Photo (cc) by andrewmalone
Like careers, kids and criminal records, money is one of those topics that’s supposed to be discussed well before we say “I do” and head down the aisle. But for many, the topic lingers on the margins as one of the most taboo subjects we ever dare broach with our betrothed. It’s as if net worth, spending habits and credit scores are too personal to discuss openly — even in the most personal of relationships.
So what happens post-honeymoon when you wake up and discover that the dutiful saver your mother raised just married a wild-eyed spender with a nervous twitch and a dozen credit cards? Is there any chance that the thrifty and the “spend-thrifty” can make it work?
I think so. Whether you’re just dating, newly married, or have been together so long you have matching recliners, there’s always hope for the money-mismatched.
Making it work
If you and your significant other speak different languages when it comes to saving and spending, it’s time to start translating — quickly. According to a 2012 survey by the American Institute of CPAs, more than 27 percent of people who are married or living with a partner cited money as the topic most likely to cause an argument. That makes it the most volatile topic for couples — far more sensitive than children, career or friends.
But constructive communication can go miles in resolving nearly any relationship conflict. Good communication is the first step in understanding where the other person is coming from and how you can both, over time, meet in the middle. Without clear, direct, honest and ongoing dialogue, differences in money management styles will erode trust and sour even the sweetest unions.
If money has made your partnership feel more like a battleground, here’s how to clear the air and begin working together:
Understand your distinct histories
Everyone approaches saving and spending differently. And often, our relationship with money is established very early in life. Explore how money was handled in your homes as children. Was there always enough cash, or did your family struggle to make ends meet? How do you think those early experiences set the tone for your saving and spending style now?
Understanding the history each person brings to the table can help temper egos and reduce anger.
Set goals together
Whether you’re a saver or spender, financial success is driven by clear goal-setting. Sit down with your partner and discuss what your financial priorities are and how those priorities translate into specific short-term and long-term goals. As a couple, define goals around things like:
- Retirement. When do you plan on retiring? How much will you need in savings and investments by your retirement target date?
- Real estate. Do you want to buy a home or move into a larger home? Would you like to have rental income down the road?
- Debt. What’s your comfort level with debt? What debts do you have and which one carries the highest interest rate? When would you like to be completely debt-free?
- Saving and investments. How much of your income would you like to save, or what target amount would you like to have saved 10, 15 or 20 years from now? Do you plan on paying for all or part of your children’s education? What investment risk level are you comfortable with?
Work to find a middle ground if your goals and your spouse’s goals are significantly different. The object is to reach consensus so that each person feels invested in the process and the outcome. Motivate and encourage each other by keeping the goals top-of-mind and doing some constructive daydreaming along the way.
Establish an approval limit
Many couples with different spending philosophies set an approval limit for each other. Purchases below a certain threshold, say $100, don’t need to be discussed or agreed upon beforehand. But any single expenditure that exceeds the limit needs to be approved. It may not sound like the most romantic approach, but establishing clear boundaries for spending helps avoid the day-to-day frustrations that can build into more serious conflicts.
Create separate “mad money” accounts
If you can afford it, consider setting up individual accounts that you and your partner can fund independently. After each person contributes an equitable percentage to household expenses and joint savings, the rest can be deposited in the “mad money” accounts and spent on whatever little luxuries or hobbies each person chooses. This approach is especially helpful for couples who connect later in life and are used to managing their household finances solo. Mad money accounts preserve a bit of saving and spending autonomy and take some of the pressure off of conforming to new spending and saving expectations.
Check in regularly and track progress
Reserving time weekly or monthly to check in with one another is essential to the success of any effort. Are you and your partner on track with your savings goals? Did someone dodge the agreed-upon approval limit? Is there a new or unexpected expense that needs to be tackled together? Keep the tone positive and constructive, bask in your successes together and, when there are challenges, look for solutions that empower each person.
No doubt savers and spenders have their work cut out for them when they pair up. But few things in life are impossible. With a little patience, a lot of communication, and some creative strategizing, compromises can be made and even the most profound differences ironed out.
Just remember, information is power. Make saving and spending philosophies part of what you discover about each other long before the weddings bells ring.
Does your partner have a saving and spending style that’s in conflict with your own? How have you made it work? Let us know on our Facebook page.