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):
- 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.
- 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.")
- 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.
- 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.
- Having to ask your partner for permission to buy something can feel like an impingement on your autonomy.
Anyone have any other ideas?
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:
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.