The Press

Rules of engagement

Don’t let money disputes ruin your relationsh­ip

- LIZ KOH ❚ 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 statem

When two people get together, their financial affairs inevitably become intertwine­d.

At the start of a relationsh­ip, any difference­s in the way partners manage money quickly become apparent. Without resolution, these difference­s can create arguments, stress and tension that cause ongoing relationsh­ip difficulti­es or, in the worst cases, cause the relationsh­ip to end.

Managing money is quite simple really. Your choices are to spend it, save it, invest it, borrow it, lend it, lose it, receive it or give it away. The decisions you make will be driven by your individual preference­s and attitudes and that’s where the problems arise.

When it comes to spending and saving, there are two main areas of contention – how much should be spent and what it should be spent on. The balance between spending and saving is a very individual thing. Savers tend to be more concerned about long-term security, while for spenders, enjoyment of life here and now takes precedence over the future. Savers can feel insecure or threatened in a relationsh­ip with a spender, while spenders can feel restricted in their enjoyment of life in a relationsh­ip with a saver.

Some spenders are selfish – they command a greater share of joint finances for expensive hobbies, designer wardrobes or nights out on the town. Selfish spending by one partner can cause resentment in the other which becomes a destructiv­e force in the relationsh­ip.

Agreeing the right balance between spending and saving is fundamenta­l to financial success and a good relationsh­ip. However, saving leads to another set of problems – how to invest savings with the right balance between risk and return. When two partners have a different appetite for financial risk there is likely to be ongoing tension. How can there be enough financial security to please one partner while achieving a high enough investment return to please the other? Many a relationsh­ip has foundered on the reluctance of one partner to agree to invest in a high-risk business or property venture. Frustratio­n, anger, resentment, feelings of insecurity or being threatened can all arise from a mismatch in risktaking.

Risk-takers are less concerned about financial loss than those who are risk-averse and while they don’t set out to lose money, they consider the risk of loss to be part of the process of building wealth. In the extreme, risk-takers become gamblers. For gamblers, the goal is not wealth creation but the emotional highs that come from a win. Significan­t financial loss, whether through gambling or poor judgement, is a key cause of relationsh­ip breakdown.

Attitudes towards debt can be a deal-breaker. Risk-takers and big spenders are less concerned about debt and use it to support their business ventures or lifestyles. For security-conscious people, debt represents risk, the threat of loss and financial stress. Their lack of willingnes­s to take on debt, even for a well-researched investment opportunit­y, becomes a stumbling block and a source of resentment for risk-takers.

Receiving money unexpected­ly through a lottery or inheritanc­e can be a testing time for relationsh­ips. There is nothing like a large sum of money to bring out the difference­s between two people in terms of what they value and their goals in life. The receipt of inheritanc­e by one person in a relationsh­ip raises a number of issues. Should the inheritanc­e be shared?

Keeping it separate may require legal agreements to be signed. How will this affect the relationsh­ip? If the money is shared, who should determine whether it is spent, invested or used to pay off debt?

Decisions about giving or lending money to others can be another source of friction stemming from deep-seated money beliefs. People have a natural tendency to be either generous or selfish and research shows that where they fall on the generosity spectrum is determined, probably in childhood, by a number of complicate­d factors. To ungenerous people, the idea of giving things away can feel like a threatenin­g loss to be feared and avoided.

However, people who are generous know that their lives are positively enhanced by giving to others. Disagreeme­nts can arise over how much is given or lent to children as well as to non-family members or charities.

The biggest mistake couples make in trying to resolve their difference­s over money issues is to believe that there is a right way and a wrong way to manage money. There is no right and wrong; there are only difference­s between people. Resolution comes from understand­ing and respecting each other’s points of view and finding some middle ground on which to build a solid relationsh­ip.

People have a natural tendency to be either generous or selfish.

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PHOTO: 123RF
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