Love & Money: Yours, Mine, & Ours

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Last time, we chatted about managing money with your in-laws. This week, we’re going to focus on managing money with your honey. Despite the fact that your marriage is, hopefully, your most intimate relationship, many couples find talking about money difficult.

Couples grapple with different spending styles, decisions about whether or not to combine finances, and determining financial assistance to one another’s families. In fact, research by Papp, Cummings, and Goeke-Morey found that conflicts over money tend to be the most pervasive and troublesome issue of marital conflict and often go unresolved. As a result, couples may avoid discussing money with one another altogether. Although that may seem like a good short-term fix, it’s going to cost you a lot more than cash in the long run.

It’s important to note that having a calm, open, and respectful conversation will help you achieve the best results. Don’t start the conversation right after you open an astronomical credit card bill, or see a new designer bag sitting on the counter. Schedule a time, in advance, to discuss your finances. Then, both of you should come to the table with questions, comments, and concerns (or as I like to call them, QCCs).

Also, listen to where your partner is coming from and try to understand the root of his/her financial perspective. Often times, we repeat the past and spend or save the way our parents did. But, if that doesn’t jibe with your sweetie, then you need to work toward finding a mutually agreeable solution. Finances need to be a win-win situation and the first step to getting there is talking.

Below are some common situations couples experience and how to tackle them.

Situation 1: Spender vs. Saver

In a magical universe filled with rainbows and butterflies, partners agree 100% on how to spend and how to save their money. In reality, couples often have differing expectations. One partner may want to sock away all of the money, while the other partner likes to spend money on extravagant things, even if it means living paycheck to paycheck. These discrepancies are particularly problematic when finances are combined. Additionally, these habits are highly ingrained and hard to break. But just because they’re hard to break doesn’t mean it’s impossible.

First, if you’re committed to making your relationship work, you need to be committed to getting your finances in order. Make a budget and a long-term financial game plan that is (a) realistic, and (b) meets both partners’ needs. If only one person “wins” it’s less likely that the other partner will stick to the plan. Thus, it’s important that both partners are involved in the financial decisions.

If one partner is a compulsive saver, for instance, agree on a percent of your monthly take home pay that will go directly into savings. If the other partners love to eat out, come up with a realistic entertainment budget. This way, both partners get their needs met.

Also, you may want to consider each having a “fun money” fund to spend as you see fit. For instance, each partner gets $100/month to spend on lattes, shoes, gossip magazines, or whatever his/her heart desires. No questions asked. But, when it’s gone, it’s gone. This will allow each partner to feel like they have some financial independence, but also that they’re working as a team to meet their larger goals.

Finally, have monthly financial summits. Alright, it doesn’t need to be that intense, but set aside a time to chat each month about your budget, where things went right, or where things went wrong. Discuss any changes either of you want to make and check in to make sure your headed in the right direction to meet your long-term goals.

Situation 2: To Combine, or Not to Combine

Another issue couples struggle with is whether or not to combine finances. Although some sources say that joint-account couples are more satisfied, others suggest that separate is the way to go. In actuality, there is no “right” way to manage your finances. Only you and your sweetie can determine what’s best for you. However, there are two “must-dos” when determining whether to pool your resources or swim in separate financial waters.

First, it’s important to think and talk about why you want to keep your money separate. Do you want separate accounts because you don’t trust your partner? Do you just want to have a little freedom to spend as you please? Or, do you have a unique financial situation, such as remarrying in later life or having stepchildren that make it easier to keep things separate? It’s important to look at the reason for your decision and address any underlying issues that are affecting not only your finances, but your relationship as well.

If you find that bigger issues, such as lack of commitment or trust, are guiding your financial decisions than it’s important to have an open discussion about your concerns. It’s likely that these issues are impacting more than your finances, but the overall health of your relationship as well.

Second, you both need to agree on how your money is divided. For example, if you decide to keep separate “mad money” accounts and maintain joint checking account and savings accounts, you need to be in complete agreement over what comes out of what account. Do all joint activities (e.g., dinners out or vacations) and expenses, such as mortgage and groceries, come out of the joint account or does some of that have to come out of your personal account?

Additionally, if you do decide to have personal accounts in addition to joint accounts, it’s important to keep things as equitable as possible. If one partner makes more money, that person shouldn’t necessarily have more “fun money” or be able to do more activities because they earn more.  Also, it’s important that the priority be your joint accounts, not individual finances. Marriage and committed partnerships are team sports and financial inequality will eventually lead to resentment in the relationship.

Situation 3: Spreading the Wealth?

Couples may also grapple with differing opinions about if, and how, to give (or loan) money to extended family members. Some of these differences might be rooted in culture. Perhaps in your honey’s culture, children help support their parents and other siblings, even into adulthood; whereas in your culture, children may not be expected to provide financial aid to their parents or siblings.

Again, it’s important to listen to where your sweetie is coming from and come to a consensus regarding if (and how) you provide financial aid to family. Perhaps you agree to only give money to siblings as a “loan” and not a “gift” with concrete terms of repayment. Or, perhaps you both agree to give money to family freely.

The same type of agreement is needed when it comes to gift giving as well. Maybe it’s easiest to agree to spend $XX amount per family member for birthdays and holidays, this number may be influenced by the number of members you each have in your family. Or, maybe you have carte blanche when it comes to gifts. Either way, it’s important to talk about what you’re comfortable with and make sure that you and your love muffin agree.

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Although talking about finances may seem like a daunting relational task, it doesn’t have to be. Putting your cards on the table will help you and your honey set short- and long-term goals that will help you build a financial future together, which is a crucial step on the path to happily ever after.

Until Next Time,

Sylvia

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