There’s a lot of emotion around our money. Given this, it makes sense that money issues and money fights are one of the major causes of relationship breakdowns. In fact, in some studies researchers have determined that fighting about money is “by far” the top predictor of whether a couple will get divorced.
The good news is it doesn’t have to be this way. You can get on the same page as your partner when it comes to money.
Before we look at the top tips for making your money work in a relationship, it is helpful to understand why this can be such an issue. Money arguments tend to last much longer than fights over the kids, sex, or in-laws. They are also more intense and take longer to recover from due to the heightened emotions such as shame, blame, and frustration.
So, whether you’re just moving in together, or you’ve been married for a long time, here’s how you can ensure fairness and avoid money fights.
If you’re more than roommates, then it is time to combine finances. This can feel like a big step and there are often worries about maintaining independence. If it helps, then keep your own day to day bank accounts for coffee, lunch, or general spending. But you will benefit big time from bringing everything else together in a joint account. If you want maximum results, you need maximum control and visibility (again these words can be scary but remember that you are the adults in charge here aren’t you?).
From there it’s time to budget for the big, shared household expenses such as food, rent or home loan payments, utilities, and transportation. These are the four walls of your financial house that you need to take care of first. After that you need to learn how to budget and work your plan. Taking control of your income will feel like you’ve received a pay rise.
But how do you handle his personal loan payment? Her BNPL repayments? Or his car loan from way before you got together? This requires open and honest discussion. Set a timer for how long you plan to discuss each item. When it goes off, you stop. It’s ok if you haven’t reached a decision yet, you can come back to it. Remember you are not trying to get your way or win an argument here. You are talking to someone you love about the options for how you will build your future together.
It is easier to hit a target if you know what and where it is. Before you develop your savings plan, you need to have a dream meeting. This is where you look ahead together to imagine the ideal future state for your lives. Financial milestones, and mini goals, will then flow from (and toward) the ideal future state. If you’re finances aren’t great now, that’s quite normal, so give yourselves a break, avoid any blame, and start towards your future. I
This ideal future state is your Why. It’s the reason that you are making the effort to pay attention to your money. It’s why are you willing to sit together with love and patience, once a week or fortnight, to look over your budget and track your progress. And it’s the purpose for being laser focused on getting yourself out of debt so you can win with money.
Once you’re clear on your Why, the savings and investing goals will flow from there. Commit to a savings level you are comfortable with and then deposit that amount in a joint savings account each month. When you have built up $500 or $1,000 for example then it is time to invest for your future.
Of course, by this stage, through following the Financial Peace framework, you should already have paid off all debt (except your House) by using the Debt Snowball. And you will have a fully funded emergency fund saved of 3-6 months’ worth of expenses.
(Note – if you haven’t ticked these boxes yet, then it isn’t time to invest. Go back and set yourself a solid foundation and get maximum control of your income by clearing debt.)
There are many things to be mindful of when investing. These include the minimum amount that you can add to the investment via regular investment. Look for something that will let you add $500 regularly (or even less), this will help you to stay motivated and build momentum. Watch out for fees – you will have to pay something, but be careful not to overpay, e.g., paying alpha management fees for hugging the index.
Also consider your timeframe and your investment risk profile. Generally, the longer your investment horizon, the more volatility/risk that you can take on safely, with the payoff being higher potential returns. This could also require some discussion when one partner is an assertive investor and the other is conservative. Keep the communication flowing, compromise and move ahead. You might be surprised to know that among the biggest factors which determine investment success are the amount and regularity of your deposits / contributions. Fees and returns are important but the simple action of investing regularly does most of the heavy lifting.
Managing money isn’t just about figuring out your ideal future state (your Why) and coming together to make the budget work. It’s also about making sure that you’re both involved. In any couple you can have a Saver and Spender, or a Nerd and a Free Spirit. If you see things the same way that’s great, just look for the blind spots and consider alternative perspectives. If your natural styles are different, this can work in your favour when you both work together. It doesn’t matter if one partner does the groundwork on the budget, or tracking results, so long as the other partner commits to show up, sit down, review and agree together.
Finances might not be your thing, but you have a responsibility to join in. Don’t leave the responsibility totally to your partner. You’re in this together, they are not your mother, and the sense of closeness that develops from working together towards your goals (even and especially when it is hard) will go a long way to making sure that your relationship is one of the success stories. Not to mention that you will be in control and winning with your money.
Gaining clarity and getting on the same page about money will strengthen your relationship. No matter what your level of income, this is important and makes a big difference.
