The good, the bad, and the ugly.
You’ve probably seen the movie Pretty Woman, detailing the love story between a wealthy man and a working woman. The romantic arc where two people from different socioeconomic backgrounds fall in love isn’t new. Still, it does pose a novel question — is financial dependence in a relationship good or bad? It’s admittedly hard to characterize something as entirely negative or positive. Often, various factors come into play, making the answer unique to each couple. We’ll cover the advantages and disadvantages of being financially dependent on your partner so you can make an informed decision about what’s best for your relationship.
What is Financial Dependence?
Financial dependence describes the state of a relationship in which one partner financially depends on the other. It isn’t gendered, meaning either partner can be the dependent. Usually, this partner will have low income or no income and virtually zero savings.
This precarious position can stem from numerous things. The dependent partner might be a stay-at-home parent, have a disability that makes them unable to work, or might have been encouraged not to work by their significant other. On their own, their financial situation would be unstable, and in most cases, they would have little to no support.
Is Financial Dependence Always a Bad Thing?
More often than not, financial dependence is cast in a negative light. Usually, it’s because the situation prevents the financially dependent person from leaving. Without their partner, they have no source of income for life’s basic needs and no savings or support system to fall back on.
However, some couples knowingly go into a situation of financial dependency for the better of their family or relationship. Such as when one person becomes a stay-at-home parent, essentially giving up their career. They give up both their present earnings and future career potential. It’s essential that as soon as you both enter into this agreement, everything should be seen as “ours” instead of “yours” and “mine .”As long as the dependency doesn’t become a source of power, guilt, or contention, the relationship likely won’t suffer.
That doesn’t mean it isn’t risky, though.
Why You May Want to Avoid Financial Dependence
Generally, financial independence is a good thing, even if you’re in a loving and committed relationship. Here are a few of the most significant disadvantages of entirely depending on your partner regarding finances.
While having one partner earn the larger share may start pleasant, it can rapidly deteriorate. Either consciously or subconsciously, both the earner and the dependent can experience and exhibit a range of emotions.
The person bringing in the income may expect the other person to do a larger portion of the housework and family raising or prove their commitment to the relationship with greater affection in order to “earn” their position.
Alternatively, the dependent might feel guilty, ashamed, or stuck. Feelings that they do indeed have to earn their place in the household can be common. This feeling to prove their worth can lead to them taking on greater responsibility and forgoing their interests, especially if they cost money.
Often Creates Crisis
Having only one person bring home a paycheck can leave a couple or family in a fragile financial state. If the earner is unable to work or let go of their job, the sole source of income is lost. There is no other income source or earner to fall back on. Lack of a safety net can increase the likelihood of a crisis, making a minor setback much more precarious.
Additionally, at some point, the dependant may be alone, such as if their partner passes or they experience divorce. When this happens, there is a chance the partner who earned less may be left with very little. Having financial independence and a sense of managing money is a great way to avoid this situation.
Nowhere To Go
Should one-half of the couple ever want to leave, financial dependency can make it impossible to do so. Many dependants feel they have to stay because they have no support or savings, leaving them nearly destitute if they choose to walk away.
The situation only worsens if the couple has children. Being able to provide for themselves and their children is a seemingly unattainable goal for the financially dependent. This leaves them trapped, but it can also further the unhealthy power imbalance.
Financial insecurity should never determine if a person has to stay in an unhealthy relationship.
Prenups Protect Both Partners
Prenups traditionally have been thought of as only protecting the wealthy partner and serving no benefit for the financial dependent. In some cases, prenups were believed to disadvantage the person who earned less. But that’s not true!
Prenups can be crafted to protect and benefit both the wealthier and less wealthy partners in a relationship. As a couple, you and your significant other should work out if a prenup is something you would like. If it turns out to be a good decision for you, consider these stipulations and clauses that can provide advantages to both the earner and the financially dependent.
- Sunset Clause. At the most basic level, this clause is an expiration date for a prenup. You can choose a range from five years to fifty years. After the selected amount of time, the prenup is no longer valid. A Sunset Clause can provide confidence and security to the dependent. Should a divorce occur after the end date, they won’t be left with nothing. Alternatively, it reassures the wealthier person that they won’t lose all their assets if the marriage ends sooner than the clause date.
- Income Earned. A couple can dictate how income earned during their marriage will be handled during a divorce within a prenup. One stipulation can be a shared or joint bank account to which both the wealthy and less wealthy have access. They can place all income into the joint account or only a percentage, either promoting independence or creating a more amiable dependence.
- Excluding the Alimony/Spousal Support Waiver. Historically, a prenup included a waiver regarding alimony or spousal support that prevented the less wealthy partner from seeking either of these things from their spouse. Choosing not to have this waiver benefits the dependent by not barring them from future alimony or support payments.
- Separate Assets. A prenup can help couples define marital and non-marital assets, especially concerning how long a marriage lasts and what the state laws define as marital and non-marital. Asset definitions include appreciation on a property or stock shares, marking the value pre-marriage as non-marital and the increase in value as marital. Financial gifts can be included or excluded to either take care of the dependant or protect them in the wealthier partner’s best interest.
A High-Risk Proposition
While being financially dependent in a relationship isn’t always a bad thing or a guarantee that the less wealthy partner will end up destitute, it is a risky proposition. Not having financial independence can be prohibitive in many ways, especially should you want to leave the relationship. It can be a good idea to leave the romantic relationship ideals we see in movies behind and treat marriage as what it fundamentally is – a business relationship.
While most of us dream of having an equal and supportive relationship regardless of who is the earner, it’s essential to be realistic. A prenup can protect both the income earner and the dependent should things go awry.
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Julia Rodgers is HelloPrenup’s CEO and Co-Founder. She is a Massachusetts family law attorney and true believer in the value of prenuptial agreements. HelloPrenup was created with the goal of automating the prenup process, making it more collaborative, time efficient and cost effective. Julia believes that a healthy marriage is one in which couples can openly communicate about finances and life goals. You can read more about us here Questions? Reach out to Julia directly at [email protected]