Financial decisions are difficult enough on your own. But they can get even harder when you bring a significant other into the mix. After all, you both are coming from different life experiences and may have very different (often deep-seated) views on money, including how it should be spent and whether it should be saved.
Not surprisingly, money is a common cause of stress in relationships and, if left unaddressed, it can start impacting more things than just your bank account. Research consistently shows that financial problems and disagreements over money is a leading cause of divorce.
Considering how personal, and therefore complicated, each partner’s relationship with money can be, navigating money conversations can be tricky.
A great first step is to understand that financial decision-making as a couple may not come naturally, and that’s completely fine. These conversations take practice. What follows are a few strategies to try and some ideas to keep in mind when making financial decisions with your partner.
Common Causes of Couple Money Fights
Whether you and your partner are struggling to make a particular money decision or generally don’t see eye to eye on money, know that money fights are normal and common. Here’s a look at some of the most common hot button issues for couples.
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Sharing Account Information
Some couples struggle with privacy limits and may disagree about what level of access their partner should have to their financial accounts. If one partner feels they don’t have fair access to financial accounts, passwords, and paperwork, resentment can build.
Married couples in particular may find it confusing and challenging to not have a full picture of their complete financial health.
Determining Budgeting and Spending Limits
Maybe one of you likes to spend and enjoy life, while the other prefers to save for a rainy day. This disconnect happens all the time. Not all couples agree on how much they should be spending versus putting aside for the future and this can lead to anger and tension.
Dealing With Past Debt
If one partner brings a sizable amount of debt into the relationship, couples may disagree about who is responsible for paying off the debt.
You might take some solace in knowing that debts brought into a marriage stay with the person who incurred them and are not extended to a spouse. It won’t hurt the other partner’s credit rating (which is linked to their Social Security number and tracked individually). In most states, however, debts incurred after marriage jointly are owed by both spouses.
Saving and Investing
Many couples can’t agree on how much money they should save each month, as well as how they should be saving it. One partner may feel investing is the best path to a stronger financial future, while the other might be more risk averse, preferring to stash extra funds in a high-yield savings account.
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7 Tips for Making Financial Decisions as a Couple
Just having a conversation about money with your significant other can be fraught. Coming to an agreement on how to manage your money is often even harder. Fortunately, these eight strategies can help you find common ground.
1. Make a Date to Talk
Your instincts might tell you to dive headfirst into a big money talk in order to get it the heck out of the way. But this may not be your best strategy. No one is their best self when they feel caught off guard. A conversation about a tough financial decision will likely be more productive when there are two calm, prepared people at the table.
Instead of bringing up the topic of money out of the blue, you might give your partner some notice. You can simply set a time to talk about the financial decision at hand. Or, you might want to turn it into a real “date” and treat yourself to a coffee at the local shop or pick up your favorite take-out dinner. Either way, the most important thing is that you have a designated time for the talk. This strategy can be applied to discussing one particular financial decision, or you can utilize it on a regular basis.
Recommended: How to Make Talking About Finances Fun, Not a Fight
2. Write It Out
Sometimes, it’s simply hard to communicate how you feel. This is especially true for topics that affect us deeply and in confusing ways, like money. If you and your partner are people that like to put their feelings down in writing, consider writing each other a letter prior to your financial “date.”
In your letter, you might include some background on how you were raised to think about money, your money stressors, and your financial goals. Focus the letter on yourself and from where your financial beliefs stem.
Not only will this help your partner understand where you are coming from, but it can also provide you with some very useful introspection about money and your system of values.
3. Be Prepared to Listen
When making financial decisions, your main objective should not be to explain your point of view. To have a truly productive conversation, you must be committed to listening, too. This is good practice in all conversations with your partner and loved ones, but especially when talking about financial decisions.
Here’s the thing about making financial decisions: It’s rarely black and white and, generally, there is no right and no wrong. Being open to listening often translates into being open to learning.
Not only is your partner’s perspective important, but you might even be able to learn something from them. We’re all learning as we go anyway, and by listening, you have a chance to learn and evolve as a couple.
Recommended: How to Budget As a Couple and Why It’s Important
4. Be Communicative
One key to having a productive and healthy conversation regarding money or a specific financial decision with your partner is to communicate your feelings, thoughts, and fears. Something that seems obvious to you may not be obvious to them, so give your partner the benefit of explaining yourself in a calm and thorough way.
When you communicate, try to stick with talking about how you feel regarding a matter and avoid making declarations about what your partner has done in the past or what you’re hoping that they will do in the future.
