“Nobody can go back and start a new beginning, but anyone can start today and make a new ending.” – Maria Robinson
When it comes to relationships, how a couple deals with money can be a major influence on whether or not the relationship thrives or fails. Statistically, 41% of Canadian marriages end in divorce and, given that money is widely considered to be the most common reason for relationships to end, it makes sense for couples to make learning to handle money well as a team a priority. Our relationship with money is deeply personal and because of that, any judgment by a partner regarding the way that we handle our finances can lead to an array of emotions, both positive and negative, which have the ability to trigger some (seemingly) irrational reactions. When you add in the fact that many people don’t feel comfortable talking about finances or confident in dealing with money-related issues it’s hardly surprising that couples fight about money so much. A 2004 study by SmartMoney Magazine discovered that the most frequent reasons couples fight about money center around six specific topics. Here are the first three:
1. Merging Money
The tradition of couples pooling funds is one that has existed for a long time but the main difference between couples merging money now compared to centuries past is that today it’s a matter of choice. Up until the 1920s women were not allowed to own any property and, upon marriage, all of a woman’s wealth and possessions became the property of her husband so a couple’s finances inevitably had to be merged. This is no longer the case but many couples still find it easier to merge their money and cover joint expenses such as housing and groceries from a jointly owned account rather than figuring out who owes who what for their share of the bills. Whether or not a couple chooses to merge their money is a personal choice. However if there’s a difference of opinion it’s important to understand why that is and to endeavor to find a win-win situation that will satisfy both partners.
Merging money may not be the best choice for every couple and there are equally effective ways that a couple can manage their finances. Some couples opt to keep their finances separate with each partner responsible for covering certain bills while some couples each contribute to a joint account that is used to cover joint expenses and also maintain their own individual accounts. Whatever you decide, the important thing is to find a solution that each partner is comfortable with; in this way you can ensure the bills get paid, the responsibility is divided fairly, and you can avoid ongoing stress and resentment (which hopefully reduces the chance of future arguments!).
2. Dealing with Debts
According to some research, we tend to marry our financial opposite. Those who love to spend are often attracted to the disciplined nature of savers while savers find the spender’s carefree ways exciting. The challenge lies in the fact that what attracts us to someone initially may not be as attractive ten years down the road; the saver’s discipline becomes restrictive and the spender’s shopping sprees become frustrating. The way we handle our finances is often rooted in our upbringing and the influences around us and bad habits can only be replaced with good ones if the person who needs to make the change is willing to do so.
Fighting over debt is never going to be resolved unless a plan is made and implemented. Ironically, the spender’s strongest ally in conquering debt is the steadying influence and support of their partner. However, being able to ask for (and accept) that help and to have it given in a non-judgmental and non-critical way is often a lot more difficult than you’d imagine it would be in a romantic relationship. Savers and spenders can make great couples but there needs to be honesty, give and take and a shared commitment to building financial security for their future in order for the relationship to succeed with minimal friction. All too often, spenders don’t realize that their habits are sabotaging their relationship until it’s too late. As in all aspects of relationships, when it comes to money, open communication is key.
If you’ve read my posts before you may know that I have a strong dislike for the word “budget” because it conjures up feelings of restriction and deprivation. I much prefer the term “money management” because it carries a sense of control and empowerment; a sense of making choices about how to spend money rather than being prevented from spending.
A budget is simply a plan for your money; it helps you understand how much is flowing in and out of your account and allows you to purpose each dollar for either spending or saving. Some spending will be necessary, some may be frivolous, some saving will be long term (for retirement) while some may be short term (vacations, home renovations, birthdays etc.). The trick for couples is for both people to be aware, for both to be involved and for finances to be handled as a team. The responsibility doesn’t have to be shared equally; the true magic of a well-balanced team is allocating the responsibilities so that people are doing mostly what they love. If one of you loves looking after the money then it makes sense for that person to take on most of the responsibility but that doesn’t exempt the other partner from being involved. Some of the saddest stories I hear as a financial advisor involve women who were completely disinterested in dealing with the family finances and then find themselves either completely without financial security when their partner is no longer around. It's unfortunately, when they are unable to handle their finances alone. It’s also unfair to make one person responsible because what often ends up happening is that they become the “money police”, holding their partner accountable for their spending and this is where the arguments can begin.
At the end of the day, a long-term relationship requires both people to be committed to each other and to building a life together. Keeping your happiness and goals at the heart of your finances allows you to overcome the discomfort that money conversations can create and step forward into a better life together.