Even if you don’t realize it, how you manage and talk about your finances can have a major effect on your love life. In some cases, bad financial habits can even lead to divorce.
In a recent survey, TD Bank polled 1,749 Americans who are either married, in a committed relationship or divorced, about how they deal with money in the context of relationships — and the findings are a good guide for what to do and not to do if you want to make your marriage or relationship. If you want a happy home, learn the money habits you should adopt.
Mistake No. 1: Keeping Bank Accounts Separate
Many people in relationships consider their money to be communal, and most combine their bank accounts. More than half of respondents — 55 percent — said they combine all of their finances and consider all money to be “our money.” Twenty-nine percent keep their own money and combine some, and 15 percent keep their money completely separate. Only 19 percent said they have separate bank accounts — but these people could end up regretting this decision because joint bank accounts have numerous benefits.
“People are often reluctant to start sharing money or bank accounts. They think by keeping their money separate they remain less dependent and more in control in their relationship,” said Dr. Jane Greer, Ph.D., a nationally-renowned relationship expert, psychotherapist and author of “What About Me? Stop Selfishness from Ruining Your Relationship.” “I work with many couples who prefer not pooling their money; it really translates to the financial foundation of your life and the goals you’ve set for yourself. Couples need to decide what their joint goals will be, flesh out a plan and determine each person’s role in seeing it through. This will help strengthen your relationship. Opening a joint bank account together [can help a couple] to work toward a shared future.”
Mistake No. 2: Using Separate Credit Cards
Most people who are in a relationship — 52 percent — said they use a shared credit card. This is an increase from 2017, when only 46 percent of respondents in relationships said they share a credit card account. Less than a third — 31 percent — of couples said they only use separate credit cards. Seventeen percent use both shared and personal credit cards.
Combining credit cards not only lets you earn rewards points more quickly — it can also benefit your relationship by allowing you to budget together as a couple.
“Set up a budget together for shared expenses, and agree on a premise of how and what money will come into and out of that budget,” said Jason Thacker, head of U.S. Deposits & Consumer Payments at TD Bank. “Whether it’s through a joint account or credit partnership, these are all tools and tactics that will help you align your money and budget over the course of a month.”
Mistake No. 3: Waiting Too Long to Talk About Money
Nearly half of Americans in committed relationships — 45 percent — discussed money within first three months of their relationship. Only 5 percent waited three to five years or more. Additionally, of people in relationships who believe they have made a money mistake, most (18 percent) said that waiting too long to discuss money is their biggest mistake.
If you wait too long to talk about money with your partner, you won’t find out if you’re on the same page about how you prefer to handle finances, which can lead to sticky situations down the line.
“The most important thing in a relationship is communication,” said Greer. “People are often unaware that they inherit a set of values from their families, which can determine their expectations when it comes to money. Discussing early on in the relationship who pays for what, how individuals deal with financial decisions, and each other’s respective feelings about money can help shape your dating and relationship experience from the start in a positive way.”
Mistake No. 4: Not Talking About Money at All
Eighty percent of coupled and married respondents said they are either extremely comfortable or very comfortable talking about money with their partner. Only 43 percent of divorced people said they discussed finances with their partner on a weekly basis. Meanwhile, Americans who are currently in relationships who talk about money weekly say they are extremely or very happy (80 percent) and satisfied with their intimacy (64 percent).
Talking about money can bring a couple closer together, so those that don’t talk about it might not be as intimate in other ways too.
“If you are talking about finances, the more open you are, the better. The more you talk about your individual needs and are mindful and aware of your joint needs, the more comfortable you are with one another,” said Greer. “You will be less likely to build up resentment and anger towards your partner because you will not feel they are controlling your spending habits. Not talking about money occurs so that people can avoid their partner’s opinions or judgments about what they do. People may withdraw or retreat, which can lead to conflict. Talking about money keeps things front and center so that you can maintain closeness and intimacy with each other, and feel supported in your mutual desires.”
Mistake No. 5: Arguing About Money Too Often
Unsurprisingly, people who are divorced reported arguing about money more often than those that are still married or in a relationship. Twenty-three percent of respondents who are now divorced said they argued about money weekly when married, while only 19 percent of those who are married or in a committed relationship said they argue about money weekly.
Conversations about money should be open discussions — not arguments.
“People often think communicating is only about telling people what they want, but communication involves much more than that — it includes explaining what your needs and preferences are, negotiating what those needs are individually and collectively, and setting up time to talk with your partner about challenging issues like finances without anyone feeling criticized,” said Greer.
Mistake No. 6: Keeping Financial Secrets
Only 12 percent of respondents who are currently married or in a relationship said they have kept a financial secret from their significant other. Men are more likely to keep financial secrets than women. The biggest financial secret Americans admitted to keeping from their partner is having significant credit card debt.
“Secrets can be deadly,” said Greer. “When and if they are discovered, people feel betrayed because their trust has been broken. Financial infidelity leaves the other person feeling deceived and lied to, which can permanently damage the relationship.”
How Divorce Can Affect Finances
Unfortunately, even when financial mistakes aren’t at play, many marriages do end in divorce — and divorce can be expensive.
Nearly a third of respondents — 32 percent — said they are worse off financially after divorce, and 28 percent said the cost of their divorce was more than they had anticipated.
How to Overcome Money and Relationship Challenges
“Just like matters of the heart, matters of the wallet can be complex when it comes to divorce,” said Thacker. “Sorting out your financial situation may require different conversations at different frequencies with a financial expert who can help best manage your needs. When preparing for a life change that may have financial implications, like divorce, people should have more frequent, comprehensive conversations with a trusted financial advisor. Establishing a regular rhythm and cadence will enable them to feel comfortable and in control of what can be a stressful situation.”
Love Lost: The True Cost of Divorce in America
More on Relationships
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- 20 Worst Money Mistakes People Make in the Name of Love
- Cost of Local vs. Long-Distance Relationship: Who Has a Better Deal?
- Watch: This Frugal Couple Ditched the 9 to 5 to Live Their Dream Life
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