With tax season right around the corner, money is on the mind for most wage-earning adults. Whether you are living with your special someone or you have been married for years, money management issues are sure to rise in any committed relationship. On one end of the spectrum, some couples choose to pool all of their money, while others keep separate accounts and share expenses. Authors Carolyn Washburn and Darlene Christensen of Utah State University found that financial harmony is critical for validation, freedom, power, respect, security, and happiness in the relationship”. Couples must realize the great importance that managing their money has on their relationship and learn to define guidelines .
Here are 3 tips for setting some realistic finance-related expectations, that might just spare your relationship a few fights:
Rule #1: Relationships are not fair or equal.
Couples often get caught up in the “he who pays the piper calls the tune” mentality. It is important that they not focus on who brings home what dollar amount and instead, look at at the bigger picture of how each person contributes to the relationship and the family. It is time to really sit down and discuss your values and priorities.
Though you both may put in a 40+ hour workweek, you might bring home different paychecks. This does not mean one person is worth more in the relationship, and has more decision making power or say about things as a result of the bigger paycheck. . When it comes to finances, treat it much like a business negotiation in which you collaborate and set terms that you both agree are fair and acceptable.
What if only one of you works? A stay-at-home dad or mom may take care of everything from home needs to childcare services during the day, though he or she obviously does not get paid for these tasks. Do the math for a minute…How much would child-care cost if you paid someone else to drive the kids to-and-from school, helped with homework and watched them during the day if both partners worked? Then, add up how much time one or both of you spend on the simple daily survival needs and requirements, such as household chores and changing the oil in the cars? These hours equal work hours, as well, and must be taken into consideration when you asses the financial value of having one partner stay-at-home. Therefore, it is important that both partners recognize the value of one another and show respect with regards to money-related decision making, accordingly.
Rule #2: MY spending, YOUR spending, OUR spending.
According to research conducted by Fenaba R. Addo and Sharon Sassler of Cornell University, having separate accounts can be beneficial to couples, even after marriage, because it allows for collaboration, autonomy, independence and some personal responsibility . In this case, one way to set your finances up is to open three checking accounts and two savings account:
Checking Account #1: Family Essentials (rent, utilities, groceries, bills, childcare expenses, etc.)
Checking Account #2: Partner 1’s Spending/Lifestyle
Checking Account #3: Partner 2’s Spending/Lifestyle
Savings Account #1: Emergency Fund
Savings Account #2: Travel, Holidays, and Collective Family Goals (ie. Getting a boat)
When paid, the total monthly income is added up between both partners, enough is placed in Checking Account #1 to cover essentials and into each Savings Account, as the couple has collectively decided to contribute. Whatever remains is split 50/50 into Checking Accounts #2 and #3. By doing this, there are no arguments over how the other person chooses to spend their personal “allowance,” so to speak. Any other arrangements are totally okay, too, as long as you both agree and feel good about them.
Rule #3: Ultimately, you are responsible for your own financial security.
If something happened to your partner, would you be financially secure? Would you be able to sustain a living without having to ask for help? If not, it is time to really take a look at your own abilities, budget, savings and lifestyle. Remember, the more dependent you are on your partner, the more pressure you place on the relationship and the less flexibility you have with your choices. Have a backup plan.
Although you may have chosen not to work or have not worked for many years, it is important to contemplate how you would make money if you were in a situation where you had to. It is prudent to be prepared for life’s curve balls. One suggestion, is ready yourself for a career by pursuing a certificate/degree or keeping up your skills (e.g. technologically) so you are ready to work if you need to. This way, you will know that you can take take care of yourself, and this confidence will enable you to show up in the relationship as a fully embodied, entitled person. Without this security, you may feel more beholden and less equal.
Finances are a tough subject for couples to tackle and often result in power struggles and conflict. It is one area where it might be wise to have lots of discussions and talk about before getting serious, and maintain an ongoing conversation throughout the relationship.