End money fights

When a spender lives with a saver, the relationship might depend on communication and compromise.

Managing money in a relationship can be complicated and fraught with emotion. Money is never just money. It represents emotional states such as happiness, power, love, security, self-worth and success.

Intense feelings arising from these emotional states can lead to arguments over money and ultimately to relationship breakdown. Finding ways to resolve money conflicts can therefore help to create healthier and longer-lasting relationships.

There is almost no limit to the number of money-related issues that can cause conflict between two people – whether they be partners, family members, friends or business colleagues.

Getting the right balance between spending and saving is often top of the list. Perhaps one person values money for safety and security, and likes to have plenty of it on hand, while another sees money as something to be spent on things that create pleasure. Different views on the spending/ saving split can also be intergenerational, with older, more cautious people criticising younger people for wasting money.

Use of money for power and control is another common cause of arguments. Money becomes a weapon through which power is held over someone else through withholding it, hiding it, or being secretive about it.

People have different tolerances for debt and risk-taking. Often this is linked to feelings of money as a source of security. Those who are confident with money tend to have a higher risk tolerance. Overconfidence with money can lead to reckless financial behaviour with high levels of debt and risk. Major financial decisions, like buying or renovating a house, buying a new car or booking an expensive overseas trip will draw out fundamental differences between people’s attitudes towards risk and debt.

Giving to others – children, family members, parents, friends – becomes a problem in a relationship when two people have different feelings about generosity. A less generous person can feel resentful and angry about joint money being given away, even to close family members.

Resolving conflicts starts with both parties getting to the core of the beliefs or feelings that are causing the difference of opinion. Understanding each other’s perspective can help find the middle ground.

For example, conflict between a spender and a saver can be dealt with by allowing the saver to feel more secure through setting up a regular payment into a savings account and giving the spender freedom to spend within an agreed budget.

There is no right or wrong when it comes to setting the balance between spending and saving. Ultimately all money is spent, so it’s a matter of agreeing how much will be spent now to please someone for whom money represents enjoyment of life and how much will be spent later, to please someone for whom money represents security.

Good communication is essential to a harmonious relationship and money issues need to be discussed on a regular basis. A monthly catch-up is often enough to keep things on track, but if you set up a system to manage your money automatically through direct debits, direct credits and automatic transfers, you should be able to review your finances quarterly without things getting out of hand. A money management system which sets an agreed balance between spending and saving and deals with both longterm and short-term saving will eliminate most money conflicts.

Setting up a money management system requires transparency – that is, full disclosure of financial information by each person, even if money is still managed separately to some degree. There should be no financial secrets in a close relationship, and there should be equality when it comes to making key decisions. Equality relies on both parties fully participating in financial decisions and having a good level of understanding of financial matters.

Planning ahead, budgeting and regularly talking about money will help avoid financial crises which are triggers for conflict. Less conflict means a better relationship and ultimately more enjoyment of life.

Liz Koh is an authorised financial adviser and author of Your Money Personality; Unlock the Secret to a Rich and Happy Life, Awa Press. The advice given here is general and does not constitute specific advice to any person. A disclosure statement can be obtained free of charge by calling 0800 273 847.