Whether you are newly merging finances with your sweetie, or have been married for many years, money disagreements are bound to arise. It’s okay to disagree about money, but the important thing is to communicate and come to a compromise without getting nasty or becoming bitter about it.
To that end, here are the two most important commitments couples can make to each other about money.
Coincidentally, this is critical for all aspects of your relationship. But, money can be the most telling. If you are hiding spending from your partner, it’s likely the spending is funding something else your partner wouldn’t approve of. Examples are gambling, a mistress (or gigolo), addiction, excessive spending on shoes/in-app purchases/TVs, or donating to Donald Trump’s re-election campaign.
There are couples who carve out their own spending money from the household budget where each person can spend on whatever and the other person has no say about it. That’s okay as long as the big goals are still being met (see next paragraph). But it’s not okay if you are using your spending money for something that’s destructive to the relationship as a whole.
Come to an agreement about the big goals.
If you have thoughtful, honest discussions about big money goals, that means you are having thoughtful, honest discussions about big life goals. Congratulations, you are in an adult relationship.
A common understanding of how much each partner will contribute to longer term goals will cut down on petty arguments along the way. The old adage of everyone rowing in the same direction comes to mind. What are the big goals to discuss and agree to fund?
- Retirement – When do you want to retire? What lifestyle do you envision?
- College – Do you believe in paying your child’s way through college (if it’s possible) or do you believe the kid should have some skin in the game and contribute?
- Where to live – Big house or small condo? Move every 5 years or stay in one place? Try to pay off a mortgage early or let it run its course?
- Gifting – Will you need to support a family member in the future? How much do you want to give to charity each year?
- Vacations – 5-star hotels or hostels? First class airfare or road trips? Who will contribute what amounts to the vacation fund?
There are other goals, but if you have a frank discussion and plan for those big items, the smaller stuff should fall into place without too much contention. And remember, fair doesn’t always mean equal. In other words, if one person earns 50% more than the other, the lower earner shouldn’t have to (or can’t) pay for the 5-star hotel vacation equally.
Want to learn more about how to avoid these arguments? Check out my online course on Combining Your Finances!