Financial wellness Article
MONEY AND LOVE
“Whilst the roses are red and violets are blue, money matters between two can very soon turn her (or him!) into a shrew.”
All couples fight about money at some point or another. To some extent this is normal, but if left unchecked, money tensions can fester, leading to relationship breakdown and even divorce.
If you are sharing your life with someone, you need to have a common understanding and strategy when it comes to your finances. This can be challenging as you and your partner may have completely different attitudes towards money: one of you might like putting away every cent, whereas the other might be quite extravagant. One of may avoid debt at all costs, while the other may have accumulated heaps of it.
You might also have very different priorities. So for example, one of you sees buying the latest gadget as money well-spent, while the other would rather spend that money on experiences together, like a holiday away. This can lead to petty arguments and disagreements, which build resentment over time.
One partner earning considerably more than the other is another common area of tension. It can lead to an imbalance in the relationship if the higher salary equates to more decision-making power. It can also place pressure on the other person to ‘keep up’ with a certain lifestyle that they can’t really afford.
You might also have difference aptitudes when it comes to money. So one of you might be more financially-minded or more educated when it comes to money. This person often naturally assumes the role of taking care of the finances, unintentionally leaving the other person unempowered and ultimately vulnerable.
The good news is that there are positive and proactive steps that you can take together to avoid some of these common relationship pitfalls:
Share some expenses, not all
Accept that you’re never going to agree on all items of expenditure and that this is normal. After all, priorities are highly personal, reflecting what is important to you as an individual.
One way around this is to think about your money in terms of “Yours, Mine and Ours”. The “Yours” and “Mine” means that each partner retains a degree of financial independence, both practically and psychologically. So each person has his/her own separate bank account and own savings account. The “Ours” represents a pooled account for shared expenses, such as the running costs of a household.
Each month, each person first puts a pre-agreed amount into the pooled account. This money is then used to settle all shared or joint expenses, such as groceries, rent, school fees, utilities and so on. Anything left over is for each person to spend and/or save as they choose.
You don’t each have to put the same amount into “Ours” each month. In fact, if you earn quite different amounts, it is fairer to contribute in proportion to your income. If you haven’t yet drawn up a household budget, now would be a good time. This will help you to work out what sort of lifestyle you can jointly afford as a couple.
This approach can be facilitated through a joint account, which makes paying for shared expenses easier. Unfortunately, in South Africa, most banks do not offer joint accounts as such. However, you can open an account in one of your names and authorise the other to operate that account. This account should then be used purely for monthly transactional purposes and no savings or surplus cash should be kept in this account.
Some of the advantages of the “Yours, Mine, Ours” approach are as follows:
- You are each paying what you can afford towards the household;
- It facilitates the easy settlement of monthly household bills;
- It allows for different priorities and approaches to money and spending; and
- You remain directly in control of your own savings and investments.
The disadvantages could include higher bank fees.
Talk to each other
Often a simple lack of communication is to blame for money misery in a relationship. In some ways, it’s understandable, as it’s not always easy to talk about money! But not talking about it will only lead to misunderstandings, resentments and more problems. For example, often each partner doesn’t even realise how much the other is spending on shared expenses, with both secretly feeling hard-done-by.
To avoid this, you need to communicate and agree on a clear plan from the word go. If you are not using the “Yours, Mine, Ours” approach, you need to determine who will be responsible for paying which expenses. The worst type of scenario is where both of you fall into paying for certain things without discussing it. This can lead to unfair situations, such as one partner paying off a mortagage (in their name) while the other person pays for the remaining monthly expenses. This effectivaly means that one party is building up an asset in their name over time, while the other party is left with nothing, should the couple split.
Set aside time on a regular basis to talk about money and try to be open and honest. What works well for some couples is setting joint financial goals, like saving for a holiday together, or thinking more long-term, such as planning for your retirement together.
Take responsibility for your own finances. Even if your partner is a financial guru, make it your aim to educate yourself about basic money management.
If your partner’s spending habits worry you, it would be better to get married out of community of property, if you still have the option (see our article titled “Antenuptial Contracts: Insurance for a Happily Ever After”). Don’t think you can change your partner…attitudes towards money can be deep-seated and difficult to shift.
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