There’s nothing like spending habits to fuel an argument.
In fact, money consistently rates among the top reasons couples fight.
That and taking out the garbage.
Are you nodding at this?
Garbage duty certainly causes tension in our household.
But back to money.
Money troubles place a huge amount of stress on any relationship. So does differing money personalities unless you have strategies in place to reconcile those differences.
And that’s the good news. There are 3 effective strategies you can put in place to reconcile your money troubles and create marital harmony.
(I have yet to find a solution to garbage duty though.)
The 3 STRATEGIES THAT ELIMINATE MONEY ARGUMENTS
It is possible manage the household finances as a team and never argue about money with the three Cs:
Below are the specific action steps to improve communication, increase co-operation and navigate compromise fairly.
1. COMMUNICATION – 2 ESSENTIAL QUESTIONS TO ASK YOUR PARTNER
When I was in my 20s, my boyfriend dumped me.
And like a rock, I hit the ground hard.
This is what he said:
It’s like we’re in a row boat together and I’m rowing one way and you’re rowing the other and neither of us are getting anywhere.
Do you feel that way sometimes? That you’re rowing and rowing but your dreams are still a distant beacon on a far away shore.
Wouldn’t it be easier to reach if the two of you were rowing together?
The problem is, many of us are rowing out of sync with our partner and we don’t even realise it.
When a friend of mine enrolled her children into the local public school, she was shocked that her husband wanted to enrol them in the private school instead.
She assumed that because he had, like her, attended a public school, he would be on the same page as to where their kids would attend. She had no idea he had a different opinion and that he felt so strongly about it.
And I can relate. When I’ve sat down and had a focused money talk with my husband, I’ve been surprised how different my assumptions of what his priorities are and what his priorities actually are.
So to clear the air, eliminate assumptions and start rowing together you need to ask each other two questions:
- What are your spending priorities?
- What are your financial goals?
1. WHAT ARE YOUR SPENDING PRIORITIES?
What’s important to you? New v used? Big house or small? Vacations or staycations? Childcare or stay at home parent? What are your childhood money lessons? Is looking good important to you? Are you a spender or saver? What are your money values? Do you value security? Do you value charity? Do you bequest money in your will or spend it all in retirement?
As you talk about your spending priorities there’s four important things to remember:
- Be honest and don’t hide your spending habits. Trust is essential in a relationship.
- There are no right and wrong answers. We are who we are.
- Your spending priorities ARE going to be different. You are individuals with different backgrounds, goals and desires. I’m addicted to reading and my husband is a gamer. We’re different and those differences influence our spending patterns.
- You don’t have to leave the boat! Our differences can be our greatest strengths if we use them in a partnership with one and other. A saver can help a spender find financial security. A spender can help a saver not hoard so much and live a little. When we work together, we can find a balance that we might not find on our own.
2. WHAT ARE YOUR FINANCIAL GOALS
Our spending priorities guide our day to day spending while our financial goals are the big dreams we want to work towards.
Have you thought about your own financial goals? Do you know your partner’s?
Now’s the time to find out.
Sit down when the kids are in bed, turn off the telly and talk about what goals you have for your money this year, over the next few years and in the long term. If you’ve never done this before, you will get to know each other on a deeper level and the answers might surprise you.
What if your financial goals are different? Does that mean you should just chuck in the towel?
This is where you say, I’ll help you reach your goals and you can help me reach mine.
Two rowers are always better than one.
Which brings us to…
2. CO-OPERATION – CREATE A WINNING GAME PLAN
There’s 2 minutes left on the scoreboard and your team is down.
The coach calls a time out and the team forms a hustle.
He outlines the game plan.
The buzzer blows and the crowd holds it’s breath. This could go two ways.
The team can execute the game plan with finesse, score the winning point and go down in history as the victors.
Or a player can go rogue. The other team members are screaming pass the ball, but Rogue takes the shot.
You and your partner are Team Couple and your budget is your game plan.
It’s your winning strategy.
But in this game, you’re not out to beat the opposition, you’re out to achieve your financial goals.
Your game plan is where you work out ahead of time how much money you need to allocate for bills, how much you need for debt repayments, what you need to do to boost your financial resilience and protect yourself against personal SHTF scenarios and how you’re going to reach those financial goals.
When you’ve got a game plan in place and you’re following the plan, money management becomes really easy and stress levels go way down.
To recap: once you’ve discussed your financial goals, take the time to work out a game plan for your money. How much do you need to save for expenses? What’s your debt plan? What’s your savings plan to reach your financial goals?
Then go ahead and put that game plan into action.
3. COMPROMISE – THIS ONE PROVEN STRATEGY CAN MAKE ALL THE DIFFERENCE
You spent HOW MUCH on WHAT?
While it’s important to work as a team when managing the household finances, it’s also important to keep your independence.
As we’ve seen, you both have different spending priorities. There needs to be freedom to pursue those individual spending priorities within the framework of financial co-operation.
Having to justify every single dollar you spend is only going to lead to stress and arguments.
So what’s the solution?
As couples all over the world have found, the best way to balance managing joint finances with independent spending is to have an individual splurge fund.
In practical terms, this means giving yourselves a fun money allowance – an allocated amount each pay that’s yours to spend however you choose without having to justify it or feel guilty about it.
Here’s how to make it work.
First you need to have your money plan sorted. How much you can allocate towards a splurge fund will depend on how much is left over after you’ve covered the bills and essential expenses.
What if you’re trying to pay off debt or money is really tight? Should you skip the splurge fund? Wouldn’t it be better to put that money towards savings or debt or bills?
It’s best if you still give yourself some fun money, even if it’s just a couple of dollars, because it will help you stick to your money plan in the long run.
There have been times when we could only give ourselves $5 a week fun money. That’s about a cup of coffee and not much else.
But being able to treat yourself without guilt is super important for your happiness (even if it’s only a little treat) and it helps keep the household kitty intact.
Once you have your money plan in place and you’ve worked out how much money you’ve got left over to allocate to your splurge fund, divide it EQUALLY between the two of you (or if you have children, they might get a share as well).
The whole I earn more than you so I deserve a bigger cut does not lead to happily ever after. You’re a partnership, so an equal splurge fund is fair.
The last step is to agree ahead of time what comes out of the household budget and what should be covered by the splurge fund. Is clothing covered by the household budget? Work lunches? Memberships? Write down what you agree on so there’s no confusion later on.
And of course, there’s always room for renegotiation down the track.
I know this sounds a bit formal and, you know, isn’t an allowance for kids? but it’s a super effective way to eliminate money arguments and navigate joint financial management.
Money does not have to be a source of arguments in a relationship.
With a solid money plan, an appreciation of where each partner is coming from and a guilt-free personal spending allowance, you can eliminate the common reasons why couples fight about money and focus on building a better financial future.
A future where the kids take out the garbage.
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Melissa Goodwin is a writer and the creator of Frugal and Thriving who has a passion for living frugally and encouraging people to thrive on any budget. The blog is nine years old and is almost like her eldest baby. Prior to being a blogger and mum (but not a mummy blogger), she worked as an accountant doing other people’s budgets, books and tax.