The more often partners engage in a fight over a money topic, the more likely the couple is to separate. In fact, the frequency of financial disputes has been recognized as the single best predictor of divorce. Beating out fights about sex, children, and division of household labor.
Reports claim couples who have a disagreement about their finances at a rate of once per week are 30% more likely to divorce than couples who admit to having a money based argument a few times per month.
These statistics lead one to wonder, why so many people split over money.
Why is Money such a Combative Topic?
According to this Psychology Today article, there are two types of money personalities: the spender and the saver. The spender doesn’t place a lot of value on money. To them, money is only valuable in that you can spend it on the things they want. The spender takes a short-term, instant gratification stance on money.
On the opposite end of the spectrum, we have the saver. The saver sees money as invaluable. The value of money lies in saving it. The saver has more of a long-term outlook. They see the value in delaying gratification so they can achieve more significant gains in the future.
According to a Forbes interview with David Bach, author of “Smart Couples Finish Rich,” “financial opposites attract.”
So, if you’re a saver, then you are likely to find yourself attracted to a partner who likes to shop and spend.
Talking about money is still taboo.
An article by the American Psychological Association says our beliefs about money, and our ability to talk about money, are primarily affected by how your family discussed the topic.
Did you grow up in a family where it was okay to talk about money? Or, were you told it was rude and inappropriate to discuss topics of personal finance?
A lack of financial literacy.
When you don’t know the first thing about your personal finances how do you initiate a conversation about money with your romantic partner? Where do you start? How do you articulate a financial goal or problem you don’t understand? What do you do if one, or both, of you don’t feel confident enough in your financial knowledge to even approach a discussion about money?
It’s a charged topic.
When you are in a relationship, it’s likely one person makes more money than the other. This can create a power dynamic. “I make more money so I should make more of the decisions.”
Despite living in a more progressive time and society, we still need to talk about the fact that there are some deep-rooted gender norms. A 2017 Refinery article caused quite a stir when it stated women who made more money often felt “ashamed”.
Sad, but true.
Additionally, other studies have found when women earn more than their male partner it can increase their chance of divorce by 50%.
So, times are a-changin’… but slowly.
There’s still a lot more work needing to be done to ensure women are able to feel proud of their achievements and to remove the belief that a man’s value is tied to his ability to bring home the fatter paycheck.
Again, many of these gender norms are ingrained in us by our families and our upbringing. We might not even be aware of them until faced with a situation bringing us discomfort and making us question where we stand on the issue.
When to Approach the Money Topic with Your Partner
The answer is right now!
If you are in a serious, committed relationship, one that you see continuing into the future, then the time is now. If you see marriage in your future, if you are engaged, if you are planning to buy a house, if you are co-puppy parents, then you MUST have a conversation about money.
You absolutely should not be saying “I do” before you’ve had a serious conversation about money. If it feels awkward now imagine how terrible it will be in 10 years if you end up in a nasty divorce situation with three kids, 2 dogs, and $50,000 in consumer debt.
This might seem unrealistic, but it happens all the time.
How to Approach the Money Topic with Your Partner
Step one is to get it in the calendar. Write it down, put it in google calendar or find a cool new app you can both use to coordinate your time.
Do it in a public place.
This will help to keep things calm and cool. It will also help to keep you focused on the topic at hand.
It’s too easy to get distracted at home, so take this conversation somewhere public, at least for the first few conversations until you are on the same financial page.
If you are a couple who gets a little heated when you talk about finances, you might want to continue meeting outside of the house indefinitely.
Do it regularly.
Make financial date nights a regular occurrence. How often you want to chat is up to you. If you are just getting things figured out then maybe you need to meet more frequently (every week or every second week).
If you are facing a significant expense, re-balancing your investment portfolio or some other major financial event then talk more often. However, once you feel like you have things under control maybe once a month is all you need.
Share in awareness.
If you have shared finances, then you should both know what is going on with your money. Don’t put your head in the sand and let your partner deal with it. What if one day that partner isn’t there to do it for you?
It’s your responsibility to know how much you have in savings and investments. You should both know the passwords to all of your shared accounts. Learn together, teach each other, motivate each other!
Ideally, this would be a clean 50/50 split. Easy! But, the reality is one person is usually better with money and/or tends to care more about the budgeting and tracking of finances.
You’ll need to discuss who is going to pay what bills, and who is going to manage investments. Maybe one person agrees to take over full responsibility but inform the other partner. Or, perhaps you do find some way of sharing the burden.
There is no one size fits all solution.
You need to do what works for you and your partner. There is no step-by-step method that works for everyone. The most important thing is being open and honest with each other. Remember, you are both coming from different money backgrounds, be patient and listen to what your partner has to say.
What to Discuss with Your Partner
Here’s a preliminary list of questions that you should have addressed before you walk down the aisle, move in with each other, take out a loan together, or any other major financial commitment. This list is not exhaustive, but it’s a great place to start.
- Do you have any debt?
- Have you ever experienced bankruptcy?
- What is your credit score?
- Do you pay your credit card balance in full every month?
- Are you a spender or a saver?
- Who’s paying for what?
- Do you have a savings account?
- Do you follow a budget?
- What are your financial goals?
- Do you want to rent or own a home?
For more details on why these questions are so important, check out this post: 10 Questions you should ask your Romantic Partner about Money
What is our budget?
Developing a budget can be as simple as writing down a few numbers on a piece of paper. In fact, the simpler, the better. At least when you are first getting started.
Begin by writing down what you both make. Be honest.
Then start listing your expenses, fixed (rent, car loan, utilities) then your variable (eating out, entertainment, etc.). If your expenses are more than your income, you have a problem needing to be addressed immediately.
The end result should be a mutual awareness and understanding about how much you make, how much you need to spend on essentials, how much you can spend on nonessentials and how much you need to be saving to achieve your goals.
Figure out how much each of you will contribute. This can be a difficult decision for couples. If you make $100,000/year and your partner makes $50,000/year do you just split expenses down the middle or do you do it by percentage of income. E.g., if all of our expenses (rent, utilities, other bills) cost $2000/month do you each pay $1000 or does the person making $100k pay $1500 while the person who makes $50k only pays $500?
There’s no right answer. The only way to figure out what is going to work in your situation is to talk it out.
Figure out a strategy that works for you.
Are you going to pool all of your money into one shared bank account? This strategy was common among older generations, mainly because there was often only one breadwinner (the man).
Or, are you going to maintain completely separate bank accounts?
Maybe you are somewhere in the middle with a shared account for all of the bills and then separate accounts for your own money.
Again, there’s no right answer here.
Once you’ve had the tough conversations, made all of the decisions and put your plans into action, there’s still one more step. In order to keep the momentum going, you need to ensure you are continuously following up and communicating with each other.
When a relationship is going well the last thing you want to do is think about the “what ifs.”
What if we break up, what if this ends in divorce, what if…..but, we can’t predict the future. So, it’s essential to have these conversations when you are in a good place, with a clear head.
Normalize the topic of money by having regular conversations. There’s no reason topics of money and personal finance should be off of the table.
Having an open dialogue will allow you and your partner to be on the same page. It will prevent major financial surprises, and it will enable you to work towards specific financial goals together….planning a wedding, a vacation or even for a family.
So, if you and your partner have not had a discussion about money and your financial goals then now is the time to book your first financial date!