When you consider combining your finances, it is important to make sure you are ready for the issues that can come with couple finance. There are a number of pitfalls that can trip up even the best relationships. However, some pitfalls are a little more serious than others. Because there are so many emotions involved in a relationship, and because money inspires strong emotions, it is really isn’t a surprise that finances can become a real problem.
Issues with Shared Finances
While you need to communicate regularly, and make compromises in any situation, there are some instances that can be more devastating than others. Here are 3 pitfalls of couple finance that you need to avoid:
1. Not Setting Shared Financial Goals
At the root of many fights about money is a lack of shared financial goals. When you don’t have a shared direction, it can be very difficult not to clash on money matters. My husband and I found this out the hard way a few years ago. I was aggressively paying off the credit card debt we had accumulated during our Master’s programs and from moving across the country twice in two years. (Not to mention some very stupid spending choices during our first years of marriage.) However, my husband wanted to buy a house. He was dismayed that I had put so much toward debt reduction — without putting money aside for a down payment. Two days of recriminations, finger pointing, and unhappiness followed.
It is important to talk about what you want to do with your money together as a couple. Have shared goals, and create a timeline for reaching those shared financial goals. Have regular money meetings (every week, month or quarter) to tweak your plan, or to simply touch base. You want to make sure you are both working toward the same things.
2. Cutting One Partner Out of the Decisions
It’s very tempting when one partner stays home to care for kids and home, or works only part-time, to adopt the attitude that the person that makes the money should make the decisions. This point of view can quickly poison a relationship. After all, if you decide together that you want one partner to stay home, it isn’t fair to then penalize him or her for fulfilling an assigned role. Remember that your relationship is a partnership. What the stay at home partner does for the family is very valuable — even if society doesn’t recognize the contributions with a regular paycheck. Another variation is that the person “in charge” of the bills makes the decisions without consulting his or her partner. Sometimes, a stay at home partner has complete control of the situation, making budget decisions unilaterally as they serve as the household’s manager.
Make sure that both partners have equal part in decision making. While you both have different responsibilities, how your life together functions overall depends on you both making financial decisions together.
3. Spending Out of Revenge
Another pitfall in couple finance is revenge spending. One partner might buy something he or she likes, while the other partner feels as those his or her spending wishes are discarded. This can lead to feelings of resentment. In order to feel as though things are equal, the partner that feels slighted might go on a spending spree. This can be especially detrimental if both partners resort to revenge spending. A bad situation can quickly get out of control and you find yourself with a large marriage money problem.
Also, avoid the pitfall of believing that your spending must be exactly equal. My husband likes video games, and I like books. Video games are often more expensive than books. While my husband tries to find good deals or waits until the price drops before buying a game, chances are that his game will cost more than my book. Does that mean I have to spend the exact amount that he does, buying a bunch of books to “make up for” his video game? I don’t think so. We each get what we want, and we are both happy. (Of course, if there were a larger discrepancy in price, there might be problems.)
What other pitfalls do you think could ruin a relationship?
Photo by tim caynes.