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How to Protect Yourself Financially When You Earn Less

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Photo by Kristina Litvjak on Unsplash

This article was originally published on Women’s Personal Finance as a guest post (written by me) and is republished here with permission. The post includes affiliate links, which means we may receive a commission if you make a purchase through our links. There’s no extra cost to you and it helps to support our sites. Thank you!


From Regina, editor at Women’s Personal Finance

This great post emphasizes how important it is for lower-income partners to take measures to protect themselves financially in a relationship. Unforeseen circumstances (and foreseen statistically, but sometimes hard to accept individual circumstances) do occur! 

Life and partnerships can change fast; from relationship breakdowns to job losses, illness, injury, and even death. These aren’t always the things we want to think about, but we have to be realistic about the odds of something unexpected happening over the course of the partnership.

As Chrissy notes, she is writing from the perspective of a “good” relationship. Knowing that things can change over time is always easier to have these discussions earlier and when the relationship is in a good spot. Proactive discussion and open, honest communication can also be keys to ensuring a long-term, healthy partnership. 

The tips below can be great even if you’re the higher earner. How can you help advocate for an equitable relationship and make your partner feel supported, secure, and respected? If you’re looking for more tips to help open up conversations about money and work on the financial security of your relationship, here are nine ways to advocate for your money in a partnership.

How I’ve protected myself financially

As a full-time stay-at-home mom, I’ve always been aware of how precarious my financial situation could be. Since our first child was born, I’ve earned little to no income, and my husband was* the main breadwinner. As a result, I was nearly 100% reliant on him for our household income. 

Relying on my husband alone could’ve been disastrous for me had anything happened to him, if our relationship collapsed, or if he wasn’t the reliable, stand-up guy that he is. I was and continue to be in a fortunate position, so I never had to worry about my financial security.

However, I didn’t rely solely on good luck and faith in my marriage. Those factors weren’t enough to keep me, as a lower-earning partner, financially safe. Instead, my security and confidence came from the legal and logistical arrangements we put in place. 

This is what this post will cover—how I maintained and ensured financial security for our kids and me, despite being the lower-income partner. But first, let’s discuss why it’s so important to ensure you’re financially protected.

*We reached FIRE about a year ago, so I no longer rely on my husband’s income. Instead, we’re both living off the investments which we built together. 

Why it’s essential to protect yourself and gain financial security

For cohabitating partners, income imbalances are pretty common— and stay-at-home parents aren’t the only ones who may be affected. An income imbalance can also occur if one partner has a lower-paying job and/or higher expenses (for example, when paying off debt).

Whatever the situation, I can’t stress enough how important it is for the lower-income partner to protect themselves. The sad reality is that things happen even in strong, trusting relationships.

Relationship breakdowns can and do occur (sometimes out of the blue). One or both partners could lose their job. Illness, injury, or death can also happen suddenly, leaving one or both partners struggling to make ends meet. 

Bottom line—even if you’re in a healthy, happy partnership, it’s still important to be prepared. You never know what might happen. And by planning ahead for worst-case scenarios, you’ll be protected, and ready should the worst come to pass.

Why I wrote this post

As a woman and a staunch feminist, I’m passionate about helping other women improve their finances and grow their confidence with money. There are too many stories of women who weren’t raised to be financially literate, are oppressed by the patriarchy, or are in abusive relationships

These stories are frustrating, sad, and painful to read, and I want to help change the script. This post is my small contribution to my blog readers, the Women’s Personal Finance community, and the broader community of women worldwide. 

But it’s not just women who could benefit from this info—it’s applicable to any gender and higher-income partners as well. If you’re in a relationship, you need the info in this post! I hope it helps you and others in your life. 

Note: This post was written with a healthy and mutually respectful relationship as a starting point. If your relationship is in an unhealthy place, some of the tips may not apply and could even be harmful. If this is your situation, please take care and reach out to a local domestic violence hotline or shelter for help.

How to protect yourself financially when you earn less

Below are nine tips for lower-income partners to protect themselves financially. The tips are in no particular order, but I recommend tackling them one at a time—perhaps starting with the easiest tasks and working your way to the hardest.

1. Get on the same financial page 

As a couple, you and your partner work as a team towards shared goals. That means decisions are made jointly, and both partners are aware and supportive of each other’s needs and wants. This teamwork mindset is crucial if you earn less than your partner. 

As the lower-earning partner, you may feel that you have less say or less of a right to be involved. But that’s completely false—both partners deserve equal voice and involvement in the household finances. 

Now, this isn’t to say you have to agree on everything; it’s okay to compromise or disagree on some things. But you should try to be in alignment on the most significant decisions. To help you get on the same financial page as your partner, try the following:

Getting on the same financial page is a huge step towards financial equality and stability for you as the lower-income partner. It also benefits your partner and the relationship as a whole. There’s really no downside, so grab your favorite drinks and have a money chat with your partner tonight!