Making comments about how a person is spending can quickly turn accusatory, putting them on the defensive. Even when having tough conversations, do your best to remove judgment from the equation.
Also, it’s best not to assume that just because you have explained something to your partner once, that they understand what you mean and where you are coming from. Don’t lose your cool if you have to remind your partner what’s important or a priority to you, especially if your priorities don’t align on this particular issue.
Recommended: Guide to Improving Your Money Mindset
5. Crunch the Numbers
Sometimes, the numbers help guide financial decision-making within a relationship. It can be worth taking the time to figure out exactly how each financial decision would play out over the short and long term.
By breaking big costs down into monthly numbers, you and your partner can see on paper what is possible (and what isn’t). The exercise may provide a new perspective altogether or, at the very least, get you on the same page regarding the different options with your money.
If you feel at a loss for what you should be focusing on or how to accomplish your goals, you may want to hire a financial expert, such as a credentialed financial planner. Some financial guidance from a person skilled in financial planning could be just what a couple needs to step up their money game.
6. Compromise
If you’re in a partnership, you already know that compromise is key. The good news is that with money, compromising is not only possible but often ideal. For example, you don’t have to pick just one savings goal to work on at a time. Financial decisions don’t have to be one or the other. Indeed, a multi-pronged approach is often the best way to build financial security.
Also, know that there is no perfect formula for how a couple makes financial decisions. Just because your best friend and her spouse divide their finances in a certain way or prioritize certain money goals over others doesn’t mean that you have to do it this way. Part of compromise with your partner is abandoning the idea that your partnership should work like anyone else’s.
7. Put Plans Into Action
Once you’ve hashed out your money goals and fears with your honey, and made some key financial decisions together, it’s a good idea to come up with an actionable plan to make your shared goals a reality.
If you’ve decided that you want to purchase a home in two years, for example, figure out how much of a downpayment you’ll need and, then, how much money you need to siphon into savings each month to reach your goal. You might then set up an automatic transfer from your checking account(s) and into your joint savings account each month.
A fringe benefit of making financial decisions as a couple is that you have a built-in accountability buddy to make sure you follow through on your plan and don’t spend that savings on something else.
Smart Money Decisions Couples Make
Here’s a look at some smart money moves you may want to make as a couple:
• Opening joint accounts: Having at least one joint bank account can simplify your finances and make it easier to work towards your shared goals. That said, you don’t have to merge everything. You might decide to keep individual accounts for personal use — this gives each partner some freedom to spend on themselves without having to explain their expenditures.
• Labeling your savings: Having separate savings accounts for separate goals (even giving them labels, like a “downpayment” or “vacation” account) can help you stay on track and reach your goals sooner. Some savings accounts have a sub-savings account feature, which allows you to split funds in one primary savings account into separate categories.
• Automate your savings: It can be smart to set up recurring automated transfers from your checking account(s) to your savings and investment accounts based on your goals.
• Increasing your emergency reserve: Your emergency fund should be large enough to cover living expenses — for both of you and any dependents — for anywhere from a few months to a year, depending on your situation.
Recommended: Survey Says: Couples That Pool Finances Are Happier
The Takeaway
Talking about money with your partner isn’t always easy, but having honest discussions about your financial situation and goals is critical. This can help you better understand each other, make important financial decisions as a couple, and come up with a plan that can make your shared goals and dreams a reality.
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FAQ
Should married couples make financial decisions together?
Even if you don’t merge all of your money, it can be a good idea to work together on some key financial decisions that will impact both of your futures. Making financial decisions together can have multiple benefits, including increased closeness and trust, less conflict over money, and better financial outcomes.
How should money be split in a relationship?
There are several methods couples can use to manage money and cover their living expenses. One option is to merge all or some of your funds in a joint bank account and use it to pay for shared expenses. Another option is to keep separate accounts, but have each partner make equal payments towards shared expenses.
A third approach you might consider is to split bills proportionally based on each partner’s income. So if one partner makes 70% of the total household income, they would then cover 70% of shared expenses, while the other partner would pay for 30%.
What are financial red flags in a relationship?
Financial red flags are money issues that are either currently causing problems in a relationship or have the potential to do so in the future. While they are not necessarily deal-breakers, they are harbingers of future relationship and financial strain. If you notice any of the following six signs, it’s important to deal with them promptly, ideally before your life is too intertwined with your partner’s.
• Unwillingness to discuss money
• Excessive credit card or other debt
• Flaunting their wealth
• Severe frugality
• Using money to manipulate or shame
• Keeping secrets or telling lies about money
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