Mastering your money game can totally transform your life
A Relationships Australia study found that 70% of participating couples identified money as a cause of stress in their relationship, yet less than 40% had discussed how they would manage their money before making a commitment to their partner.
Financial stress is one of the leading causes of relationship breakdown and divorce and, unfortunately for some, can lead to mental health issues as well. And while it is true that money doesn’t buy you happiness, it can cause a lot of unhappiness when you and your partner have a different view on money and how it should be treated.
Everybody has a different money story and just because you fall in love with someone doesn’t mean that you have to automatically love their beliefs in money as well. For some couples, constant arguments around money become just another battleground that can’t be overcome.
While this seems like a whole lot of doom and gloom for life as a couple, it doesn’t have to be that way. There are lots of steps that couples can take to avoid letting money and finances get the better of their happily-ever-after story. Here are the top 7 tips to ensure that money does not become an issue in your relationship.
I get it, money can be a difficult thing to talk about.
Particularly if one person in the relationship has more than the other – more assets, more debt, more knowledge, more goals… Money tends to intimidate one person more than the other and makes having that conversation a time of anxiety and stress for both.
Remember though, being open and transparent is better than burying your head in the sand.
Equally important is taking the time to listen. Listen to what your partner is saying and feeling. Too often I see people make the assumption that their partner has the same thoughts and fears as they do, or that their partner will come around to their way of thinking.
Lay it all out on the table – talk about what you have and don’t have, about what you want to achieve in the short term and long term. Talk about what is acceptable spending and what is not. Talk about what expenses are coming up or challenges that you are going to face.
Also, keep in mind that this is not a set-and-forget type of arrangement. Our thoughts on money can change as circumstances change in our everyday life.
Schedule a regular catchup to discuss your finances (make it fun and relaxing – cook a nice meal, pour a glass of your favourite vino) and commit to showing up both mentally and physically. Being 100% focused is the name of the game here.
By having these regular check-ins, you can reduce or avoid altogether those fights and arguments that happen in the heat of the moment (when we tend not to think rationally and be as accepting of others’ opinions).
Money mindset refers to the unique set of attitudes and beliefs that each of us have about money and finance. Your own money mindset has been built up over many years and comes initially from your family and childhood experiences.
Sometimes a couple can have very similar money beliefs (just like they may have the same love of travel), but then again, they can be at opposite ends of the spectrum. That doesn’t mean though that their marriage is doomed. Just like all other things in life, we continually adapt and change to our environment and the community we are a part of.
The key thing here of course is to understand each other and the differences in money mindset.
Don’t dismiss your partner and assume that your mindset is the only one that matters, or that they will change. Find a common ground and understand that sometimes there just needs to be a compromise.
Christmas and birthday spending is a good example. Some people have been brought up to go all out with their Christmas gifts, like there really is no tomorrow, while other families give small gifts and believe that Christmas is about family time and not the physical gift.
Talk about what is important to you and be prepared to accept that sometimes what is important to your partner may not be negotiable.
Yes, I can hear you all drifting off – budgets, no way!
A budget is not an option.
It is an essential tool to ensure you have control over your finances and can plan for a healthy financial life.
A budget will make sure you are living within your means and will give you the greatest chance of fulfilling your goals and dreams.
Sitting down and doing a budget together will allow each partner to have an input into how and where your family money is to be spent. It will make sure you are both on the same page and will keep each of you accountable to what you have both decided.
It is important when you are setting the family budget that both of you have equal input into decisions around spending and goal setting.
And remember your expectations have to be realistic and achievable.
In some relationships, people may be tempted to keep a secret bank account or credit card and hide purchases from their spouse. This is the financial equivalent of an affair.
If you need to hide purchases or accounts from your partner, then it would suggest that there has not been enough communication and agreement around yours and your partner’s goals.
This deceptive behaviour can lead to emotional issues such as guilt and, when discovered, could result in some heated arguments or even separation.
Having said that, it is just as unhealthy if all purchases need to be approved by one partner or one person’s purchases are constantly being questioned, to the point that it becomes a form of financial control.
The key here is to have agreed boundaries about what can be spent without agreement and discussion.
This is one of the questions I get asked most often.
The answer to this question is very personal, of course, and for most people there is no right or wrong answer, as long as both partners agree.
However, the very foundation of a marriage is a shared environment – be that emotional or financial.
Some couples believe that there should only be joint accounts, whilst others like to keep separate bank accounts and simply spilt bills when they are due. The downside of bill splitting can be the lack of saving and working towards financial goals, which can be to the detriment of long-term wealth growth.
It can also lead to financial resentment if one partner earns more than the other. The lower income earning partner may feel resentful that their partner can spend more than they can.
This method can make things more difficult when dealing with the loss of income of one partner, or a reduced income if one partner cuts working hours to raise children, support elderly parents or deal with their own health issues.
An alternative to this is to allocate a set amount each week to a personal account for each partner to spend as they want. This allows each individual to spend their money on what is important to them without judgement or question.
I talked about this earlier in budgeting. Goal setting is the backbone of any budget.
Why then am I dealing with it separately?
Because goal setting is the basis of healthy and productive communication and planning. It helps both parties identify what they are hoping to achieve in the medium and long term.
You may have some different, individual goals, but as a couple you need to be on the path together and walking in the same direction.
Imagine the anxiety of this scenario:
A lovely young couple have just enjoyed a wonderful wedding and are settling happily into married life. They have never discussed (in any depth) their finances and goals, and probably have always assumed that they share the same ideas. Immediately after the wedding, the husband starts talking about saving a deposit and buying a house. The wife, meanwhile, is dreaming of at least 12 months of travel to exotic places around the world. A house purchase is much further down the track as far as she is concerned.
Oh dear…
By setting goals together, those different hopes, dreams and desires can be discussed, negotiated and agreed upon in advance, rather than when it dawns on you both that you are walking a path that heads in opposite directions.
Goal setting gives you both financial direction.
This is where we need to realize that all the good planning, conversations, budgeting and communication in the world doesn’t mean that there will never be arguments around money. We’re all human after all.
Remember, we have differences in lots of things and money is no different.
Take a breath, calm down and talk. If things get heated, agree to take a break until you can discuss the situation with a clearer head.
Above all, treat your spouse as you would like to be treated by them.
If you’re wondering how to be better with your money, our personal finance masterclasses for women can help take the guesswork out of financial management and will ensure you make informed money decisions moving forward. Don’t miss out on Got Money Honey’s next My Money Makeover masterclass and achieve financial freedom sooner!