the job of their say in how you manage your household income and finances. Try to picture the tables turning. How would it feel if a temporary job loss affected your say in a life and future you’ve helped build? It would likely make you feel even worse about a job loss than you may already feel. Treating your partner like an actual partner after a job loss is a productive and loving path to take.
One way for an unemployed partner to use their time spent not working in a way that can make them still feel like they are contributing to the financial health of the household is for them to do the “financial housekeeping”. They can take charge of money chores like filing all the insurance forms, paying any non-automated bills, and reviewing bills and credit card statements. That way both partners have a role in the household finances and it doesn’t feel like one partner is exerting control over the other. As a bonus, the working partner will have less financial housekeeping on their plate and can spend a bit more time relaxing after work.
Yes, You Can Still Keep Finances Separate with One Income
Some couples prefer to manage their finances separately, which can get a bit sticky if one partner loses their source of income. If the job loss is temporary, my recommendation would be to focus on bringing in extra income while looking for a new job in your career field. Consider gig work (like food delivery) or putting your skills to work as a freelancer (like online tutoring). The key is to be open-minded and flexible. Also, it’s important to communicate as often as possible with your partner about your job search and any smaller jobs that you take on, so they aren’t left to make assumptions that are not accurate...
If becoming a single-income household is expected to be a longer-term situation, keeping your finances separate can still work but you might consider having a joint account to pay bills and separate accounts for each partner’s discretionary spending. The income earner would still be putting all the money in, but they can automate the split so the non-income earning partner doesn’t have to “ask” for cash when they need it.
Keeping credit card usage in check on one income.
Credit cards can be a useful financial tool as they provide a quick way to access cash in a pinch. That being said, it’s easy to build up debt if you aren’t careful and charge more than you can afford to pay when the bill comes. Always take a moment before charging something and ask — can it wait? Is there a second-hand option? Do you already own it?
If you’ve already started to accumulate debt, be strategic in how you pay it back. I recommend prioritizing the debt with the highest interest (read: credit cards). Then tackle auto loans, personal loans, student loans, and mortgages.
If everything is becoming too overwhelming, consider tools like Tally to help manage your credit cards and pay off your debt faster.