Couples and Money
Submitted by Sara Worley & Brendan Donahue
Investment Advisors, Manulife Wealth Inc.
Money can be a sensitive subject. Some psychologists say that people will talk about most anything else before they’ll talk about finances. This is because money represents different things to different people. Some feel gratification from saving or investing; others prefer to spend. Differing perspectives about money are what help drive a healthy economy, however, these dissimilarities can cause friction or a lack of understanding in a marriage or common-law relationship. Here are a few things to keep in mind while having the “money talk” with your partner.
Be proactive
It goes without saying that the best time for couples to talk about money is before any concerns arise. Overspending or being too frugal are the two most common money issues between couples. Often, a person’s behaviour towards money directly relates to their personal experiences with it. For example, someone who grew up in a family with very little money might be thriftier than someone whose family were more economically comfortable. Of course, the opposite may be true. Feelings about money are as diverse as people themselves.
One way to be proactive is to set a family budget. Try tracking your family’s monthly spending over a couple of months, then budget for the average. Be sure to include amounts for emergency and long-term savings. This will help paint a clear picture of your family’s spending habits, needs and wants.
Established couples often aware of one another’s feelings towards money and may have devised a system to account for things. Newer couples considering marriage or a common-law arrangement would benefit from writing a budget and setting out guidelines at the start.
Designate jobs
It’s likely that in a relationship, one person is more interested in managing the family finances such as balancing the budget and paying the bills. If this is the case it makes sense to delegate those duties to one person, especially in the case of bill paying to ensure it gets done and isn’t accidentally done twice. The other partner should still be involved in the process to ensure they understand the family finances.
Other financial jobs to be delegated include managing savings and investment accounts, as well as grocery and other family shopping.
Coping with differences
Often, people find that problems can arise when one partner consistently spends more money than the other.
One way to mitigate this is to keep a joint bank account as well as separate bank accounts. Each partner seeds the joint account with a certain dollar amount or percentage of their paychecks. This joint account should cover all household expenses, as well as emergency savings, vacations and long-term savings.
The couple’s personal accounts house the money they have left after all of their mandatory savings and expenses have been accounted for. This money should be thought of as personal spending accounts. If one partner chooses to save their money and the other chooses to spend it, that’s up to them. Many couples find this idea works because everyone needs discretionary spending money, and as long as the household expenses and savings are taken care of there isn’t much else to worry about.
If the problem is more serious, for example, one partner is running up a lot of credit card debt, it could be a sign of other problems. If this behaviour is chronic, and not something a couple can work out themselves, there are resources such as marriage or credit counsellors who can help.
Final thoughts
Conversations about money should be handled sensitively and with understanding. Both partners should be willing to give and take a little in order to reach common ground and ensure a happy, healthy financial future.