money and relationshipsAs we approach Valentine’s Day, millions of Americans will celebrate with special dinners, cards, flowers, chocolates, and “I love you’s.” Whether you’re a fan of Hallmark Holidays or not (I’m not), hopefully, we can all celebrate love, partnership, marriage, and companionship! And now is a good time to examine the money and relationships — and how to improve both!

Unfortunately, many couples won’t be celebrating their relationship this week because it was torn apart by conflicts over money. “Money fights predict divorce rates,” says the New York Times. 80 percent of couples fight about money, says a 2014 Money Magazine survey. Research from American Express revealed that 91 percent of couples avoid talking about finances, and only 43 percent discussed money before marriage!

But not all couples fight about money. The happiest couples have learned to communicate about money and manage it positive ways. The ten points below will give you some tools and advice to increase the chances that your relationship will be a happy one!

#1: Schedule talk time.

Money is not a topic that gets easier the longer you ignore it. Even if your finances are in excellent shape, it doesn’t benefit one partner to be “out of the loop” if the other is managing the household finances and investments. (Actually, this is a recipe for disaster if the household finance manager dies or becomes disabled, or the couple gets divorced.)

Make money matters a priority and schedule regular talk time. Put it on your calendar at least once a month, to make sure you aren’t avoiding a very important topic! Research suggests that couples who talk about money most often are much more likely to describe themselves as “extremely happy,” according to a Love & Money study by TD Bank.

So you’ve scheduled the time. What do you talk about? Here are some ideas:

  • Your current financial reality: earnings, expenses, debt and cash flow.
  • Your financial hopes, goals, concerns and questions.
  • What are your financial beliefs and philosophy?
  • Spending and saving values and priorities—have honest conversations about whether or not your financial behavior match your values and priorities, and if not, how you can bring them into alignment.
  • Investments and insurance—where are you putting your money and why?
  • Family of origin financial history—what’s yours and how would you like your family to be similar or different?
  • What you learned about money from mentors and others (or what you want to learn).
  • Consider reading and discussing books, articles, or listening to podcasts together on money, such as The Prosperity Podcast.

Last but not least, don’t neglect the four things that, according to a 2016 Ameriprise study on money and couples, accounted for the majority of financial disagreements:

  • Major purchases (34% of couples clash about this at least once a month)
  • Decisions about finance and children (24% of respondents with kids disagree on this),
  • A partner’s spending habits (23% argue about this), and
  • Important investment decisions (14% of couples disagree about this).

#2: Have regular financial check-ups and check-ins.

Talk is great, but make sure you’re not neglecting the numbers! Do a regularly scheduled review of your finances, in black and white. It’s important that you SEE a snapshot of your family’s financial picture. Whether you use Mint.com, Quicken, Quickbooks, Excel, or even simply bank statements, monitor where your money is going and what it is doing.

Depending on the complexity of your finances, this could happen monthly, quarterly, or (at the very least), once a year. If you have a bookkeeper or accountant, have them prepare regular statements and/or sit down with you. If there is a family business, look at monthly profit and loss statements. Monitor your investments at least quarterly. You can monitor most mortgages and life insurance policies annually.

It’s not necessary to go into great detail, but it IS important to get an accurate snapshot of your finances so both partners understand what’s happening with their money. Tools such as our Prosperity Profile (we’ll have an updated version coming soon) can help you see your financial summary on a single page, which can be helpful!

#3: Transparency and honesty are required.

When one partner is resistant to looking at financial facts and another resists revealing financial facts, it can be a huge warning sign. Just ask Barbara Stanny, whose father was the “R” in H & R Block. She grew up believing that making and managing money was “a man’s job,” and was advised by her father not to worry about money. That was fine with Barbara, until she found out her stock broker husband was a compulsive gambler who was gambling away her inheritance! After their divorce, he left the country and left her with tax bills for over a million dollars (and no money to pay them.)

Lying about money can have catastrophic financial consequences, and perhaps even worse, it breaks down trust in a relationship. It’s known as “financial infidelity,” and if you see signs of it in your relationship, don’t ignore them. You may need a good accountant AND a marriage counselor! Just as some relationships recover from infidelity, if trust can be rebuilt, relationships can survive financial infidelity.

#4: Understand your partner’s financial style.

If opposites attract, this can spell trouble when it comes to understanding how your partner deals with money! According to the Ameriprise study, 73% of individuals have money management styles that are different from their partner’s. Perhaps one admires the other’s prudent discipline in saving, and the other admires their loved one’s generosity. It’s all well and good until you merge your money!

A helpful tool is the money styles quiz you’ll find at MoneyHarmony.com. Are you a spender, hoarder, money monk or an amasser? Take the quiz separately before revealing your results. To dive in more deeply, read Money Harmony: A Road Map for Individuals and Couples, by Olivia Mellan and Sherry Christie. The online quiz is based on chapter 4, which gives more details about each of the money types.

#5: Use your partner’s strengths.

