My first husband and I met in university decades ago. At that time, I was working part time to pay my way through school, with the help of student loans and grants. He was a little more fortunate than I. His parents helped him out and he was in a co-op program that allowed him to save quite a bit during work terms. We never really talked about money when we decided to move in together. Suddenly, our paychecks were merged into a joint account and he took control. I let him as I did not think it was a big deal. When I was growing up, my father always managed the money in my family. It seemed right and didn’t bother me in the least. With a goal of paying off my student debt before we married and the fact that I was paid more than he, we did agree on being frugal in many ways. Over time, however, his frugality became a nightmare for me and the source of many conflicts.
We should have talked openly about money before we committed to a life shared. We would have realized the distance between us on this front and possibly avoided much heartache. Hopefully, if you are just starting down the romance path, the things to consider listed below will guide you to understanding your partner’s relationship with money is as important to consider as their relationship with themself, others and you. It is important you can take time to understand and assess the fit with yours before you take the deep dive in for a truly committed life together. However, even if you are already deep in, follow these few tips to help manage the financial side of your commitment.
Understanding how your partner thinks and feels about money is key to knowing how you will connect and join forces as a united financial unit. If your partner has conflicting money values from you, for example, sees home renovations as a luxury while you were raised in a home where such renovations were seen as necessary to maintain property value, you may have a foundational conflict that you might not be able to overcome. These differences need to be discussed and steps to overcome them thought out and agreed upon.
Having a regularly scheduled review of your money status, where you are today vs plans for expenditures, savings, retirement and more, allows you both to check in with each other as well to ensure that you are still on the same page and heading in the right direction.
Mad money for both
It is so important that each person have their own “mad money” that they can spend on anything they wish. It is demeaning for a person to feel that they have to ask permission before buying something that is not a major purchase. Separate credit cards are a good way to support this and allows each person to build or maintain their own credit score. In the event the relationship fails each person is likely to need to have their own financial identity to move forward. You might want to each maintain your own independent chequing account as well for your pay to be automatically deposited to and then do a standing monthly transfer of your contribution to the shared family expense bank account.
Choose a household income allocation method
You may choose to pool both of your incomes, as my husband and I did, and pay the bills from the commingled pool. Another method may be to equally share household costs such that if total household costs were $3,000 a month, you each paid $1,500. Finally, you may choose to pay a proportionate amount based on your earnings. In this case if you partner made 1/3 of the total household income, they would pay 1/3 of the expense, in this case $1,000; while you making 2/3 of the household income would pay 2/3 of the expense, or $2,000. Whichever way you decide to proceed, it is important to talk over your options and agree upon what you believe to be the fair and right way to proceed.
Designate a household CFO
Another conversation is that required to determine who is going to ensure bills are paid on time and that the household cash flows are tracked. This should be done in conjunction with the division of other household duties. I do believe the division of duties in this matter is a specific benefit of finding a partner. Find whatever division suits you, your partner, your schedules, skills and interests. The Non-CFO does not walk off and bury their head in the sand about money. This partner needs to keep informed of what is going on through engaging with the CFO during Money Talks to understand where the household finances are at.
Dreams and Goals
Dare I say it. Budget. Yes, you should work with your partner to have a household budget. Money is easy when there is a lot of it flowing, but the good times do not always last. We all have to save for retirement, dreams and goals, which usually require a budget. After the first budget exercise, it gets easier.
Money therapy is a good thing. If you find your relationship suffering from financial strain for any reason and you are spinning your wheels, find a way to get help. Research and read the tons of free financial literacy content that is everywhere on the internet. If you feel you can afford to, visit a counsellor and talk through your issues. We live in a world where there should not be shame surrounding money.
Financial disagreements are a leading cause of divorce that may be avoided through thoughtful discussions before committing and after joining financial forces. As with any other aspect of your relationship, remember, you come from different places which have made you different people. We come together in relationships to share life, and I believe, to help each other in our efforts to become better people. When it comes to money, this means respectfully helping each other own your financial decisions as a team.
The key always is to behave with integrity.