Relationships and Money
Money is one of the biggest sources of frustration in marriages. The main reason is that a lot of people have trouble talking about money. Talking openly and honestly about money can reduce stress in your marriage, and can lead to greater savings when you and your spouse on the same financial page.
Communicate. Why is it that we have such difficulty talking about finances? Some of us are embarrassed about our spending habits, the amount of debt we have, or the amount of income we earn. Others take the approach that money and finances is something that people don’t talk about --- even with the closest of friends and family. The most important thing in any relationship is honesty, and this must hold true with your finances as well. You must let your financial partner know if you have credit card debt, a poor credit history, a bankruptcy, or struggle with the basics of money management.
Here are some tips to follow when discussing money with your spouse:
- Understand your own weaknesses. Do you tend to overspend on certain things or events? Do you get defensive when talking about the bills? Knowing what your own flaws are will show you what you need to work on in order to have a better financial relationship with your partner.
- Set aside one day per month to discuss money. This is the time when you can talk over current and future expenses, and discuss priorities. Make a commitment not to disagree about money the rest of the month.
- Continue to learn about money together. By reading books and watching programs, you begin to get better educated about personal finances.
Share bill paying duties. One of the issues that causes problems is when one member of the relationship handles 99% of the household bills. That person may get frustrated with due dates, limited funds, lack of foresight, bad planning, etc. When it comes to the fixed, monthly bills like the mortgage, utilities, and credit card statements, both people should always know the details about those important obligations.
Set goals together. Most experts agree that couples should set goals. Consider making separate "wish lists" and then, together, rank the items and work toward those that you both feel are most important. One goal that every couple should have is to be able to retire comfortably. That goal can only be achieved if both the spender and the saver in the relationship come to an agreement about the importance of that issue.
Celebrate success. When you are able to achieve something, it’s fine to feel good about that! Maybe you paid off a credit card, or built up a savings account, or purchased a new appliance with cash. Celebrate together when you reach your goal. That will help keep you both motivated.
Create a system for managing finances. There are a lot of different systems to choose from (such as joint accounts vs. shared accounts) and you'll have to find what works for you. But it's important to make sure that you have one.
Maintain individual accounts. A solution that works for many couples is to have separate accounts. Use the joint account to pay household expenses, including mortgage or rent, utilities, insurance, and car and home repairs. If there's money left over, split the remaining funds into personal no-questions-asked accounts. It's from these accounts that you can pursue individual wish-list goals. For a spender, that might mean paying for a family dream vacation. For a saver, it could mean investing money into a money market account.
Your Money Personality
Your money personality --- how you feel about money and the way you manage it --- is a product of your upbringing and your life experiences. It was formed over many years, and is unlikely to change significantly after you become an adult. Couples who understand this also understand that trying to totally convert one's spouse can be an exercise in frustration. One of the hardest things to deal with is having a financial partner with an opposite money personality.
If you and your spouse seem to be polar opposites when it comes to money attitudes, it’s absolutely possible to live together happily. Experts say that opposite money personalities can actually complement each other. Savers keep spenders out of the poor house, while spenders encourage savers to enjoy the fruits of their labors now and then. But getting to the point where both money personalities contribute to a balanced approach requires compromise and communication.
Consider which of the following money personality types you may be and how this may frustrate someone with a different type. Then, see if you can figure out which might best describe your partner:
You normally have no problems talking about finances. You like to take control of the finances, just as you do with your life in general. You always make sure to have a large nest egg in your savings account, and want to make sure that every penny is accounted for. You don’t like debt, and prefer to buy only what you can pay cash for or pay off immediately.
Middle of the Road
You may be open to talk about your finances at times and other times you aren’t. You know that you should have a budget and savings, but sometimes you let your emotions get in the way and spend more than you should. It’s not that you are irresponsible with your money. It's just that you don’t think money should run your life. For most of the week, you watch your spending carefully, but then the weekend comes and you occasionally overspend. You do use credit, but always pay your bills on time.
You can be very frustrating to deal with when it comes to money. You have been overheard saying “You can’t take it with you.” You normally don’t like to talk about your finances and spending, and tend to walk away from those conversations. You may have savings one day and overdraft your account the next. You struggle to understand priorities, and have been late on some payments because of a lack of planning. There are times when you avoid opening mail because of the growing account balances. However, you can be very generous with your money, often helping charities and the needy.
Can you see how these types may be conflicting? It’s not uncommon for families to have members in each of the categories. Respect and communication are the first steps to making the money relationship work.