Equity vs Equality in a shared budget

Some time back in another thread, the concept of equity vs equality came up with regard to how elective spending is budgeted between partners. I thought it might prompt an interesting discussion and I'd like to hear how all of you tackle this (sometimes thorny) concept.

Here's how I approach shared budgeting:

1. My partner and I contribute 100% of our incomes, including retirement and investment gains when they are realized, to our shared budget. Once in TBB, there's no concept of who earned what dollar.

2. Shared and necessary expenses are budgeted from TBB. This includes things like rent, food, insurance, pet supplies, transportation costs, and so on. It doesn't matter who incurs these, they get budgeted from the shared dollar pool. These are "general cost of living" items, and the idea is that while one person might eat more food, or spend more on personal care, they are not penalized for this. By sharing these costs, we set a level bar -equity- from which we can grow.

3. *this point is key*: Debts and loans, regardless of who incurred them, are also budgeted from the shared pool of expenses. This is the heart of equity in my model. Fortunately we both have similar levels of debt, but if we didn't, the concept is that one person's higher debts shouldn't mean they have a lower starting bar (maintaining equity), or that their maximum potential is lowered (they don't receive an equal share of money to allocate). This requires an understanding that the relationship is a merging of financials, and that the well-being of the partnership takes precedence over the well being of the individual.

4. Once all shared and necessary expenses are budgeted, and all debt payments are budgeted, then we move out of equity into equality. Through the equitable approach above, we're starting each month with our bars equal, so we then distribute an equal amount of discretionary budget to flex spending categories for each of us. This is our monthly allowance that we can use for whatever purpose we see fit. The key here is we both have the same amount budgeted each month, and it should cover all the elective spending we do on a regular basis. If it doesn't, the amount put in both flex categories can be increased equally, in exchange for lower debt payments. This gives us both equality moving forward, and we both have agency in determining how equal portions of our budget are allocated. One person might spend more than the other, but the other can then save up or put their portion towards long term goals. This equality ensures we are equal partners and that our past differences don't create a lasting (fiscal) power imbalance.

So, what do you think? What are your approaches and do they work for you?

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  • Scott said:
    we both have the same amount budgeted each month, and it should cover all the elective spending we do on a regular basis

     That's not been our experience. Activities and interests simply cost different amounts. A spouse may prefer a gym membership and exercise classes ($$$) while I may prefer to ride a bike or walk ($). I'd rather give up my "extra" (if things were funded equally) so they can take another class. Broaden this to other discretionary things (clothing, hobbies, charity interests, etc.), and hopefully you see my point.

    The funding MIGHT wind up being similar, but that would be coincidental and hardly the goal.

    Like 3
      • Scott
      • In the beginning the budget was created. This has made many people very angry and has widely been regarded as a bad move
      • Scottgoeshiking
      • 2 wk ago
      • Reported - view

      dakinemaui In your scenario where you want to contribute towards your partner's activities, you certainly can! But you could also decide to do something else with it. It'd be your money first and your partner's second. 

      The difference in my model is that you make the conscious decision where that money goes and are always aware of how much you are giving up from your equal share of the partnership's profit. It also helps avoid one partner feeling they are entitled to more than an equal share of life, which I think might help to avoid many power imbalances and emotionally charged situations.

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  • I'm glad you brought this up again, as I was planning on having the same discussion at our house.  I'll check back in with what we talk about. :)

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  • Scott said:
    It'd be your money first and your partner's second

     Not as I see it. It is our money, first and second. I realize this may not be a typical viewpoint, but it works for us. When this thread started, I had to go add things up to see who gets more. My point is I didn't even know because we arrived at the budget together. Both of us are happy.

    Like 4
      • Herman
      • herman
      • 2 wk ago
      • 1
      • Reported - view

      dakinemaui We treat this similar to you.  Been married 29 years and we've never tracked who spends what on these items.  We look at "Is it a priority for us?" and if so we fund it.   I'm not going to look up who gets more but i'm sure it changes over time. 

      Like 1
  • Interesting conversation. I was also with you until the flex spending. Like  dakinemaui we pool all of our money together. Then, we make decisions as a couple on where we spend all of our money together. Yes, I know for a fact that *I* generally incur more expenses for personal type hobbies (golf, fitness classes) because I need more socialization and structure than hubby (he can do fitness on his own with no one telling him what to do! gah! LOL). Generally the only time we don't know that the other is spending is on gifts but that is super limited. 

    The other thing is that there would be a blurry line in what is considered elective for one person vs elective for two people. One example is eating out. We eat out as a couple, we eat out on our own as we go about daily business over meal hours and we eat out socially as individuals. How would we break that out? We just have one category and stay within it. We make exceptions together. 

    In addition, using this process has helped us to work better together because we know where we are going a as a couple/family. We justify expenses in the context of the total budget. I could see scenarios where someone could get into the mentality of fighting to protect "their" portion of the elective spending rather than seeing it as part of the greater whole. People will fight tooth and nail to not give up things that they see as theirs. Not saying it is your case but there is a lot of psychology around money. 

    Like 3
      • Scott
      • In the beginning the budget was created. This has made many people very angry and has widely been regarded as a bad move
      • Scottgoeshiking
      • 2 wk ago
      • Reported - view

      Navy Blue Pegasus Good thoughts!

