4 Crucial Ways to Manage Money and Relationships
Most people think of romance when it comes to sharing their lives with someone else. It’s the love and the intrigue that keeps things interesting and brings them together. Still, while bringing up finances can feel like a major drag, money and relationships walk hand-in-hand.
Most activities in life require shelling out cash. Accordingly, there will inevitably come a time when spending habits come up. Be sure to have discussions around how to manage this together in order to avoid sticky situations.
This article will cover some effective ways to manage money with your romantic partner.
1. How to Talk About Money With Your Partner
We’ve said it before, but communicate, communicate, communicate. The biggest challenge with money and relationships is a failure to articulate your beliefs and needs.
If you think things may get serious with your partner, you should aim to open the door to this topic as soon as possible. The longer you wait, the more impactful the potential financial surprises might be.
That said, doing this properly is crucial, as it will be easy for them to get the wrong impression.
They might distrust your reasons. They could wonder whether you’re looking to take advantage of them.
We recommend three foundations you should have in place when you’re going to have the money talk with your partner:
- Recognize that money beliefs go back to childhood and are often more emotional than rational. Everyone is entitled to believe what they do.
- Keep the discussion safe. Both should be able to share their truths without fear of repercussions.
- The discussion should be open and transparent, but also light. Many people fear financial discourse, so take the sting out by sitting beside one another — not across the table as if you’re a shark about to close a business deal.
Create Opportunities to Address Money and Relationships
Chilling on the couch with your favourite programs on Netflix is entertainment, though it can also be more.
Look for times in your shows when couples are hitting a financial roadblock. Ask your partner how you think they feel the situation should have been handled. Better yet, propose a solution and solicit their feedback.
Expressing thoughts and emotions in a vicarious manner can make the discussion less guarded. Bear in mind that this is only the primer to get the topic started. From there, you can circle things back around to the personal level.
Remember that the best time to talk about significant topics is before they become a problem. Given that money is one of the biggest reasons couples break up, don’t let it linger.
2. How Should Couples Split Finances?
With any model for money and relationships, effective communication about expectations is pivotal. This can avoid introducing unwanted tension into the relationship. Likewise, both partners must trust one another and come at this honestly.
With this foundation in place, it is then possible to begin thinking about finances collectively.
There are two main ways for couples to manage their money:
- A joint account. In this case, a single account is shared to manage household expenses.
- Separate accounts. All financial accounts are separate.
We will review each of these options in turn.
Using a Joint Account for Shared Expenses
When using a joint account, shared expenses are all paid from it. This can include bills such as a mortgage, but also extend to entertainment (i.e., going to dinner and a movie). This way, both partners have a shared accountability in their financial journey.
Contributions to the joint account should be made on a percentage basis. Most partners don’t make exactly the same amount of money, so this keeps it fair.
The Math That Explains How to Contribute to a Joint Account
Let’s say Sally makes $4,000 monthly. Her partner, John, makes $3,000.
Total Income = $7,000 ($4,000 + $3,000)
Of the total $7,000, Sally makes 57%:
- 4,000 / 7,000 = 0.57
- 0.57 x 100 = 57%
If Sally and John decide that they need to contribute $2,000 monthly to their joint account, Sally should be contributing $1,140 ($2,000 x 0.57) and John should be contributing the remaining $860 ($2,000 x 0.43).
Beyond this shared account, they would each maintain personal accounts for individual spending.
Risks to Using Joint Accounts
When sharing an account with your partner, it’s important to be aware of the possible downsides.
In the event of relationship breakdown or if one partner goes rogue, the other will still be on the hook. If there is overdraft on the account, it is possible to find yourself in a serious financial hole.
If you don’t pay close attention to the inflows and outflows, you could easily have your credit score damaged.
Keeping Separate Accounts
Some couples prefer to keep their spending entirely separate. They don’t hold a joint account for shared expenses.
This can work if the partners come to a shared understanding of who will take care of what. For example, one partner might pay the mortgage, while the other covers the insurance, hydro, and so on.
Given the accounts are separate, it is important to each have access to the online accounts to confirm payments continue to be made. There should be complete transparency for both partners to feel well-informed.
Risk to Using Separate Accounts
A common scenario in relationships is where one partner has most of the bills in their own name, paid from their personal account. This helps them build their credit score, but does nothing for the other party.
Likewise, in the event of death, the other partner can have difficulty untangling everything in order to keep the lights on. If going this route, it is important to keep a file with all account numbers and contact information documented.
3. Who Should Pay the Bills in a Relationship?
The strongest relationships are those that have a foundational element of give and take. There’s no explicit tally of who has given the most.
If one partner is always footing the billing, resentment is bound to fester. It doesn’t matter whether it’s something big like paying the mortgage or just picking up the tab for coffee.
It is unlikely that both partners have equal salaries and financial commitments, so it is expected that one partner will have more disposable income. This shouldn’t mean that the burden should be solely on them to do the treating.
Cassie’s Personal Take on Money and Relationships:
In my situation, I am fully aware that I do not pay an equal share and am very appreciative to have a partner who spoils me. I do try, whenever I have the means, to reciprocate. I also know that he would not want to see me in financial ruins in a spurious attempt to keep up.
Even though there may be a financial imbalance, a gesture can make the difference. Although sometimes a fancy dinner may be out of reach, but I can afford to treat for breakfast. If I have come up with a concert or event that I would like to attend, I generally budget to afford the arrangements.
Although this agreement works in our relationship, it might not work in others. I am fortunate that there is no topic of communication off limits with my partner. This is an important one.
Keep Things Even
We’ve come a long way in society. Gender roles continue to be broken down, and we believe that is important in healthy relationships.
The old model was that the male was the breadwinner who paid the bills. This is antiquated and is best replaced with a balanced approach with both partners sharing financially.
The burden of keeping things afloat shouldn’t rest solely on either party’s shoulders.
4. Identify Deal Breakers for Money and Relationships
When it comes to finances, there are two main times you may be facing a relationship deal breaker:
- Fundamental differences in values. The differences are so substantial that there’s an unbridgeable chasm. Sometimes it is too difficult to see past certain issues. If this is one of them, the relationship was likely already on its last legs.
- Money is the relationship. When only one partner is contributing financially and there does not appear to be any other aspect to the relationship, it might be time to re-evaluate next steps.
Spending patterns often reflect base values that individuals hold. If you have strong beliefs that money should be placed aside for the future, but it’s carpe diem all the way for your partner, this will rear its head continuously.
If you are unable to resolve — or even openly discuss — reconciling your differences, a relationship-train-wreck may be in your future. Get ahead of these things to assess whether you’re on the right track.
Final Thoughts
Discussing money and relationships can be emotionally charged. That’s one of the ways you know it’s important.
Having open dialogue is the main differentiator between successful and failed relationships. Be sure to broach the money subject sooner rather than later, as it will be one of the bedrocks to build on. If you and your partner equally want the best for one another, you should be able to come to a solution that suits you both.
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