You consider yourself a saver, someone who is frugal with their money and knows where every penny is going. But the love of your life is a spender, a firm believer in retail therapy, prone to impulse buys. Despite how much affection you have for your partner, their money habits may be a sore spot in your relationship.
This scenario is not uncommon. About half of all marriages end in divorce and often money issues are a driving factor. According to a survey by Ramsey Solutions, arguments about finances is the second leading cause of divorce after infidelity.
Though we may try to deny it, most of us have an emotional attachment to money one way or another. Our emotions heavily influence our money decisions, according to Dr. Brad Klontz, author of “Mind Over Money,” co-founder of the Financial Psychology Institute, and a contributor to CNBC.
Because of the emotional attachment to money, it’s important for couples to talk about finances. Financial blogging couple Julien and Kiersten Saunders have figured out the magic number of conversations you’ll need to have. According to the pair, “You have to have over 10 discussions with your spouse or partner to understand their underlying money beliefs.”
Here are some tips from experts that can make those conversations easier.
Talk about your feelings towards money
As a financial therapist, Klontz says people develop and internalize “money-scripts.” These are behaviors and habits we observe in childhood and are reinforced throughout our lives, usually by the people we associate with. They typically stem from what our parents taught us about money.
For instance, Klontz realized he developed his own money script from an early age. Raised to believe that debt was bad, Klontz attempted to pay off his student loans by day trading.
“I thought, what a brilliant idea to get out of debt,” Klontz said in an interview with CNBC. “I sold basically everything I had of value, which was primarily a truck.”
Two months after pouring all of his money into stocks, the tech bubble burst.
The experience led Klontz to better understand his own money psyche.
Knowing your partner’s feelings toward money matters is the first step in tackling this sensitive topic. Couples need to be patient with each other and listen to their partner’s emotional response to money matters, say financial advisors. This will allow both of you to communicate easier moving forward.
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Create a budget
“It’s not good to live individually in the household when it comes to money,” said Rianka Dorsainvil, a CFP and also a member of the CNBC Advisor Council. “You need to be on the same page. It’s always better to work as a team.”
When building a budget as a couple it is crucial that both parties are involved in crafting it. Discuss your desires and describe how you want to use that money.
Creating a budget together gives both partners ownership and input in your plans. The best part is both partners can revisit the budget if something is not working.
It’s easier to create a budget than most people think. Start by calculating your combined income. Then subtract your monthly expenses, things like rent or car payments. You’ll want to break down your expenses further categorizing them into variable- and fixed-costs.
From there you’ll be able to start to trim the fat in your budget, removing expenses that are unnecessary. Extra savings can be put towards an emergency fund or retirement.
Have a savings plan
The idea is simple: every month each person puts aside a set amount to spend on whatever they want after savings goals are met. It’s a favorite of certified financial planner Lazetta Rainey Braxton, who calls it “a made money account.”
“No shame, no fault, fear, obligation or guilt,” said Braxton, founder of Financial Fountains in Baltimore and a member of the CNBC Advisor Council.
The idea is to allow each person to splurge without feeling stressed since money is already accounted for in your budget.
“You feel like you have some ownership within the relationship,” said Braxton.