Money and partnership are closely intertwined. Don’t believe us?
Then, let’s look at some research: did you know that wealth and money management impact how successful someone will be at dating? Or that a research study found when in a committed relationship, both women and men earned more and were more financially sound? Or that, on the flip side, “money issues” is the third leading cause of divorce — behind “basic incompatibility” and “infidelity”? And finally, that a survey found that people find discussing politics or religion easier than talking about personal finance?
Do you need more convincing?
While things might seem perfect in the honeymoon period, you’ll very rarely find a partner who has the exact same attitude as you when it comes to money. Money tensions almost inevitably arise at some point. And so, as with everything in a relationship, things are about shared goals, communication, and good old planning.
The multi-layered money conversation:
Before speaking about money, it is worth understanding that there are multiple layers to any money conversation. Firstly, there are the numbers and the mechanisms by which to manage money. Secondly, there’s the emotional dynamic which is often the more complex and touches on deep-routed beliefs and values. These might relate to generosity, power or inequality.
It’s this second layer that typically needs to be addressed before you can work out the mechanisms to deal with the numbers. It’s also the harder one to talk about.
With this in mind, let’s go through some of the big money points you might want to discuss with your partner.
Know what base you’re working from and establish shared goals:
Be open about your own financial situation and values with your partner. Don’t hide things like debt from them, especially if you’re committing for the long-term.
Then create a vision of your future together – answer big questions like: Do you want to get married? Do you want family? A second home? Early retirement? Then translate these into shared financial goals.
Consider and align on the next level of detail on each aspect of your vision, such as what kind of wedding do you want? How many children you want? How are you expecting yours and your partners roles to evolve in the family? How many houses and where? What kind of retirement?
Aligning your aspirations helps you work towards a common set of goals. Getting into the detail also allows you to start getting a sense of the second, more emotional and value-based layer of money decisions.
Key here is that both partners are inputting into the goals, and both feel they have an equal voice.
Budget and save as a team:
Once you have your goals, things get real. Creating a budget together is a powerful tool for joint financial success. Sit down as a couple and outline your income, expenses, and savings targets. Identify areas where you could adjust to meet your financial goals.
There are different mechanisms to budget and save for the future together; the key ones are:
Share everything exactly down the middle:
Whatever you and your partner earn, you share costs exactly. This means you set up a joint account and joint savings / investment accounts alongside your individual bank accounts. Each partner pays in exactly the same amount every month into the joint account. For instance, if you live together and your shared expenses for rent, utilities and childcare and food are £4,500, you’ll both pay in £2,250.
The same applies to longer-term goals, like saving for a house deposit. If your monthly goal is to save £3,000, then each partner would pay £1,500.
Share everything in proportion to your earnings:
In this instance, joint expenses are covered in proportion to what you earn. So, if you earn twice as much as your partner, you will pay double into the joint expenses account. Using our previous example of £4,500, one person pays £3,000 and the other pays £1,500.
Combine everything:
Here you share all bank accounts. You have a joint account into which all income goes and from which all expenses are paid. And for savings and investment accounts you also set these up jointly.
Combine and provide flexibility through an allowance:
Here, all monies are combined in a joint account and each partner has an allowance that they receive either into a joint account or onto a pre-paid debit card. So joint expenses are equally covered, and each partner retains some flexibility to spend on whatever they like.
It is also worth saying that couples can choose to mix and match different mechanisms for budgets and savings goals; so, you might share the monthly budget exactly and the higher earner puts more savings into the savings account for the house.
Regardless of which mechanism you choose review both your expenses and how you have set things up regularly and make necessary revisions. By budgeting as a team, you'll keep your finances on track and avoid unnecessary stress.
Every couple is different:
Fortunately, or unfortunately, there is no perfect mechanism to managing money as a couple. So, you get to define and refine it together. Think of it as something you can tackle together and get better at over time.
Things change over time:
Life changes. Goals change. Careers take off, kids are born, homes need refurbishing, we age. This means you and your partner need to revisit the goal setting again and again and check-in that you are still aligned on your life goals.
The hard part about these conversations is that over time, the money dynamic has changed and where both partners started their relationship earning the same, one partner might now be earning more than that other. This shift in the money dynamic, often influences the perceived power dynamic when it comes to life and financial goals and decisions on spending.
In these instances, it is helpful to speak to a coach to guide one or both partners into having a productive conversation about money.
Conclusion
Talking about money is hard. It remains a societal taboo. But, the key to any successful relationship is communication, and money is no exception. Make it a priority to have regular, open and honest conversations about your financial expectations, values, and goals.
Remember also that each money conversation is multi-layered: the first is about the money, the second is about the underlying emotions, values and principles.
It’s also never too late to start this conversation with a partner. And if you need help, book a session with Aila to get the help you deserve.
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