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As we approach Valentine’s Day, our Financial Literacy Counsel team promotes healthier relationships between couples. An area we cover is household finances for couples who have differences in incomes. To do this, we decided to ask one of our in-house experts on Financial Planning, Winnie Wu. Winnie is a Certified Financial Planner with over 10 years of experience in the industry.

Q: How can couples address an income gap in their household and why is it important?

Though money isn’t everything, it does play a prominent role in your everyday life as it affects what you are able to purchase, where you live, and how much you may choose to work. When another person is added into the mix, they may have different ideas or expectations of what is appropriate. By not addressing these differences, couples can experience tension when one partner makes a purchase that the other feels is “too extravagant” or if they feel one partner is not contributing enough.  

It is important to understand the impact that money can have on a relationship and to take proactive steps to ensure that your finances are aligned with your shared goals and values. Here are tips to get started:

  1. Have difficult conversations: Talk about each other’s values around money and spending habits.
  2. Set expectations: It will help minimize future tension about finances.
  3. Choose a suitable cash flow management plan: Decide how the household will handle income and expenses.
  4. Review your plan: Do this on a regular basis and again when life events happen.


Q: What are some questions and topics that should be discussed?

You and your partner may have different ideas around money, but remember to listen and be respectful. The purpose of these conversations is to understand how each person spends, saves, and what the financial goals are.

Here are some sample questions you can address during your conversations:

  • Do you have similar values about money? This includes financial security, financial freedom, giving to others, materialism, and living simply or minimalism.
  • Do you have similar saving and spending habits? When one partner prefers to save and the other likes to spend freely, this can cause tension and lead to arguments. To avoid these issues, it’s important for couples to have open and honest discussions about their financial goals and priorities, and to come up with a plan that works for both parties.
  • Do either of you have any expensive hobbies? If so, is your partner supportive of your hobbies? Some hobbies may require costly equipment or travel expenses that may need a budget to ensure the couple can still achieve their financial goals.
  • Are you okay to work together and develop a plan to achieve your goals? Keep in mind, this may include paying down a partner’s debt and contributing to each other’s saving plans to maximize the use of your incomes as a family.

Q: What are some cash flow management plans that you would suggest?

A suitable plan is dependent on each couple. After having the conversations and setting expectations, plans to consider are:

  1. Share all incomes and expenses: Have both incomes deposited into a joint account, which is then used to pay all household expenses. After the expenses have been covered, distribute the cash into the savings accounts that are meant to achieve the household financial goals. Any remaining cash can be left in the joint account or divided between each partner for spending.
  2. Split expenses 50/50: Couples calculate shared total expenses and savings requirements for financial goals. Each partner contributes enough to cover 50% of the costs into a joint account that is used to manage bills and savings. The remainder of each person’s income can be used at their discretion. Depending on the expenses, the lower income partner may be left with very little compared to the other partner.
  3. Split expenses proportionally to incomes: Similar to 2, couples calculate their shared expenses and savings requirements. However, instead of covering 50%, each partner is responsible for a percentage based on their income. With this method, there is more balance between the remaining incomes.

Q: Is there a particular plan that you would recommend or prefer?

A partnership is about working together as a team, which typically means sharing wealth and resources after a while. When you share your finances, you can plan as a family with the pooled resources, work together to maximize each other’s saving vehicles, and support the goals of your spouse that bring them joy!

Some examples of what this looks like:

  • Savings vehicles: This includes individual TFSAs, RRSPs, and joint savings accounts.
  • Planning as a family: If one partner will retire later, the other can help so they can both enjoy retirement together.
  • Supporting your spouse’s goals: Pursuing further education, becoming a stay-at-home parent to spend more time with kids while they are young, and helping their family financially.

Q: What are ways to save as a couple and reduce household taxes?

By utilizing a spousal RRSP for the lower income partner, the higher income earner can contribute to their partner’s retirement savings, while also reducing their own taxes. Another consideration is that it may be used to withdraw from your RRSPs earlier.

If you are an incorporated professional, consider if there are ways your spouse can contribute to your business and earn extra income.

To learn more about the details and if these can be worked into your plan, ask your financial advisor.

Q: Any final comments?

Remember to review periodically and after life events. You may find that your preferences have changed over time. Buying a home or starting a family can also lead to significant changes in your income or expenses and make a different plan more suitable for your new circumstances.

As your finances become more intertwined with your partner, the benefits of having a conversation and budgeting plan increase. If you have any additional questions, reach out to your financial advisor!

The comments contained herein are a general discussion of certain issues intended as general information only and should not be relied upon as tax or legal advice. Please obtain independent professional advice, in the context of your particular circumstances. This article was written, designed and produced by Financial Literacy Counsel, a registered trade name with Investia Financial Services Inc., and does not necessarily reflect the opinion of Investia Financial Services Inc. The information contained in this article comes from sources we believe reliable, but we cannot guarantee its accuracy or reliability. The opinions expressed are based on an analysis and interpretation dating from the date of publication and are subject to change without notice. Furthermore, they do not constitute an offer or solicitation to buy or sell any securities.

Mutual Funds are offered through Investia Financial Services Inc. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments.  Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently, and past performance may not be repeated.

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