In the spirit of Valentine’s Day, let’s talk about a relationship topic that’s less about roses and chocolates, and more about cents and sensibility: managing finances as a couple. Financial Planner Nicole Baker gives us the lowdown on how to navigate the less romantic, but equally important, aspect of love: money.
First off, the big question: “Is it really that important to make sure spouses or partners both be on the same page about their wants and goals?” Nicole responds with an emphatic “Absolutely!” She proceeded to give the example of planning a getaway with your person. “Imagine planning a week-long vacation with your partner to Bahamas, only to find they want to spend the trip on an Alaskan cruise. We can picture the facial expressions and feel the awkward silence now.” Nicole chuckles with the remark. She goes on to say when choosing to partner your life with another person, it’s incredibly important that you’re both working towards the same goal, in the same way that you want to be on the same vacation. If you find a partner who has a different destination than you, it does not mean you have to stop planning, but it is important to pause and find a compromise on what each of you wants. “While you may not get exactly what you want, you are both satisfied with where you intend to end up.”
Understanding your financial goals as a couple is just the start. But how do you put those goals into action in day-to-day life? “In your opinion, how should couples split financial duties or responsibilities?” Nicole compares it to dividing household chores. “If one’s a neat freak and the other’s not, it can cause tension,” she explains. It’s the same with money. A 2018 National Health Interview Survey revealed a significant link between financial concerns and psychological distress. While the study did note individuals who were married or cohabiting were less likely to face psychological distress than those who were separated, divorced, widowed, or had never married, doesn’t mean that differing attitudes toward finances can’t create similar stress. The one more sensitive to an unclean house may also clean the most, which might cause animosity. Similarly, if couples are not aligned in how their money is utilized, it might feel one-sided when it comes to who is saving or spending more.
Nicole’s advice? Have an open dialogue early on. Find what works for you both, whether it’s separate accounts for personal and shared expenses or separating bills between regular and variable ones. Remember, there’s no one-size-fits-all in love or finances. “The important thing is that you find what makes sense for the two of you and make sure you continue working towards that and communicating about any concerns or feelings of imbalance.” She illustrated.
For established couples, aligning financial habits and responsibilities is key to maintaining harmony, but what about those just starting their journey together? “What should be the main focus when creating a balance sheet and organizing finances as newlyweds?” Baker’s advice is to ensure they’re not spending all that they earn. “Whether they’re new to combining incomes or seasoned pros, they’ll want to make sure they have something left over at the end of the day to put towards their goals. Doesn’t matter if that’s retirement, a new house, children, or a trip to Tahiti for your 5-year anniversary.” She continues to explain that starting off your marriage by just breaking even can make it harder to catch up later. This can lead to frustration, psychological distress, and animosity in the relationship. A 2022 Financial Therapy Association Journal publication highlights how perceptions of financial behaviors in a spouse, whether they are seen as spenders or savers, significantly affect marital satisfaction, commitment, and dynamics. The findings reinforce the idea that understanding and managing perceptions and behaviors early in marriage is crucial for long-term relational well-being.
So, as we wrap up our chat with Nicole, it’s clear that love and finances are more intertwined than we often think. From being on the same page with your partner about your goals to navigating the everyday responsibilities of money management, it’s all part of the same journey. Whether you’re a newlywed laying the groundwork for a future together or a couple seeking harmony in your life, remember Nicole’s wise words: open dialogue, understanding each other’s money habits, and working towards shared goals is the essence of financial compatibility. Finances, like love, is all about finding that sweet spot where both partners feel heard, respected, and on the same page. Let’s take these insights to heart, not just on Valentine’s Day, but every day, as we build our lives with those we love.
Note: The individuals and their situations presented was a hypothetical example provided for educational purposes only and is not intended as financial, legal, or tax advice. It’s always recommended that you speak with your financial, legal, or tax professional regarding your specific situation.
