Common Money Issues Between Couples:
Couples disagree and argue about lots of things but there is one particular subject that tends to be more damaging to relationships than others: money.
It should be part of every relationship to make sure that the income, spending and savings styles of both people are well understood as soon as possible. Not discussing financial issues can lead to a lot of grief.
If there are problems, a good way to start off the discussion is to ask where your partner's general outlook on saving or spending money is coming from. Obviously, most will be somehow related to their parent's attitudes towards money. Some people follow in their parents' footsteps and some do the exact opposite to avoid some negative experience they had when they were young. Getting clarity of each other's attitude towards money is an important first step to finding common financial ground. Acquiring a mindset of problem-solving rather than finger-pointing is another one.
Talking over finances: According to a survey conducted by Wells Fargo, 44% of people ranked personal finances as the most difficult topic to talk about. Many people would rather talk about death, politics, and religion rather than what they earn, spend, or owe. If you want to have a long and happy relationship with someone, one of the first things you’ve got to get over is your fear of talking about money. Letting financial concerns simmer beneath the surface leads to fights – and in many cases, those fights lead to break-ups or divorce.
Incomes:
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The new reality: now that women are having careers, they want to control more of their money. It may even come down to keeping control of all of their money. Young men are also feeling the need to control their own money. This is a new way and it is also a way to keep control of funds if a couple splits up. Keeping their own funds in their own accounts means it is easier to split up. In this instance, many couples look at each other incomes and decide who will pay for the various expenses. In some instances, couples will decide to put just enough in a joint account to pay the bills. The amounts to putting in may be based on a percent of the total income or it may be based on other factors such as who pays more because they use more. Then one person is responsible to make sure the amounts are put in the account, then pay the bills.
- One partner will obviously make more money than the other and in fact, one person may make all of the money. That doesn't mean that one person should make all of the decisions. Each partner must have some say in the financial distribution of spending and savings departments, even if one person is deemed the actual budgeter in the family. Make sure to make a concerted effort to discuss all of the types of things that are usually spent on or saved for.
- If only one partner has income or makes most of the income then it is reasonable to pool the funds, pay off all of the bills and debt, put some funds aside for savings goals, give out any allowances and finally give out some 'own' money for each person to spend on whatever they want.
- If both partners have income then they can split the incomes in various ways. They can create a joint account for paying bills. They can either put the funds in based on a percentage of their incomes, split it evenly or put in varying amounts based on who is spending the money to create the costs. They can do the same thing to cover savings for various items and possible allowances. Any remaining funds can be left in each others 'own' accounts.
Spending Habits:
- This is one of the biggest problems. A real spender will be ticked off when the other person is somewhat frugal and vice versa. Being too frugal or too extravagant will cause some resentment. Talk over the problem and what results emmerge because of the problem. Then discuss some solutions. Maybe set some limits. Spending habits develop over time, and it is likely hard to change that habit immediately. Try to decide on some new rules and/or boundaries to help control the issues, then be patient for changes to happen.
- In our world where credit cards offer instant gratification, developing sensible spending habits is one of the biggest problems. Being too frugal or too extravagant will cause some resentment. Spending habits develop over time, and it is likely hard to change that habit immediately. Try to decide on some new rules and/or boundaries to help control the issues, then be patient for changes to happen.
- Another way to deal with this is to allow each person an allowance and a personal account and some of the savings can go into it while the main part of the savings goes into a joint investment account. Then there is a control method here and each person is responsible for that amount only.
- Make sure to agree on certain parts of the expenses. The cook in the house might get a little more say in what happens for the kitchen while someone may be the planner for the home and yard. These types of issues should be discussed early on in a relationship. It is a good way to start so there are fewer surprises down the road.
Saving Habits:
- As mentioned above, saving habits are tightly connected to a person's general outlook on money, and therefore differ from person to person. It's necessary to reach a meaningful compromise for both. One way of doing this is to develop some long term Budgeting goals and create a set of financial goals on the basis of what is important to both partners. If goals can be set up then both people should make an attempt to meet them. The main thing is to create some savings just in case of emergencies or the need to buy a new vehicle or you just want to go on a vacation. Use a savings planner +++link to a sample planner+++ that shows how much and how long the savings plan will be in effect.
- Couples often disagree about how (and how much) to save as well. For example, some people might be so focused on saving that they’re willing to pass up many life experiences, from travel to eating out at a restaurant, while others appreciate a little splurge now and then.
- It can be difficult to agree on where to save money - put it in a safe account or put it in an investment. Savings accounts rarely make more than inflation but they are safe. ETFs and Mutual Funds are decent middle ground but can down in the short term. Couples can't always agree on where to save. If it becomes an issue then it may be best to let it be handled by a financial professional. Learn about Investing here.
Attitude towards Debt :
- There can be dramatically different attitudes toward having debt. How much is too much or how to pay off existing debt? One person may say that debt is normal in our society while the other person may say that debt is wasted money.
- If one person comes into the relationship with a lot of debt while the other person is debt-free then how should the debt be paid off.
- Obviously, this kind of problem should be discussed before the relationship starts to make sure a solution is found beforehand.
Get Everything Out in the Open - it is very hard to keep things hidden and if something is hidden then found, the result is usually not good.
Of course, it will take a bit of time for all of the issues to come to the fore and for all of the issues to get sorted out. Be equitable as discussions are ongoing.