2. Combine your finances

Consider this situation: you’re a stay-at-home parent or you work for a non-profit. No matter how hard and long you work, you may never catch up to your partner’s income. Even so, your efforts and non-monetary contributions are equally valuable. (For example, here’s how much a stay-at-home mom’s salary could be worth.)

Whatever you earn, the value you bring to the relationship can and should be acknowledged. One of the most meaningful ways to do that is by combining finances. In doing this, both of you reaffirm that:

  • You’re equals.
  • You trust and value each other.
  • You each contribute in your own unique ways.
  • You’re working together towards shared goals.

My husband and I manage 100% of our money jointly, and it’s always worked well for us. However, this isn’t the case for everyone. Know that you don’t have to go all the way—there are many ways to combine finances with your partner.

As you consider the options, keep the following points in mind:

  • Partners who pool more of their money tend to be wealthier. (Pooled money grows faster and gives couples greater access to wealth-building assets.)
  • Combined finances can make couples happier because of an increased sense of trust, safety, and connection.
  • Money management is more straightforward and transparent when accounts are shared.
  • Joint accounts make estate planning easier and more efficient.

I’ll reiterate that there’s no right way to combine finances. However, you can and should advocate for yourself as a lower-earning partner. Your monetary and non-monetary contributions need to be recognized and taken into account. 

If your finances aren’t already combined, or you want to change how much is combined, start the conversation with your partner. They may not be aware of the importance of financial equality and how much it can improve your relationship, so help them get informed! 

3. Establish your own credit

Establishing and maintaining your own credit history and score is a crucial aspect of financial stability and independence. However, many people aren’t aware that they may not be building a credit history—even if they use multiple credit cards.

One partner not having credit often occurs with couples where one partner manages most or all of the finances. This person will tend to be the one who applies for new credit products—usually using their own name and ID. 

But it can also apply to couples with income disparities. In such situations, the lower-income partner may opt to only apply for cards in the higher-income partner’s name. That’s because the higher-income partner has a better chance of being approved for credit cards.

As a result, all the credit inquiries, approvals, and usage history will only appear in the credit report of one partner. It’s also important to note that joint holders or authorized users may still be essentially ‘invisible’ to the credit bureaus. 

Don’t make this mistake! Check your credit reports* to ensure that each partner is the primary account holder on an equal number of credit accounts. In doing so, each partner will build their credit history (which safeguards them in case they ever need to apply for new credit lines on their own). 

*That’s WPF’s link to Credit Karma (for US readers). Canadian readers can check their reports for free using Borrowell.

4. Use a password manager

Password managers aren’t just great for online security—they also play an essential role in couples’ finances. Using a password manager as a couple offers many benefits:

  • Encourages transparency and openness between partners.
  • Prevents either partner from being locked out of joint and individual accounts in case of an emergency.
  • Allows the healthy/surviving partner to more easily deal with their partner’s affairs.
  • Ensures that no accounts are forgotten.
  • Eliminates the need to share passwords over insecure channels such as email or text messages. 

There are a variety of password managers out there, each offering a slightly different set of features. Do some research with your partner to find one that both of you like, then get it set up as soon as possible—future you will thank you!

5. Open a spousal retirement account

If your partner earns more than you, consider opening a spousal retirement account in your name. (Examples of such accounts include the spousal IRA and spousal Roth IRA in the US and the spousal RRSP in Canada.)

Spousal retirement accounts are opened in the name of the lower-income partner, but the higher-earning partner makes contributions. The benefit to the lower-income partner is it allows them to build their retirement savings equally—even if they earn less. 

The higher-income partner also benefits from the tax deduction they’ll receive for the contribution (to a spousal IRA or spousal RRSP). These accounts lower tax bills and could allow the couple/family to receive more tax credits and government benefits. 

In short, spousal retirement accounts are a win-win for everyone. They help ensure both partners build an equitable retirement savings while also providing tax benefits to the higher-earning partner and the couple/family. 

However, just like non-spousal retirement accounts, these accounts have specific limits and rules. Contact your brokerage, bank, or advisor if you need more details.

6. Name beneficiaries for retirement accounts 

Whether you live in Canada or the US, retirement accounts without named beneficiaries will be paid out to the estate. If this should happen, the assets in the account(s) will not only need to pass through probate but will also be assessed for income tax.

Conversely, when beneficiaries are named, they can inherit the accounts probate and tax-free. And, depending on the relationship between the beneficiary and the deceased, the account may also retain its tax-advantaged status.

For example, spouses can inherit their partner’s retirement accounts (RRSP, TFSA, 401k, Roth IRA) and retain the tax advantages. When a child inherits a retirement account, they do not receive this benefit but may receive the assets tax-free. (Taxation rules vary per account.)

