Money and relationships have always been a delicate combination; disagreements over finances is one of the leading causes of divorce and relationship breakups. One partner spends more than the other or racks up large credit card debts, or general disagreements over spending and banking habits end up sabotaging a relationship. And the economy hasn’t helped to alleviate money stress with one or both partners losing jobs or having to take lower-paying work.
However, many of these money-related relationship issues can be solved if the underlying cause is identified and addressed. And often, the cause of money problems in relationships is a specific behavior or attitude that can be changed if the person or couple is willing.
Bad Money Habits in Relationships
Sharon Gilchrest O’Neill, Ed.S., LMFT and author of “A Short Guide to a Happy Marriage” notes that there are specific themes at play when money problems endanger a relationship.
Resentment: Such as when one can’t say ‘no’ to children from a previous relationship or has to have every new tech toy, even when there’s no money in the budget for it.
“Unfortunately, in my experience, such spending tends to become a habitual topic of arguments and resentment before a couple takes on the problem, and it is not an easy issue to tackle,” O’Neill said. “Money and spending habits are very tied into what we have learned from our family of origin, and that tends to become what we’re comfortable with and what we believe in.”
Communication problems: Financial issues often stem from negative behaviors like lying about money, not being completely forthcoming about bills and savings, and acts of omission.
“To prevent arguments, couples should sit down and have what’s called the ‘money talk,’ which involves discussing the outlook each person has on money (for instance, are they a spender or a saver?),” recommended David Bakke of MoneyCrashers.com.
Making the transition from being single to being a team. “It can become a power and control issue, or just a problem of replacing old habits with new ones,” O’Neill said. “You must share almost everything — your food, your kids, your money. Do not have separate bank accounts.”
Keeping Bad Money Habits in Check
A key component in keeping bad money habits under control in a relationship is to create a joint budget for monthly expenses.
“The couple should come up with rules for when it’s okay to spend money and when the other party needs to be consulted first — for purchases greater than a certain dollar amount, for example,” recommended Bakke. “An emergency fund and retirement savings should be planned for, as well.”
Pegi Burdick of Thefinancialwhisperer.com, warns to beware of the “Teflon budget,” where the couple sits down, makes a budget and agrees to keep each other accountable … then the following month, they’re back to their bad money habits. The solution: tighten the window of accountability.
“Meet weekly, not monthly, as this affects one’s respect for each other and does not become a collision of resentment 30 days later,” Burdick said.
Another big step in creating better money habits is to create a plan to pay off all credit card and other debts.
“A financial practice that reduces stress is to save for the things you want instead of putting them on credit,” said Leo Willcocks, a stress consultant with Solving Stress. “Only buy something if the money is in the bank right now. Not next week when you get paid, but now. While you might have to wait a little longer, your peace of mind will be so much greater.”
So instead of immediately whipping out the plastic, pay with cash for your transactions as it keeps you on budget and allows you to see exactly where your money is going.
“If discipline is an issue, consider cutting up your credit card,” Willcocks recommends. “This is a decision best made together with your partner, so there is no chance for one partner to resent the other for cutting up the card.”
O’Neill suggests that to open the communications pipeline and better understand each other’s attitudes toward money, couples should ask the following questions:
- What kind and amount of debt would each partner carry into the relationship?
- How will the debt be dealt with as legal partners?
- Once you are partners in finance, what are your positions regarding how much debt is acceptable?
- How many credit cards do you have in use?
- What are your positions on gifts and holiday spending on your family?
- Will you pool all your money together or have any separate accounts? What amount of savings do you each regard as acceptable?
- How do you each feel about certain kinds of spending: Designer suits, high-end shoes, use of services such as household cleaning, gardening and painters?
- How would you feel about incurring high expenses on fertility treatments if pregnancy becomes difficult, or for an adoption?
- If you have children, how do you feel about public verses private education?
- What kind of vacations do you expect to take? How do you like to travel?
To create harmony between money and relationships, both parties need to agree to be respectful and polite, and to never judge or place blame.
“If they can’t come to an agreement on a certain issue, it should be set aside for the moment, to be discussed again at a later date,” recommended Bakke. “The couple should make plans to have future money talks, where progress and a review of what was talked about at previous meetings is discussed.”