The COVID-19 pandemic has played havoc with families’ finances through lost jobs, squeezed budgets, increased debt and missed payments. Money and the decisions spouses make with it are one of the main sources of stress among couples, and sometimes money issues end relationships or cause divorce.
But differences can be solved or managed if couples learn to listen to each other and work as a team to formulate a sensible plan.
No matter how long you have been together, financial issues can wreak havoc on a committed relationship. When couples don’t agree about spending and saving habits, it causes arguments and resentment.
But understanding what you’re fighting about and why helps you and your partner come up with solutions. By being transparent and honest with each other about your finances, you can not only prevent arguments that strain your relationship, but you will strengthen it.
Here are some tips for couples to address and resolve financial issues:
• Understand your money styles.
Think of some extreme examples of money styles in your circle. Like your friend, the foodie, who won’t touch a bottle of wine that costs less than $75. Or your sister who constantly surfs Amazon.
Or your mom who washes aluminum foil, then folds and reuses it. Everyone has a money style, and it’s helpful to talk about it without any name-calling or labeling involved.
Understanding your partner’s spending habits often involves a deep-dive into money fears, scarcity memories and childhood traumas. Come up with a spending plan that works for both of you.
• Decide how to divvy up the bills and save for future goals.
You can both put all your earnings in a joint account and pay everything out of that. Or you can split bills down the middle and keep the rest of your own earnings for yourselves.
Once you have decided how the bills get paid, you need to devise a plan for saving for your long-term goals. Remember that you need to work closely together as life changes arise — such as one of you losing a job or cutting back on hours to care for a parent. If 2020 has taught us anything, it’s that contingency plans are always advisable.
• Create personal spending allowances that stay personal.
Having some personal money that’s designated just for you each month can really help how you feel about your relationship. It can also help avoid relationship-ruining behavior like “financial infidelity,” when one spouse hides money or purchases from the other.
The personal spending allowance gives each partner the chance to spend their money however they wish, no questions asked.
• Face and eliminate undesirable debt.
Couples should employ a strategy to pay off debt, such as paying off the higher-interest debt first or paying off the smallest loans first (the snowball method). Payments on credit cards, car loans, and student loans can devour monthly budgets, so the sooner they are paid off, the better.
• Set a budget you can live with.
One of the best ways to keep in sync with your partner financially is to have a budget as part of your overall plan. The budget includes your household bills, your personal spending allowance, your debt-paying strategy, and your monthly budget for long-term goals like retirement.
Relationships take consistent work in order to be happy and successful, and money management is a big part of it. The best way to be sure you and your spouse are staying on the same page financially is to talk honestly and without judgment.
Aaron Leak has 16 years of experience in the financial industry and is the founder of ECL Private Wealth Management.