Have you ever had a disagreement with your spouse or partner about money? If not, stop reading.
Put down the newspaper, tablet, phone, whatever it is, and return to your sacred mountain top in Shangri La where you can contemplate the secrets of the universe while us mere mortals toil away below.
But if you have fought with your partner over money, then you probably know that money is one of the top stress factors in a relationship. In fact, disagreements over money are the second leading cause of divorce in the U.S.
What creates all this strife around money? Like so many other aspects of a relationship, it often hinges on one thing: communication.
Unlike other aspects of a relationship, however, money provides a very real, tangible, and all too limited resource over which problems with communication can erupt into full-blown disasters. But when you and your partner are on the same page about money, amazing things can happen!
So if you’re having trouble blending finances with your partner, don't worry; it's easier than you might think.
Talk It Out (and Be Honest)
Honesty is the cornerstone of a successful relationship, and you should be just as honest with each other financially as you are in every other aspect of your relationship.
Unfortunately, this is something that most of us struggle with. According to CreditCards.com almost 30 million Americans are currently hiding a checking, savings or credit card account from their live-in spouse or partner.
And many feel this financial infidelity is as bad or worse than physical infidelity! Financial secrets are like ticking time bombs waiting to destroy your relationship. But it isn’t always as sinister as a hidden credit card. Sometimes it’s simply a willful ignorance on the part of you or your partner, unwilling to ask questions about the other person’s financial accounts or spending habits for fear of conflict.
Don’t let fear or discomfort stand in your way. Take the time to sit down with your spouse and lay all your cards on the table. What's your salary? What benefits do you get? What investments have you made?
Don’t forget to share those bad things too…like the balance on your credit card!
While you probably know some of these things about one another, without complete and utter transparency, the ‘money issue’ will always be lurking in the background.
Establish Your Roles
People can get sticky about finances, especially when it comes time to decide who pays for what.
There’s a lot that goes into this. How we were raised, how our parents dealt with money, societal expectations of ‘who-does-what’ in a relationship—all of which impact how we approach the division money duties.
If you want to discover how you or your partner thinks about money, click here and take the MoneyMind® quiz to find out.
Long story short, there’s no right answer here. Roughly a third of Americans split their bills evenly amongst partner’s salaries, while in around fifty percent of households, one partner or the others pays the household bills exclusively. The most important thing to do is, again, talk about it.
Do you split the bills proportionately based on how much money you each make, or does one income go to bills and the other towards savings?
Will one of you be the person who acts as the household ‘banker’ (paying the bills, monitoring savings and investments, etc.), or will you sit down once a month to review your finances as a couple?
How much money will you budget for your bills, your savings, entertainment, new clothes, etc.? How much wiggle room will you have every month in your budget, in case expenses you didn't expect come up?
In order to merge your financial lives, it's important for you to realize that you have to work as a team. Even if you ‘get’ finances and your partner doesn’t, that doesn’t give you all the power. It means you have the responsibility to communicate what’s going on!
Create Joint Accounts
Do you trust your partner? The answer is, hopefully, a resounding ‘yes’!
Great! Do you have joint financial accounts that either of you can access at any time?
This answer to this might be a quieter, tentative ‘yes…’ or maybe even a straight ‘no’.
Merging finances is scary. We tend to talk about money is hushed tones, and opening up your accounts to another person can feel uncomfortably intimate. After all, if something bad happens to the relationship, what’s going to be the first flashpoint? You got it. Money.
While there’s nothing wrong with keeping separate accounts, merging your money is an important part of establishing trust, especially if you’re married.
If opening new accounts is too much trouble (perhaps because your interest rates would change, or you'd lose other benefits with a given account), you should put your significant other's name on the account so that he or she can have access.
Even if you started the account years before you met, extending that trust to your partner can go a long way toward merging your financial lives.
“The handling of finances is one of the major emotional battlegrounds of any marriage. Lack of finances is seldom the issue. The root problem seems to be an unrealistic and immature view of money.” - David Augsburger
Why do you fight with your partner about money? The answer probably lies in how you communicate. Luckily, it doesn’t have to be that way. Sit down together, decide on roles together, and come to an agreement. Together.
No matter how uncomfortable it might feel at the time, it will be worth it!
United Capital Financial Advisers, LLC d/b/a Goldman Sachs Personal Financial Management (“GS PFM”) is a registered investment adviser and an affiliate of Goldman Sachs & Co. LLC and subsidiary of The Goldman Sachs Group, Inc., a worldwide, full-service investment banking, broker-dealer, asset management, and financial services organization.
The information contained herein is intended for informational purposes only, is not a recommendation to buy or sell any securities, and should not be considered investment advice. GS PFM does not provide legal, tax, or accounting advice. Clients should obtain their own independent legal, tax, or accounting advice based on their particular circumstances. Please contact your financial adviser with questions about your specific needs and circumstances.
Information and opinions expressed by individuals other than GS PFM employees do not necessarily reflect the view of GS PFM. Information and opinions expressed in this article are as of the date of this material only and subject to change without notice.