      For dining out, I have a single category in my elective spend category group called "dining out". If either of us dines out separately, I'd record the spend in dining out, then cover the budget with a move from that person's flex category. If we both dine out, I *also* have a shared flex spend category (basically my version of 'stuff I forgot to budget for'), and would use that to cover the shared dining expense. Or, I could pull equally from both of our flex categories if the shared flex category was already dry (it's not valuable to try and price out exactly how much each person's meal cost.. I suppose it could be if one person ate extravagantly and the other ate a side salad.. but that's all relative to your relationship with each other and money). This way, the dining out category captures all of our non-grocery food spend, but one of us can freely choose to eat out more if they want and it's within their flex budget (and they can do this without worrying about diminishing the other person's dining out budget).

      I think for the last paragraph, I'll point back to the distinction between establishing equity in our shared budget before we split out equal portions of flex money. That equity puts us on equal footing before we even start thinking about how we might want to spend electively. Since we've already covered ALL of the equity based categories, it's completely reasonable for one person to do *whatever they want* with their flex spend. It would be unfair of me to ask my partner for a portion of her profits. I certainly could, and she could either agree or not to share with me, but it's at this point where we have the conversation - starting from the basis of each of us having equal say over or "profit". This might seem like excess work compared to some other methods, but it does a few things for us:

      1. My partner was in a previous abusive relationship with someone who made more money than her, and he used that as justification to control the budget. While they hadn't combined their finances, his spending was irresponsible and without respect for her and her goals. By establishing an equitable baseline budget and then equally dividing up the remainder, with no concept of who earned what, this issue is bypassed completely.

      2. If we didn't divide up the flex spending but instead discussed what to do with a single pool of flex money that might work as well and seems to for many people, but then we would run into *lots* of conversations resulting from one person spending more than the other expected them to. Having the separate flex categories ensures that one person's spend never encroaches on the other's portion of the relationship "profits".

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      • Yes I can
      • yesican2020
      • 2 wk ago
      • 1
      • Reported - view

      Scott I like your approach.  You skipped over it in your initial post - but I think the point around difference in costs for personal care is a key one in terms of delivering equity vs equality.  

      Its amazing how much more it costs to dress and look after your hair, skin and body as a girl.  Its not just a matter of personal choice but societal expectations and requirements.   And  depending on a woman's job the costs in terms of hair care, makeup and clothing can be even higher.

      It sounds like you're doing a good job at respecting each other's differences and choices, while working as a team on common goals.

      Like 1
  • Very interesting subject. One that evolves over time in my experience. 

    During last year, our first year of YNAB, we changed from three accounts to one. Before, one shared account was for all shared expenses. In theory, because neither of us used it for shop purchases. I do almost all grocery shopping, so paid more from my personal account. That didn't matter, as all our money is ours. But at the same time we had small itches: money my husband earned cash he considered as 'his', to be spent on frivolities. That didn't feel right for me. I wanted our basic needs to be looked at first. And why would more of that be my responsibility, just because I receive all my income in an account? Also both of us want the other to spend on what matters most to them. But sometimes he would mention how much was in his account. Followed by that he could easily buy expensive machinery. He'd do that as well. I sometimes wondered if I was just the control freak, because I wanted some insight in what he had and spent. But now I know it all came down to the overall clarity. 

    YNAB has given that. During last year we closed both personal accounts. We also handle cash as an account. And everything goes in TBB. We fund all needs from that. Including memberships. But also have a fun money category each. We prefunded that with quite some money and budget equally to both each month. 

    For me the fundamental difference is the overall budget. Now I know all needs are covered and buying extra tools doesn't compromise those. 

    Eating out on our own or seperately with friends comes from fun money. Fun money needs no consultation/discussion about the importance. Funny effect is that my husband now hardly spends anything.... That wasn't the intention. I've asked him why and while he doesn't exacty know himself it sounds as if it has something to do with being watched. And not wanting to go below a certain amount in his category, like he used to treat his account. 

    For extra context: I've used YNAB for a year, only since we joined accounts is his money in it too. He agrees with the system, but lets me handle transactions. And I don't mind at all. But I suppose it makes me more aware of all the different category balances than he is. Apparently he doesn't feel he owns the whole budget while I do; joint ownership. 

    So, I'm very content with the change one year has bought and hope we will evolve to something better even 😊

    Like 1
  • Very interesting topic Scott.

    My partner & I are getting married next year and talking about shared budget was a difficult one (and emotionally charged) We have different conceptions when it comes to spending and we did no agree on the best way forward.

    I discovered YNAB 2 years ago and it changed my life (literally) I'm was not financially responsible and had debts. I decided to change my behaviour and moved to YNAB and now debt-free.

    My partner is debt-free and very cautious with money and would save, save, save. He does not use YNAB simply because he does not spend...

    I "bring home" 68% of the income and have variable income (on top) so when he suggested having one single account and have a shared budget, I have to say I panicked.  Right now, we are using an app to split the expenses (we keep the split 68/32) and I was fine with this.  But when he came up with sharing our savings, our accounts etc. I was not comfortable. We had a big discussion to understand where each of us was coming from and our goals.  Probably the hardest conversation I had with him ( I underestimated this topic until then I think)

    We will be opening a joint- account and one single budget. I'm not really sure how to address the fact that I spend more than him in our budget (I'm more social, send more gifts, suggest holidays etc) 

    He agreed to YNAB with me (YAY) and I'm not sure if we should have 

    • one pool for common expenses+ saving
    • One pool for me  (I'll probably have more money in this pool for dining out for example)
    • One pool for him 

    or

    • One pool for common expenses+ Saving
    • One pool for fun (i.e $500 for example) and when each of us needs it, we just take money from that pool.

    What are your thoughts?

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      • dakinemaui
      • dakinemaui
      • 5 days ago
      • 1
      • Reported - view

      Lavender Hail I don't think a single pool is enough. Heck, it's not enough for me alone, let alone the priorities of two people.

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