One of the biggest causes of arguments and dispute between couples is their conflicting attitude towards money. It's so important to know your partner's money personality and make sure that you can agree on how you manage your money, in order to live a harmonious life together.
Do you know what your partner spends their money on? Probably not every cent but what about purchases over $50? or $100? maybe $500? Some people find this kind of thing invasive and live with their partner whilst having separate finances. Even those that have been together years. "Well he earns his money and I earn mine, bills are always paid so why do I need to know where every cent goes?" The problem with this is you are playing with fire. Can you be certain there isn't a problem? One of the most common warning signs of problems in a marriage is around lying about money. Here's some signs that you potentially have issues with money in your relationship:
* Big decisions are made without consulting your partner e.g. a holiday booked away with friends, a larger purchase such as a TV
* You don't have a budget! Therefore, you don't know where your money is going.
* Arguments start at the first mention of money - in fact money is the NUMBER 1 source of arguments in relationships.
* Neither of you have any idea of the other person's balance
* One of you controls most of the money
* One of you makes the bigger decisions independently
* You find hidden items that your partner hasn't mentioned, has anyone ever said or heard "Oh, I bought that dress ages ago!"
What's a healthy way to organise money within a relationship?
Well there's no straight answer to this. There are those few couples who separate their finances and it works! But for most people you need to be on the same page. There are three different types of "money relationships"
1. Two people together who ignore bills, spend on their cards and are carefree with their money equals disaster!
2. Just as bad, maybe even worse is people who are financially complete opposites - you've heard the saying opposites attract? Well try that when one is buying a round of drinks for the whole bar whilst their partner is reusing teabags to save money!
3. A couple who know exactly where their money goes, are both on the same wavelength with money and prosper.
Getting on the same page is so important, as is having a budget. In fact budgeting isn't penny pinching, it's telling your money where to go and knowing exactly where it's going. You as a couple need to decide how you want your finances to work. Do you want to be frugal, to be a mixture of living life through spending on holidays whilst being sensible or would you rather spend all your income and live paycheck to paycheck? It really is up to you, people will judge if you are frugal but people will also judge if you are going on fancy holidays all the time "Where did they get that money from!?" So make a cup of coffee, sit with your partner and decide how your future is going to be. No-one should tell you, it's down to both of you to come to an agreement - that's really crucial in all this and will save you long term stress and arguments. Do not ignore money though as it will come back to haunt you both one day.
How me and my wife learnt to get on the same page
Through absolutely screwing up is the short answer! But here's a bit more detail. When we met, I earned slightly more than my wife - not much, maybe 20% more. I had my account and she had hers. We didn't really talk about money. We were dating at the time and so money was still separate. Over the years, we still get our finances separate but one thing I had was a great Credit Rating so I started using Credit Cards and getting loans - this was in the days when every single time you walked into a bank, they would offer you a loan. I wouldn't tell my girlfriend (now my wife) if I got a credit card and to be perfectly frank, she wasn't that interested either. We were both shockingly slack when it came to finances.
The change came on a holiday in Cuba (see previous blog post - How I spent $13000 on a $7000 holiday and we finally woke up. We wrote down all our debts and it was thousands - absolutely crazy. I'd blindly kept getting 0% Credit Cards and low interest loans, believing I was doing well. My wife (now we were married) did her own thing and we never ever spoke about money apart from little things e.g. have we got enough money for Christmas - with the plastic we always had! The truth hit us and since then we have gone on a journey which has eventually resulted in us constantly talking about finances, setting a budget and knowing where we're going in the future.
Tips for the future
* Set a plan - where do you both want to be financially in one year from here, 3 years, 10 years, 30 years?
* Set aside time to speak about finances - weekly is probably best but start with monthly if you find this too much.
* Talk about the larger purchases in life - pros and cons.
The most crucial aspect is to be on the same page, this isn't because you want to change your partner, it's because you need to work together. Compromise is important but ensure that both of you are compromising, particularly if you are on different pages. One way is to get a joint bank account but this isn't for everyone. We personally use one for bills and then have our own accounts but we know how much has in each account. Our debt free journey isn't over yet but we're on the right steps and unlike in the past, money is no longer a touchy subject, it no longer causes arguments and it no longer is ignored.
See my disclaimer here.