Preventing Money Issues in a Relationship
Money is one of the most common things that couples fight about. It’s easy to see why. People work hard for their money and they don’t want to see it spent in a way that they don’t approve of. Plus, money troubles (such as having too much debt or not having enough money saved for emergencies or retirement) can be incredibly stressful. These situations negatively affect your life a great deal, causing you to lose sleep and spend day and night worrying. When money problems arise, it’s easy for tension to develop between partners.
Here are some tips for avoiding money problems in your relationship.
Don’t Hide Money or Debt
A recent survey found that one-in-ten Canadians who are married or in a common law relationship hide large purchases from their partner, and that one-in-five do not know how much debt their partner is in. If you hide your spending or debt from your partner, they could be living under the impression that the two of you have more money than you actually do. People act differently (and spend differently) when they believe they have little-to-no debt than they do when they have significant debt. By hiding the truth from your partner, you’re making your debt situation worse.
Hiding money is also an issue. While there’s certainly nothing wrong with having separate bank accounts (and many people prefer to manage their finances this way) there is an issue with holding money that your partner has no idea you have. Not only can holding back money make it more difficult for the two of you to reach your financial goals, but it can significantly damage the trust in your relationship if this hidden money is discovered.
Talk About Money
Couples need to talk about money and debt. Yes, it may be awkward and uncomfortable, but it’s important. Before you get married or move in together, it’s important to discuss your financial past, your current financial situation, and your goals. But the money talks shouldn’t stop there. Talks about spending, budgeting, saving, and various other financial matters should happen regularly. It’s important to discuss these issues openly, honestly, and fairly. If you withhold information, get defensive, or act in a judgmental manner, you will damage your relationship.
It’s important to have financial goals; both individual goals and goals that they two of you share as a couple. Your long-term goals (such as retirement, your children’s education, etc.) and short-term goals (large purchases, vacations, etc.) should be discussed. If you don’t talk about your goals, you’ll have trouble creating a budget that works for you, and you may feel resentful of your partner when your goals aren’t realized.
Both People Should Be Involved
In many couples, it’s “tradition” for one person to handle all of the family finances. However, this can lead to trouble. First of all, leaving one person with the stress and hassle of paying bills, setting the budget, watching your savings, etc. can lead to resentment. This person may feel like they’re “doing all the work.” They might also not want to “be the bad guy” and tell their partner to reduce their spending if there’s a money issue. On the other hand, the partner who isn’t managing the money will be left out of the loop. They’ll have no idea what’s going on with their money and they may feel “at the mercy” of their partner, or lost and unaware of what is happening financially.
It’s important for both partners to have knowledge and experience handling the family’s finances. You don’t have to split everything 50/50, but you’ll want to make sure that both people are informed.
Have a Budget
Having a budget is crucial. You simply cannot make ends meet, achieve your financial goals, and prepare for the future without one. You should come up with your budget as a couple and communicate frequently about how it’s working for you. Creating a budget, sticking to it, and openly discussing it may seem tedious or boring, but it will greatly help your financial situation as well as your marriage.
Try to Have Some Breathing Room
This may not be possible for all couples, as it requires having a bit of “extra” money each month, but it can be a good idea to add a “miscellaneous spending” category to your budget, if you can afford it.
If you do this, each partner should be given an equal share of this money to use however they want. If you can swing this, it can be a great way to give yourself a bit of financial freedom while still living within your means. This sort of freedom can help prevent feelings or resentment.