19th October 2016 at 2:54pm
You see it all the time, couples in supermarkets arguing over who is paying for the weekly shop this time or a husband justifying his latest impulse buy to a weary wife. Financial arguments are often rife within couples and are a key cause of frustration within relationships.
Spending arrangements with your partner
I’ve never really experienced full blown arguments around money, as myself and my partner split all costs down the middle. Whatever we have left over within our own accounts we can spend as we wish. But according to Investopedia this too can have its downfalls;
‘It sounds like a reasonable plan, but the process often builds resentment over the individual purchases made. It also divides the spending power, eliminating much of the financial value of marriage.’
Although I have not taken the plunge to tie the knot just yet, I can see the pitfalls of my own arrangement. I must admit I have found myself despairing at my partner’s latest purchase of a completely pointless gadget, or becoming weary at the sight of yet another computer game gracing my living room floor.
And so this got me thinking, what would I prefer he did with that money? Save it? Invest it? Buy me something nice? As I get older, and become more involved with the world of financial services, my answer would be to invest the money. But, I also recognise that not everyone has come to think like I do, after all my mind set only changed recently. A couple of years ago I would have spent, spent, spent and thrown caution to the wind. But as I have grown up, my knowledge and understanding of money has grown also.
Approach to finances
My approach to finances has definitely changed, I have opened savings accounts, an ISA and am seriously planning on building my credit history. I am finding more of a balance between spending and saving, but I definitely still itch to buy something new and shiny on a regular basis. My financial personality is clearly a little mixed up.
There are many different approaches to spending
And from delving in to some research, it is clear our financial personalities affect the success and turmoil of our relationships with our spouses and partners. So just how many conflicting characters can there be?
Big saver Vs Big spender
We’ve seen it all before, you’ve got that one friend who shops like a thing possessed and then complains they have no funds a few days later. Or maybe you have that cousin who never seems to part with a penny and would rather go for the bargain buy than splash the cash. These are two of the extremes, but as we know, often opposites attract and you could find yourself in a romance with a penny pincher or sporadic splurger.
Often, opposites attract
So one of you is a spender, and the other a saver, obviously these are two very different approaches to money and can cause frustration and resentment.
Plan ahead. Sit down and talk through your future financial goals, and map out realistically how you plan to get there together. This will make those milestones achievable and will also make the spender see how their money can go towards something meaningful, not mediocre. This will also highlight to the saver that they don’t need to scrimp and scrape 24/7, that they can spend here and there without abandoning their goal.
Risk taker Vs Avoider
You are finally comfortable with having shared savings and you and that special someone are looking to invest. The trouble is…You want to invest in higher risk investments which can give bigger returns and bolster your buying power, but your partner is more comfortable with cash savings, as they see their money as safe in a bank account.
The problem here is that money kept in cash will not work for you, and will not grow nearly as much as if it were invested. Equally, high risk investments are exactly that, risky. One of you is frustrated because you can’t see the money going up in value, and the other is about to have palpitations because of the volatile nature of the financial markets.
Air your concerns to each other. Work out how much money you will need for the future. Once you have established this, look at the savings rate you currently have and work out if you will reach your goals as per your current strategy. If not, look in to other options which could help you reach your aim. It is best to seek the help of a financial adviser here, who can help you plan to reach your financial objectives.
If you are unsure about your attitude to risk, why not try our handy tool created in partnership with Oxford University.
The superiority struggle
One of you may earn the big bucks whilst the other is still finding their place in the world of employment. Or, maybe you both earn similar amounts but one of you is the control freak who deals with all of the money matters. Situations like this can lead to the lesser earner feeling inferior and that they aren’t doing enough to help manage the household finances.
Talk through the current arrangement and then share equally the responsibility of managing the finances. If you are usually in control, learn to relinquish some of your role and let your other half help. This will take the burden off you a little and let your loved one feel involved, after all it is their money too! Also agree an amount of money each person has per month to spend as they wish, make sure this is shared fairly, this will regain balance and a feeling of equality to the relationship and help the person earning less feel on par with their partner.
So, these are just some of the perilous pairings, but other common problems can crop up even if your partner is on the same wave length as you. Here are a couple to look out for….
You’ve found your perfect partner and all is well in the world. But wait, you have a large amount of debt on credit cards, over drafts and personal loans which they have no idea about. They are squeaky clean in that area and you don’t know what to do. Or maybe you yourself have minimal debt but have a partner who has a less than perfect credit score.
Come clean with your partner. Try and come up with a plan to clear any debt, and work together to make that happen. Now this does not mean that the individual without the debt has to help pay for their partners problems, but they should help by making a plan and encouraging their other half to stick to it. If you can’t seem to find a realistic way to clear the debt, make an appointment with citizen’s advice who can help get you back on track.
This is a common problem, your partner has a brother with a gambling habit, or a cousin who just can’t seem to make ends meet. They lend to their family and never seem to get their money back, there’s always an excuse and your partner seems to let it slide.
Never lend money unless you are prepared to forget about it instantly. Giving hand-outs leads to resentment, you may loan someone money because they can’t make rent and then see them out on the town a few days later. Only lend if you can afford not to see the money again.
The world of personal finance is fraught with conflicting objectives and personalities, add that in to the complexities of a relationship and the result can often lead to frustration and fights. But I believe that understanding your financial personality is half the battle. I see myself as a saver, and my partner as a spender and identifying that really has been an eye opener.
Understanding why you have arguments or even minor disagreements, helps you to overcome them and for all of the issues above the answer is simply to talk, plan and work together.