Talking about money can be a challenge for many couples. According to a Stress in America survey released in 2015 by the American Psychological Association (APA), about a third of adults with partners reported that money is a significant source of conflict in their relationship. This was the case no matter how much the couple earned!
They often cited disagreements over money as one of the main reasons people get divorced. This conflict continues even after the divorce. According to Dan Courvette, publisher of Divorce Magazine, “the two most contentious issues during a divorce are finances and children — in that order.”This is unfortunte, considering we live in one of the wealthiest regions in the world.
A survey conducted by the Financial Planning Standards Council (FPSC) of Canada in 2016 found that two-thirds of the 1000 Canadians interviewed said they still had concerns about their finances.
Talking About Money
Yet many people are uncomfortable talking about money. This could very well be part of the problem. A poll conducted by Merrill Lynch and Age Wave in 2018 suggested that 61% of women surveyed would rather talk about the details of their death than speak about money. 61% of women surveyed would rather talk about a one-off event than talk about money, a subject that affects most aspects of their lives daily.
Money touches most aspects of our lives. Avoiding the subject of money in your significant relationship can only add to this stress. So, how can a couple talk about money affectively?
As a financial advisor for over twenty years, I have observed hundreds of couples navigate money within their relationships. And the three qualities that make some couples more successful discussing money than others are transparency, good communication skills and respect.
Trust is the basis of any successful relationship. Renowned marriage therapist and author, John Gottman, examined couples from all over the country and discovered that trust and betrayal were the most important issues to arise between partners. Transparency builds trust.
Fidelity is a quality we desire in a partner. And sexual infidelity is not the only form of betrayal. We can also betray our partners through financial infidelity. Financial Infidelity is when one spouse makes significant financial decisions that impact the financial future of the other. A good example of transparency would be to tell your future partner about the amount of debt you carry.
Let me give you an example here.
Jessica called her banker to instruct him not to reveal to her husband the $20,000 credit card debt she accumulated from helping a ‘friend.’
Her husband had come in to see their banker to refinance their existing home to complete renovations on their new property.
She had asked the banker if her debt would affect their ability to refinance their home.
Of course, it would! Both their names were on their home! One partner’s debt would affect their household total debt servicing ratios, which determines the amount of credit for which they can qualify. As a couple, there is the understanding that your actions have consequences on your partner and relationship.
And how does trust show up for a couple in relation to their finances? It’s the feeling of knowing your partner has your back when making financial decisions.
Good communication between partners is the second quality necessary for successfully tackling conversations around money.
Money is a highly emotional issue. A couple facing financial challenges may find it difficult to communicate about money without getting emotional. Because it’s never just about money. Money is security, freedom, and ease. And for some people, money is also power and control.
You need to decide as a couple how much of the other person’s financial situation you need to know for you to feel safe. What’s the threshold for which you or your partner can spend before you need to consult each other? That each of you discuss a potential purchase if it costs more than $100?
Keep things separate or bring them together?
If you both decide to keep everything separate, that’s fine, but it’s something entirely different when the one person with $100,000 in unsecured debt wants to have their joint home refinanced to pay off that revolving debt.
It gets more complicated with bleded families. Would your partner like to know how much money you’re giving an adult child from a previous marriage? Will it affect your finances as a couple?
Discuss your attitudes towards money early in the relationship. Communicate about the way you feel regarding your financial concerns. Decide how you would like to resolve conflicts in your finances, especially concerning competing priorities.
Respect each other’s differences. Respect tour partner’s vision for your lives — as individuals and as a couple. What legacy do you want to leave your family, your community?
Discover what your core values are as individuals. Do you manage your money in alignment with what you value? Does your partner share your values?
Compatibility in handling money is often not one of the first few qualities that individuals are consciously looking for in a mate. A partner with a good income may be of an attractive quality, but it means nothing if that same person is constantly living in overdraft.
What can you do differently?
There are a few things you can do to nurture greater openness in dealing with your finances.
Money talk should start early in the relationship.
When I say that money talk should start early in a relationship it does not mean presenting your net worth or cash flow statements on the first date. Start the conversation by discussing your relationship with money. What does money mean to you? How do you feel about debt?What’s your partner’s interpretation of risk? How did your respective families deal with conflicts around money?
As the relationship grows, share your dreams.
Talk openly about your vision for your lives. Share your dreams as individuals and as a couple. Most dreams require a financial commitment. How can you support your partner in achieving her goals? What does wealth look like for each of you?
Work on a financial road map together.
Once you’ve shared your dreams, create a financial plan to help you achieve those goals. How will you tackle conflicting priorities? You may feel uneasy about the potential financial sacrifice if your partner is considering going back to school to pursue higher education.
Listening to your partner shows you care. I suspect that if you get your finances straightened out and talk openly about it, other areas of your relationship will also benefit from this.
Bringing It All Together
Most people I know are more comfortable undressing on a first date than discussing their finances. We generally have a tough time talking about money.
Conflicts over money are one of the main reasons couples separate. It’s not the money that causes the conflict, but the threat to what we value most. And the differences in our approach to money. A person with the need for safety and security will feel threatened by their partner’s carefree nature with nature and judge it as reckless.
With open communication, transparency and respect, couples can nurture a safe place where they can safely talk about money and discuss their concerns without judgement. This may even bring them closer together.