Money, and talking or not talking about it, can make or break a relationship
We’ve all had arguments about money with our partners. As with any relationship issue, we deal with such conflicts in a variety of ways. Some of us prefer to thrash things out and reach some sort of compromise, while others try to keep the peace by giving in grudgingly. Others simply give up, believing there is no possible resolution, and vow never again to broach the subject.
Yet, sweeping money issues under the carpet is not the wisest way to deal with them. Making the situation even more complex is that many of us were brought up to believe that money is a taboo subject and find it difficult to have a serious discussion about finances.
The only way for couples to begin feeling secure about their financial futures is to start planning and talking. Communication is the key, and planning a financial future together means having to address issues like lifestyle and financial goals, and making decisions about the way you budget, save and invest.
Where do you want to go?
Planning for the future is a lot like planning for a vacation. If you take it for granted or assume your spouse has similar retirement goals as yourself, you may be in for a rude surprise. One person’s picture of retirement paradise -– regular adventure trips around the world, for instance -– may be the other’s idea of retirement purgatory.
It is important for a couple is to sit down together and discuss their goals to ensure they are both travelling on the same path. Couples need to talk openly and honestly and map out how they are going to achieve their goals financially, instead of leaving it all to one person to deal with.
How do you get there?
Once you have figured out together where you’re headed, be it a stream of golf holidays or owning an idyllic piece of property in another country, you can determine how to get there -– how working together you will save and invest towards fulfilling these goals. Some helpful starting points that can pave the way for meaningful conversations about money include:
Acknowledge your different money personalities
Our money personalities shape our attitudes towards money and how we spend and save. While one party may be good at saving, the other may place more value on immediate gratification and prefer to spend in the present. Some may see budgets as a necessary means of controlling spending excesses, while to others ‘budget’ is a bad word. With a bit of compromise you can make the most of your different money habits. If, unlike your partner, you are detailed and organised, you can take charge of ensuring the bills are paid on time and managing the family budget. However, make sure your partner is aware of their responsibilities to ensure you are both on track.
Set a budget
The main source of many financial disagreements between couples is personal spending. Setting a budget can help smooth things out, especially once both parties have sorted out how much of their incomes should go towards household expenses, as well as to a savings and investment plan.
While joint accounts can foster unity and trust, they can also be a cause of contention, especially when two people have different financial capabilities and personalities. Personal finance guru and author Suze Orman stresses that couples should retain their individual financial identities while striving for financial intimacy.
To that end, consider opening a joint checking account for household expenses and big-ticket items like holidays or home renovations. Determine how much each party should contribute to the joint account each month. The rest of your salaries can go to separate accounts in your own names. Make a pact that anything in these accounts is a nag-free zone – so you are free to save it or spend it on your hi-tech gadgets and boys toys, and she on her shoes and bags. But do set a limit on how much each of you can splurge on yourself each month.
Have regular reviews
Every six months, sit down together and run through the family finances to ensure you are on track. Take into account any changes that may affect your savings and investment strategies, or your insurance policies and wills. Doing this together helps both parties understand this is a team effort. And if anything should happen to one of you, at least the other knows where all the important documents and assets are.
We all dream of an idyllic future with our partners, but the reality is that not communicating now about what this future encompasses, or how you plan to realise it, is not going to help make it happen. It can also make you feel financially insecure and uncertain about the future.
Because you want to be prepared when retirement rolls around, setting financial and lifestyle goals together, as well as putting in place a savings and investment plan through which you will realise these goals, is best done now. While money issues are often a touchy subject, they can be tackled if couples agree to establish open lines of communication -- keeping an open mind towards the other’s money personality and an eye towards a bright financial future ahead.