Conflict Resolution Files – Finances

Below is one of the articles in a series on conflict resolution geared towards couples. Each one is stand alone and can be read in any order but consider reading the others in the series for a well-rounded approach to conflict resolution.

I’ve heard it said in any dyad there is a spender and a saver. For us, my late husband was most definitely the spender. He loved his morning Starbucks coffee, grabbing Del Taco for lunch, and buying collectibles from other collectors. And me? Well, I was a reformed spender. I had learned a hard lesson when I was younger about racking up  credit card debt and mismanaging my funds. When I was about to marry John, I was only a few months away from being debt free.

He wasn’t. ☹

Since I wasn’t a true saver, I struggled with my own spending habits and discipline. We spent the better part of our 24 years of marriage negotiating our differences of approach to money management. At times it got heated. At times we were able to compromise. At times it felt like we were on the same page, working towards the same goals, and able to encourage each other to save and spend wisely.

For younger couples especially, there seems to be two main approaches to handling finances. One is to completely blend your accounts and share all funds together. The other is to keep funds separated and maybe have one joint account where bills are paid from. Below I outline these two approaches with the pros and cons of each. None of this is intended to provide financial advice, only to spark conversation. It’s recommended you seek counsel for your specific situation as needed.

TO BLEND OR NOT TO BLEND

Joint Accounts. We chose this option. It wasn’t immediate but we eventually opened up joint accounts. Because we were young and didn’t have much in the way of assets, this made the most sense to us. From a  philosophical standpoint, it felt like we were willing to trust each other if we blended our money. Even with this option, you can maintain a sense of financial agency if you agree to an allowance each person gets to spend as they please. For example, you can agree that each one can have $200 of personal fun money a month to use as they see fit. They don’t have to ask their partner’s input on how this money is spent and partners don’t critique spending habits of this amount.

Joint PROs: Ease of transfer in case of death, pooling money together increases income for both, full disclosure for each partner (no secrets) fosters trust, creates a sense of togetherness as a family unit, accessibility, accountability of use of funds.

Joint CONs: Potential for more arguments on how money is spent, increased need for communication to ensure no overdraft, one or both may feel controlled by other, lack of spending autonomy. Potential for resentments over spending habits.

Separate Accounts. Even with separate accounts, I’ve heard couples may opt for maintaining one joint account that each one funnels money into. They decide which bills are considered joint and transfer funds into the shared bank account to cover those. Examples of joint bills would be rent/mortgage or utilities. Others have told me they don’t have a joint account, only agree on who pays what bills. That individual is responsible to pay their share of the bills out of their own account.

Separate PROs: Each person keeps financial autonomy. They can negotiate what bills they consider “joint” vs. something that is specific to one of the individuals. For example, if one partner doesn’t watch TV and therefore wouldn’t want to pay for a service, they could make the point that the TV watcher needs to pay for that out of their own funds. Allows each person to maintain control over their own financial resources. Preserves line of inheritance if there is blended family.

Separate CONs: Lack of financial cohesion for couple. Potential for “secret” accounts hidden from partner that may foster mistrust. May set up a financial hierarchy creating a power differential. For example, one partner may feel financially inferior if the other makes more money and perceives money isn’t shared. Partners are “on their own” with financial obligations that could create more stress than if financial burdens are shared.

These are some thoughts to stimulate conversation when it comes to what the financial structure could look like for you and your significant other. While some couples are adept at discussing these possibilities, others make their own assumptions and run into roadblocks. These types of discussions are most appropriate when it’s obvious you see this relationship as long-term. Money discussion with a casual partner may be a sign of ulterior motives, so watch out.

Aside from what options to take for financial sharing, it’s also important to examine your own attitudes towards savings. If you struggle with financial discipline, be aware that blending finances will only increase your challenges. Most people don’t like others telling them how to manage their money, but relying on your own ideas if you haven’t figured it out is unwise. Taking a money management class can be a great way to gain insight without it coming from your partner.

EMERGENCY FUND & OPTIONS FOR SAVING MONEY

At various points in our marriage, we were able to get creative on how to save money. We attended a 3-month class on money management that was incredibly helpful since we both received information from an outside source. This particular class discussed a philosophical approach to money management that offered practical ideas. One helpful idea was the concept of an emergency fund. At the time, we had zero in savings and the class challenged us to save $1,000 as fast as we could. At the time, you may as well as asked us to save a million dollars! But somehow with the commitment to make the attempt we discovered we could scrape together that amount before the class ended. That amount eventually grew and we were very strict on not touching that fund unless we truly had an emergency. We defined an emergency to include things like an unexpected car repair or some other necessity. It did not include going out to dinner when we  were both too tired to cook!

Another option we pursued was a savings challenge we’d heard about online. It was a 52-week savings plan where each week you put away the dollar amount of the week of the year you were on. So for week one of the year, you put away $1; week two is $2; week three is $3 and so on. The idea was to start slow and build from there. By the time you get to the end of the year, you’re putting away over $40 a week. If you started in the middle of the year, you could either just start then as your week one or see if you could make up the shortfall. Since John and I were competitive, we each started a savings fund and competed with each other to see who kept up with it. By the time we got close to the end of the year, we both had quite a total. We pooled together our amounts and that became our vacation fund. As a reward, we used that money to go on a fun family trip. We were able to pay for our vacation in cash and not charge it to pay off later. That made the vacation more enjoyable since we knew we were going debt free!

In addition to saving for emergencies and vacation, we also practiced the joy of allocating money towards giving. When we became more disciplined with our finances, we were able to bless those less fortunate than us with a little help. In faith communities the concept of giving or tithing is common and urges people to see their money as a resource to be shared not horded. Selective giving increases a heart of generosity and does provide opportunity to invest in causes you believe in.

There are other ideas online for creative savings options and how to discipline yourself with money management. A quick search online will yield a plethora of resources to find ways that work best for you.

LEARN THE FINE ART OF NEGOTIATION

Whatever financial structure you decide to use for your relationship, make sure you fully discuss your thoughts, feelings and expectations. Do not agree to something that makes you feel uncomfortable. If you can’t come to an agreement, then that may just be a warning sign that this relationship isn’t compatible. Blending finances in any form is a big decision not to be entered into lightly. I wouldn’t recommend sharing bills of any kind too early in the relationship even if your motives are pure. For example, I’ve known friends sharing cell phone bills because they’ll get a break on the charges. But sharing a bill too soon before you really know someone’s character is taking a huge risk that could have disastrous effects down the line.

And while some people view budgeting as a killjoy, being financially responsible reduces stress and brings balance to your overall enjoyment of using money to access what you want. Those who don’t follow some kind of budget are just spending according to their whims and never achieving long-term goals. Unless you’re independently wealthy (in which case you wouldn’t be reading this article anyway), money doesn’t just magically appear. When you work hard for something and discipline yourself towards a financial goal, you gain confidence and self-respect. Using money wisely helps you live a more balanced life and reduces relational conflict.

If you need help starting the conversation regarding financial responsibility, Christine Lister is available to help get couples on the right track. Contact her for an appointment.