Dear Penny: My Partner and I Are Buying a Home. How Do We Split Finances Fairly?

A couple laugh as they move boxes into their new home.
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Dear Penny,

My partner and I are looking at buying a house. We’ve been together for two years and are talking about marriage. We currently each own a house. She has some equity in her place (around $30,000), but my place will likely sell at a small loss because of its location and the amount of work I’ve put into it since buying it.

We both work full time, but my partner makes roughly double what I make. My partner has three kids that live with us part time, so we will be looking for a large house. I don’t have any kids. I am about to receive a large inheritance that I could use toward a down payment on this house.

Could you make some suggestions on how we could do this so that it’s fair for everyone? Thanks!

— Contemplative

Dear Contemplative,

The important piece of information you have to include in your equation is what “fair” means to you. That’s going to look different for every couple and every family, and it depends on how you and your partner understand each other’s roles in your relationship and the management of your lives.

A “fair” transaction in the context of a family isn’t just about an even financial contribution. It includes everything you each contribute to and experience out of your lives together. When you’re making major financial decisions like this together, consider the nuances of your relationships with money, including:

  • Your financial histories and family wealth, and how those affect where you are today.
  • Your current assets and how you’ll allocate ownership if you move in together or get married.
  • Your incomes, but also your expectations for work in the future — will either of you change careers as your experience or education changes? Will either of you stop working to care for kids, parents or your home?
  • Debts you’ll each be responsible for in addition to a mortgage.
  • Whether you want to remain financially independent or to commingle your finances.
  • Any understanding between the two of you about the time and resources you’ll each contribute to caring for the kids.
  • Any other goals you each have; is there another way you’d want to use the equity in her house or the inheritance you’ll receive, for example?

Try leaving math out of the conversation at first, because it probably won’t lead you to a useful place. Start instead by talking about the place you want to get to: How do you want the next phase of your lives to look? What is the financial situation you each need to support that? Then ask: What are the financial decisions you can make now to move in that direction?

Dana Miranda is a Certified Educator in Personal Finance®, author, speaker and personal finance journalist. She writes Healthy Rich, a newsletter about how capitalism impacts the ways we think, teach and talk about money.