There’s also one important note to keep in mind for Canadian TFSAs: a spouse must be named as a “successor holder” and not just a beneficiary. In doing so, the surviving spouse can roll their partner’s TFSA into their own TFSA and retain the tax sheltering. 

In summary, correctly naming beneficiaries on your retirement accounts can ensure you and your partner receive the full value of the assets in each other’s accounts. Typically, it doesn’t take much time to check and/or name retirement beneficiaries.

Take care of this important task today so you can rest easy, knowing you and your partner have protected each other and any other beneficiaries you decide to name.

Related: Need help ‘translating’ US financial terms and accounts into Canadian? Check out The US/Canadian FI Glossary!

7. Create a family emergency binder 

Do you know how many bank and investment accounts you have? Are you aware of where they’re located and how to access them? What about your credit cards, mortgage, and other loans—do you know how to access those without your partner?

If your answer is no to any of the above, a family emergency binder can help! Not only can you record all the info above, but you can also add other important details such as:

  • Household information.
  • Medical information.
  • Important and helpful info about kids and pets.
  • Insurance policy details.
  • Basic financial information.
  • Locations of original documents.

You can either make your own binder or do what I did—order this done-for-you Family Emergency Binder. Whichever option you choose, know that it’s an act of love for your partner, other loved ones, and yourself to collect this info in one easy-to-access binder. 

Once you’ve filled out your binder, you and your partner will be able to rest easy, knowing that both of you know exactly where all of your money and other important info are located.

8. Get life insurance

Have you considered what you’d do if your partner were to pass away? Would you be able to carry your household expenses without them? If you plan to continue working, will you earn enough to pay for childcare so that you can work?

If your answer is no to the above questions, I highly recommend purchasing a term life insurance policy. Having a policy will ensure you’re protected in case the worst happens. To calculate how much coverage you’ll need, consider some factors:

  • Your desired standard of living (the same, higher, or lower).
  • How you want to handle your debts (pay off immediately or over time).
  • If you’ll continue working or retire. 
  • Assets and income that could help decrease the coverage you’ll need.

We’ve all heard the nightmare stories of partners who were left financially devastated upon their partner’s passing. In many cases, life insurance could have prevented disaster and provided much-needed stability and security.

Don’t wait on this—get yourself protected today.

9. Get wills and a power of attorney

Procrastination and discomfort are two common reasons couples don’t get wills or powers of attorney done. I strongly urge you to push through your avoidance and get your wills and powers of attorney in place. Here’s why…

As the lower-income partner, you’ll likely be reliant on all of your and your partner’s assets if they pass away. Without a will, you could lose access to and control of the assets you and your partner worked so hard to build. 

In addition, government agencies or the courts may distribute your assets in ways that are not in accordance with your wishes. You can avoid these issues with wills, which create a plan to distribute your and your partner’s assets and ensure that both your wishes are followed. 

A power of attorney differs from a will in that it’s only in force while the person who created it is alive. It allows one partner to make decisions or take actions on behalf of the other if they become incapacitated or unable to make decisions for themselves. 

For example, if your partner was incapacitated and you needed to sell your jointly-owned home or deal with their investments, you wouldn’t be able to without a power of attorney. The consequences of this could range from a minor inconvenience to absolutely catastrophic.

Avoid these issues by getting powers of attorney in place for you and your partner. Hopefully, you’ll never need them, but having them will ensure both of you can continue managing your financial, medical, and legal affairs even if the other cannot.

Thankfully, there’s never been a better time to create wills and powers of attorney. Various online services* make the process easy, affordable, and even enjoyable. So, no more excuses—take action and get these critical documents in order!

*Try WPF-recommended Trust & Will—or in Canada, Willful and Epilogue are popular, reliable options.

Closing thoughts

I hope this post has opened your eyes to the many ways you can ensure your financial security—even if your partner earns more. A lower income doesn’t mean you get less of a say in your finances as a couple.

Each of you contributes in your own ways, and that must be acknowledged and recognized emotionally, financially, and legally. Not doing so can lead to resentment and serious financial risks to you, as the lower-earning partner. 

Keep in mind, too, that these tips are not only beneficial to the lower-income partner. They also offer benefits to the higher-income partner, the relationship, and any children the couple may share. Everyone wins when both partners are protected and valued in their relationship!

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  • Reply
    Christopher Mercanti
    July 5, 2023 at 5:14 am

    What a great post, Chrissy! This is truly valuable information and I hope you and your family are having a great summer – Many thanks!

    • Reply
      July 17, 2023 at 9:11 pm

      Hi Christopher—thanks so much for checking out my post! I hope it helps others to avoid issues down the road. We’re having a lovely summer so far. I hope you are as well (your first in retirement)!

  • Reply
    October 4, 2023 at 4:17 am

    Great advise on the benefits of a spousal retirement account!

    • Reply
      October 5, 2023 at 7:53 pm

      Hi Gareth—thanks so much for reading and commenting!

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