Not everyone has the same gifts and interests. One partner may be better with detailed bookkeeping, while the other can evaluate investment risk or negotiate a better deal on a car. One may be more entrepreneurial-minded, while the other may bring a steady, disciplined approach to the family finances. Oftentimes, one partner focuses on earning and the other on ways to save money. Both are valuable and needed!

Our relationship has benefitted from knowing each other’s Kolbe profiles, available at Kolbe.com. (Do you know your Kolbe scores? I’ve been trained in Kolbe and am happy to discuss this with clients!)

#6: Know your partner’s financial priorities.

They’re probably different from yours! This can make money and relationships a challenge. You can even have the same money style, but very different financial priorities.

Case in point: my husband Todd is a “foodie.” He has no food budget. While I can be perfectly happy guzzling a protein shake to fuel my body, my husband would be miserable if he couldn’t grill steaks on the barbeque or enjoy occasional nice dinners out. Meanwhile, I have no problems investing in myself and my business, spending sums that would make many people hesitate. (Fortunately, Todd supports me in this.)

Understand that there is no “right” or “wrong” answer; it’s all about understanding priorities. Hopefully, you can agree what is a “necessity” and what is a “want.” Then, once basic needs are covered, understand that their wants may be different from yours.

This next tip can help resolve different financial priorities:

#7: Have “his and hers” spending money.

T. Harv Eker advocates for couples to have equal amounts of “play money” that each partner can spend. Whatever amount of discretionary income is appropriate for your situation (perhaps your “fun money” totals 5 or 10% of your total spending plan), each partner should have the same amount to spend the same without having to “check” with the other. If one partner wants a high-end camera and the other partner would rather update their wardrobe, as long as there is adequate cash flow, you might as well both spend on the things YOU enjoy the most!

You might think, “But if I earn more, shouldn’t I be able to spend more?” However, this is a trap that can lead to power imbalances in a relationship. If one partner is raising kids, running the household, or getting a graduate degree while the other is the breadwinner, both need to be recognized for their essential roles. Evening out spending money is one way to do that. Consider separate accounts for personal expenses, as suggested in the LendEDU article, “Budgeting for Newlyweds.” And ideally, you can discuss larger joint purchases and decide together!

#8: Include children at age-appropriate levels.

Kids don’t need to know everything—but they do need to know it’s safe and normal to talk about money! When it comes to discussing money with kids, concepts can be more important than numbers. Discuss negotiating a raise—but not your salary. Discuss giving to charity as a percentage—not a number. Talk about inheritances, but don’t necessarily set them up to expect a dollar amount.

Also, look for ways to involve them with the family finances. Send them to the store with cash and a grocery list. When in college, don’t just pay their rent or car payment or dentist bill—give them money to pay it themselves. (And make sure they do!)

The conversation around money and relationships extends beyond you and your significant other. Raising kids who are financially responsible will help eliminate conflicts with your partner.

#9: Saving saves more than money; it saves families, too!

Financial stress makes both money and relationships harder. Many couples have conflicts because they have too much month at the end of the money! Some couples have conflicts because the partner making the investment decisions took risks that didn’t pay off. There are hundreds of things that can increase a family’s financial stress, and one sure cure to lower it: saving money.

Some of us have taken vows to love each other “through good times and bad… for richer or poorer.” But we all know that “for poorer” can be a difficult road, and financial stress is a challenge for relationships. When a couple has a healthy emergency fund, they can take an unexpected major expense, disruption in income or economic downturn in stride. When cash is low, anxiety can run high. So protect your relationship by saving regularly and protecting your money!

#10: Prepare each other for worst case scenarios.

My husband and I use high cash value whole life insurance for our emergency (and opportunity) fund because it disciplines us to save monthly, with flexibility when needed. Gains are locked in to weather economic storms or market crashes. It gives us money to capitalize on opportunities. And perhaps most importantly, permanent life insurance leaves each of us protected in worst-case scenarios.

Losing a partner (a child, a parent) is devastating, and when actions aren’t taken to protect the surviving partner from financial disruption on top of emotional losses, something critical is missing from the family’s financial strategy. Just because we promise to love each other “till death do us part” doesn’t mean we shouldn’t care what happens to the survivor when—sooner or later—death actually parts us.

And for some couples, parting doesn’t happen quickly. There may be a disability to contend with, long-term care needed or a terminal illness. There are whole life insurance riders that can help a couple prepare for ALL of these possibilities. For my husband and myself, it was a no-brainer to prepare ourselves with life insurance, especially as the money won’t be “lost” (as is the case with many long-term care plans) if care is not needed. (And of course, we like to think positively!)

Money and Relationships: The Bottom Line

How we handle our finances can be an expression of our love for each other. It can build trust, increase communication, help us become more disciplined, more understanding, and think long-term about our relationship. Stressed about money and not how to communicate about it? See it as the grand opportunity that it is!

Finally, get and take the advice of someone you trust to guide you through financial land mines. We are your Partners for Prosperity, and we are here to help! Whether it is an investment strategy that won’t leave you fretting about the market or life insurance policies that prepare you for both the good and the bad, we look forward to serving you. Contact us today.

Sources: In addition to links above, see MoneyHabitudes.com for more on the studies and statistics mentioned in this article.