Money tends to be a taboo subject regardless of where you are in life. But it can become a much more complex issue when you’re in a serious relationship. It’s not just about deciding whether to “go Dutch” and splitting the bill every time you go out to dinner, it’s about learning how to make financial decisions together. It also involves much larger topics such as power, trust and many more. Like most things in life, not every relationship is the same and not every couple will have the same money rules.
Issues of income or expense inequality can lead to conflict
- Guilt or resentment – When one partner feels they’re not paying their fair share it can create emotional tension. However, there may be true income inequality. The median household income in America in 2019 was about $68,700 – income from wages, investments and benefits – and in many cases the income between couples wasn’t 50/50. Some may feel resentment of helping keep the others afloat by keeping a job they disliked, an inflated mortgage, or the like.
- Money infidelity – Hiding spending can occur when the partner earning less wants to avoid being confronted for “non-essential” spending. Another example is a partner who doesn’t share in the common bills thinking their money is “their money” in a sense of entitlement or hoarding money as a means of security.
- Power – Does the partner who makes more decide where the family is going for vacation? It might lead to conversations about who controls the financial decisions and why.
Closing the gaps in your relationship: Eliminate finances as a source of conflict
- Discuss financial decisions together – Money is a leading topic that couples fight about. And at no surprise, because you each have different perspectives and experiences, and money matters can be emotional. Financial matters deserve time at the table. Successful couples have shared objectives, a mutual vision for the future and alignment of priorities and responsibilities.
- Budget – You can only do two things with money – spend or save – and knowing where your money goes and who pays for what greatly simplifies the puzzle. It’s good to have my, your and our accounts. However, joint accounts are where two become one, things become much more transparent and you have a backup plan – each other!
- Non-financial contributions – Recognize that you each bring contributions to the relationship. Housekeeping, childcare, landscaping and caregiving are valuable services.
Where inequality is OK – Things don’t always have to be “equal,” but they should be “fair”
- Separate assets and accounts – Reasons to keep things separate could include not being married, legal issues, and inheritances. For example, one partner might own the home and pay the mortgage and the other pays rent.
- Blended families – This can occur when one or both partners have children from a previous relationship. More significant estate planning may be needed if you wish to protect the interest of your children rather than simply naming your significant other as the beneficiary of an asset.
- Different life expectancies – Having life expectancy stamped on our foreheads would greatly simplify financial planning. But life is meant to be interesting and sometimes a couple has a significant age difference and one may outlive the other by ten or more years. They may retire the same time or stagger retirement, or if they’re both eligible for pension benefits, the older person might elect a 50% joint and survivor benefit option and the younger one a single life payout.
Cultivating solid relationships takes time and effort. Communication can be awkward, but it’s necessary. Discuss your money matters in a safe space where both partners are heard, follow sage advice and secure your future wisely.