What Frank Sinatra didn’t mention in his famous song is who pays for the horse and who pays for the carriage. Opposites often do attract, and that includes opposing money styles.
To help ensure harmony at home, SageVest Wealth Management offers some guidance on how to improve your relationship with money and with your partner.
Open and honest communication is key. This should always take place in private. Never criticize your spouse’s attitude to money in front of others.
A great starting point is discussing your early connection to money. How your parents viewed money and how it was discussed in your family are experiences that shape your adult money styles. Discussing these with your partner helps you to understand each other and opens the door to conversations about how you currently view money, what’s important to each of you, any fears that you may have, and your overall money habits (good and bad).
Ideally, conversations begin early in a relationship, but it’s never too late. Ongoing conversations help ensure that you’re growing together and moving toward common goals – especially as these may change as your life together evolves.
If the number one relationship rule is communication, compromise is a close second. Not every decision you make as a couple will fully align with your individual perspectives on money or your own financial objectives. Differences will arise. How you and your partner learn to handle those differences matters most. It’s important to remain flexible and work together to reach agreement.
Each of you should be entitled to spend small amounts without explanation. However, you might want to agree on a ‘wants’ bucket, set a ‘splurge’ amount, or lay ground rules for larger purchases or new debt e.g., require discussion for amounts over $500.
Teamwork is essential, especially if you have different outlooks on money. A strong recommendation is to find common ground and begin there. For example, start by talking about goals for retirement or saving for vacations before delving into day-to-day expenses. Focusing on shared goals and values helps bring you closer and starts discussions on a cooperative note.
It’s also important to coordinate your position on finances if you’re a parent. Your child won’t be able to play one parent off against the other. Additionally, being financially responsible role models instills healthy money habits in your child from an early age.
Agree who’ll be responsible for paying bills, balancing the checkbook, and making investment decisions. Even if one of you primarily handles the finances, you’re in the relationship together. To the extent possible, you should both engage in the money management aspect of life as a couple.
Keeping the pulse of your cash flow and setting a regular time to review it together (for example, once a month) is a great relationship and financial management tool.
Seldom do both partners earn or contribute equal amounts. Yet, financial contributions shouldn’t dictate who makes all the wealth decisions, as this can lead to resentment.
One option that works for some couples who keep their finances separate is for both people to contribute the same percentage of their net income to household support. This creates a sense of equality. The higher earner contributes a larger dollar amount but the same percentage.
Another approach is for each partner to take full responsibility for selected items, giving them a greater sense of ownership and accomplishment.
We’re often asked if joint accounts or separate accounts work better. The answer is different for every couple.
- Some people believe that all assets should be jointly titled to promote openness and sharing. Everything is consolidated and there’s no ‘mine’; everything becomes ‘ours.’
- On the other hand, separate accounts may work better, especially for relationships developed later in life. With this choice, financial transparency is paramount.
- A third option is a combination of these two approaches. You each have separate accounts, but contribute to a joint account that pays common expenses such as mortgage or rent, daycare costs, or other household expenses.
Talking about money doesn’t mean that you have to account for every penny. In fact, trying to do so can cause more harm than good. By being open, honest and working together, you can find what works best for both of you. Remember, when it comes to finances, communication, cooperation, and compromise: “You can’t have one without the other.”