Money and relationships: 6 tips to navigate the pitfalls

Money and relationships: 6 tips to navigate the pitfalls

Managing your romantic relationship requires constant work. Staying on top of your finances is no picnic, either. Combine these two tasks, and you’ve got a recipe for heartbreak.

Money is a common source of stress in relationships. Even in the healthiest of partnerships, financial tension simmers. In unhealthy relationships, financial fights can turn into all-out war, as any divorce attorney can attest.

How do you balance both your bank account and your relationship?

Here are some basic ground rules:

1. Communicate. Talk about money. Discuss your dreams and your fears. Try to get on the same page in terms of your financial goals, whether it’s saving, spending, managing your credit scores or preparing for retirement.

Do you dream of retiring early? Do you want to buy an RV or a second home? Quitting your cubicle job for something less lucrative but more fulfilling? Talk about those goals to your partner – and listen to your partner’s own vision for your financial future.

2. Compromise. Successful relationships require letting go. Often, financial stress in a relationship stems from control. No one wants to feel dominated by their partner. So the partnership must make room for the dreams of both partners.

That means you have to take step one first – communicate with one another about your dreams and financial fears. Then you can talk about common ground that gives both of you space to be happy.

3. Find a neutral party to settle disputes. Even well-intentioned people can disagree. If money is a constant source of stress in your life, find someone to act as a referee. This person might be a financial advisor or a marriage counselor. The idea is that you both present your cases to an objective person – and to agree to abide by their rulings.

4. Acknowledge differences in the power dynamic. Money is a fraught topic even when both partners have identical incomes and come from similar financial backgrounds. If one partner earns significantly more than the other, the potential traps grow.

In many relationships, income gaps are by design. One parent stays home with the kids, for instance, or works in a middle-income job such as teaching or social work, while the other partner earns much more. If that’s the case in your household, the higher-earning partner needs to set aside notions that the lower-earning partner hasn’t earned an equal say in financial decisions.

5. Don’t hide your spending. As dishonesty goes, hiding a shopping spree from your partner isn’t on the same scale as infidelity. But the subterfuge might fall on the same spectrum.

If you find yourself making secret purchases, it’s time to go back to step one – communicate openly and honestly about your finances, find ways to compromise and, if you can’t settle disagreements yourselves, seek feedback from your financial arbiter.

6. Don’t micromanage your partner. Back to the control conundrum: Nothing corrodes a relationship quite like an eagle-eyed partner scrutinizing every grocery bill or latte stop.

  • If you’re saddled with bad debt and you need to pay down high-interest credit cards, then while micromanaging may seem appropriate, it is unlikely to work.
    • Instead, work together to evaluate expenses across the household.
      • Recommit to a plan.
      • Focus only on defining success within the near-term.
      • Once that success is defined, give each person the independence they deserve.
  • If your spending and savings are on track, as outlined in my plans, don’t nitpick over a spa treatment or a round of golf.

Too often people spend a lot of time and energy on the little stuff, and not enough time on the big stuff. The fact is that as long as you get a few of the big boulders right, the rest isn't nearly as important.

Do work closely together on the big decisions. Make sure as a couple you don't make decisions that sacrifice your freedom, such as buying things that are more expensive than you can afford.

The power of a financial plan

Any time you feel financial stress in your relationship is a sign it is time to update your financial plan. A financial plan facilitates communication and compromise. It also helps you prioritize.

Your financial life together is a journey, not a destination. Don't expect to be at your long-term goals now. Instead, identify your goals, update them regularly, and work to consistently make meaningful progress toward those goals.

It is reasonable expectation to agree to a plan, to commit to a plan, and to be accountable to progress. By planning together you can achieve balance, success and harmony in your relationship.


See related article:
The 4 Times a Financial Plan Can Save Your Relationship


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