My partner and I have been living together for a year. We currently share our finances to some extent (we have our own bank accounts, but have a shared credit card). I've been thinking about how our current system can be made more optimal. We mostly buy food, travel expenses, and other shared goods on the credit card.

Obviously, any system of sharing finances should leave both partners feeling like the arrangement is fair. That's what I mean by ethical. I think that a relationship should be a team effort, and if you can give your partner 1 utilon at the cost of 0.5 utilons to yourself, you should do it every time. If they do the same thing, I think it's very likely that you're both better off in expectation.

Also, I think it's better if a method of splitting finances as incentive-compatible as possible. By that, I mean, both partners should be incentivized to spend money in a way that optimizes total utility between both partners. Money is the one of the most common causes of arguments in relationships, and it seems to me that more incentive-compatible ways of sharing income might be a way to prevent those arguments.

(I think it was William Vickrey who said something like (paraphrasing) "We should get the part of our economy to that can be made to run off self-interest running as smoothly as possible, so more of our attention can be spent on areas that truly cannot be solved except through altruism." By the way, if anyone can track down the source of this quote, I'd be very grateful.)

Brainstorming (trying to say as much as I can about the problem before proposing a solution):

  1. Diminishing marginal utility means that inequality of consumption is a sign that your relationship could be better. In my case, I make about 4x more than my partner. It would be very bad for aggregate utility if I lived large while my partner had to pinch pennies.
  2. A strategy like "one partner pays for rent, the other pays for food" gives the partner who pays for rent no incentive not to spend on food frivolously. Even if they're not spending frivolously, it seems like the possibility that they are might create relationship friction. ("Ugh, there they go again, ordering uber eats again on my dime.")
  3. Money may be fungible but human brains like hypothecation. Saying "A covers 100% of rent" feels different than "A covers 50% of rent + their partner's gym membership and funko pop addiction" even if the total amount spent is the same.
  4. Related to the previous, it might be nice to have shared financial goals, like a joint bank account that both partners contribute to. Even if it's no different from one partner contributing entirely to the shared account and the other contributing to something else, it feels like less of a team effort.
  5. Having to ask your partner for permission to buy something can feel like an impingement on your autonomy.

Anyone have any other ideas?


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The way I'm thinking about doing this if I get married is to categorize things like this:

  1. All money goes into a shared account
  2. The shared account pays shared expenses like the mortgage, vacations, dates, house things and groceries
  3. We each get some amount deposited in a personal account (in my case, the same amount for each of us) which we can spend on whatever we want (personal meals, clothes, alcohol, etc.)
  4. Everything else goes into long-term savings

A simpler version would be to drop the shared account, put more money in the personal accounts, and each pay half for shared things. I would expect it to be more problematic though, since then you run into problems like "what if my partner blows all of their money on alcohol and doesn't pay rent". The intent of this setup with shared expenses first and then personal accounts is to make it so neither of us has any reason to care what the other does with their personal account. It would also just be more annoying having to constantly split things.

I imagine that shared vacation and dates may sometimes cause problems if one person wants to go on more vacations or dates than the other. I think the best way to handle this is to just discuss expectations rather than changing the financial setup though, since solutions like "the partner who likes vacations spends their personal fund on vacations for both partners" are probably not going to make them happy.

Groceries are another one where there could be complexity based on how similar your grocery needs are, but I think there's generally a lot of overlap and I don't expect the differences to be large enough to be worth paying attention to. Your situation may be different if you don't agree on food at all, especially if the prices of what you want are wildly different.

The "everything else goes into long-term savings" part is potentially specific to me, but this is what I want to do with my spare money anyway, so I don't mind if I'm disproportionately paying for this.

A previous setup I did was:

  • I paid for rent, most groceries, and vacations
  • For everything else, we kept our own income in personal accounts

This went badly because my partner had no incentive to keep any of the costs I paid down (unsurprisingly, they wanted to go on more vacations and live in a nicer house than I did).

Note that if you don't want to merge your finances like a married couple, I'd recommend something simpler like "you pay a disproportionate amount on shared expenses but keep everything else separate". I don't advise trying to be halfway-married, either do it or don't.

One could use a shared bank account to which both partners contribute the same percentage of their income.

In my relationship, I’m looking to develop a system based on equity, not correctness. The former ensures that everyone has what they need, while the latter is based on pure mathematics.

It’s the following quote that stayed with me from a book by Chimamanda Ngozi Adichie: “In a healthy relationship, it is the role of whoever can provide to provide.” 

Trust is an essential element in this relationship, and it’s vital that each partner will live a similar lifestyle to the other. We don’t need to share everything, but we need to work together

Of course that each relationship is different, and there is no system that works for everyone. That’s why I’m willing to try and see what sticks. 

An example of a process for a couple where both partners work and have a monthly paycheck:

  1. Every month, we pool all our money together in a joint account.
  2. Use this account to pay for everything we share throughout the month (e.g., rent, utilities, food, dates, holidays).
  3. At the end of the month, we see how much is left in the joint account and decide how much of it to put into a shared savings account and how much to withdraw into individual accounts that we are free to use however we want, without having to account for it. This split could take into account how much each of you contributed initially, so you get your share back relative to your allocation.
  4. Start over.

Now that both partners have their needs fulfilled, the monetary difference in the contribution is just a cost or an investment of being in that relationship.

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