Money is a point of contention for many couples. It’s notorious for causing conflicts and ruining relationships. The problem? “Money is very central to people’s identity,” according to Jonathan Rich, Ph.D, psychologist and author of The Couple’s Guide to Love & Money.
It can represent everything from status to success to even self-worth, he said. And partners have the power to influence each other’s finances, which can trigger arguments and anger, he added.
It also can reveal underlying problems between spouses. “If a couple lacks trust and has difficulty working together, these conflicts always play out financially,” Rich said.
To make matters worse, our shaky economy can create or perpetuate stress. “With the current economy, financial stress is a huge issue and it can easily divide a couple and lead to blame,” he said.
Conflicting Attitudes About Money
Couples clash when partners have different attitudes about money. Rich has discovered three dimensions:
- “Lifestyle (frugal vs. lavish)
- Dependence (depend on other for money vs. self-sufficient and support others)
- Risk-taking (take risks vs. play it safe)”
The biggest culprit of conflict is lifestyle because of the issues around spending. Frugal partners, which Rich calls “Spartans,” are more interested in penny-pinching in the present and saving for the future. “Monarchs,” partners that prefer a lavish lifestyle, don’t worry about the long term. They might use credit cards more often and incur debt.
Also, partners might take each other’s financial styles personally. According to Rich, Monarchs might think, “If he (or she) really loved me, he would spend more money [and] buy me nice things.” Spartans might think, “If she (or he) really loved me, she would be saving money and helping us to build a future together.”
Managing Money More Effectively
Rich recommended these three tips for managing money effectively as a couple.
1. Identify common goals as a couple.
“Meeting on a regular basis to look at short- and long-term goals can help to sort out priorities and find commonalities,” Rich said. This lets you know what you’re working toward and gives you the motivation to save your money, he said.
“The Monarch and Spartan might both agree that they want to buy a house in the future—but ‘crunching the numbers’ will show the Monarch that it won’t be possible unless monthly expenses are cut enough to save a down payment.”
2. Track your expenses.
Rich stressed the importance of recording your income and expenses. For instance, you might use financial software to keep track. “You might find that a few simple changes can put you over the line from always scrambling and playing ‘catch-up’ to being able to get ahead each month,” Rich said.
3. Work together.
Remember what you love and respect about your partner, and try to appreciate their wisdom, Rich said. “Two people working together well can be a formidable force – together you can come to solutions that you may never have found alone,” he said.
Having Separate Bank Accounts
Today, it’s not uncommon for couples to have separate bank accounts. Rich is frequently asked whether separate accounts are even a good idea. He believes that separate accounts may work for some couples.
But there are several important considerations. If one spouse makes a lot more money, their spending allowance still shouldn’t increase. “It’s a joint venture, and so you need to think of yourselves as contributing and benefiting equally,” Rich said. “Homemaking, parenting, and emotional support are also valuable.”
Also, get together periodically to discuss how this is working. “When funds are short, there might not be room for discretionary money anymore or decisions about who pays what might need to be changed,” Rich said.