How to Manage Money As a Couple

Conflicts around money are a major contributor to divorce in Australia. So what happens when opposites attract? Money is so personal and our attitudes are heavily influenced by our parents and our childhood. The odds of two people agreeing on everything when it comes to money are just about zero.

In my experience, it's these differences that can make the difference between being really successful with money as a couple and just getting along. Being aware of differences can help us understand what makes for great money management and open our eyes to our own destructive habits.

When it comes to making most decisions, varying points of view can lead to challenging assumptions that are worth thinking about twice – to get a better outcome. This is just as true at home as it is at work.

There are three key differences in attitudes that that seem to cause most money issues:

• Attitude to spending or saving
• Attitude to risk
• Attitude to giving

Each of these areas has the potential to generate friction when trying to work out a plan for your combined finances.

A plan to be successful has to have buy-in from everyone.  You need to get to a position where both of you can honestly say that our goals are more important than your or my goals.  This is the way to make them achievable.

Think in terms of three concepts: agreement, compromise and alignment.

When a couple sees things differently, there are three possible outcomes:

1. They eventually agree
   After talking it through, the couple may realize that they agree, that one person is right, or that their disagreement was superficial, or they may find a whole new way of thinking that both can agree on. This is great when it happens, but in my experience it is rare for a couple to agree on all things.

2. They compromise
   Each gives a little. In the long term compromise takes a toll. Money can be so emotional that compromising can be tough.  Neither is wholly satisfied and it is often not particularly sustainable.

3. They achieve alignment
   With this approach, a couple works out a way that meets the needs of both people. They may be doing the same thing for different reasons but both of their needs are met and they are in agreement about what to do.

Let me give you some examples.

Spend Now or Spend Later?

My first couple has a classic conflict. Steve likes to save for what he wants and never buys anything until he actually has the cash. Liz sees no issue with using a credit card knowing that she will pay it off. 

Liz knows she isn’t drowning in debt but thats how Steve feels about it. 

These sorts of attitudes are really quite innate. It is unlikely that either will fundamentally change. They may compromise by cutting back on credit card use but it constantly bugs her and it doesn’t quite comfort him. It’s an ongoing niggle.

But what could alignment look like? By getting a better handle on their budget and current position, this couple gains a clear understanding of what they need to be saving for and how much they need to put away. They can both breathe more freely and can talk about spending more comfortably because they know what they can afford to buy.

Based on this plan, they are aligned on how and when they will use credit and have an overall map for their total spending. Cash or credit is no just so much less of an issue. They both feel much more in control of what is important to them. They are working as a team toward their goals. Steve generally pays the bills, but Liz agrees to pay the credit card bill because it just bugs Steve to do it.

Risk or Opportunity?

Jane and Rob have quite different views on risk. Often this is the toughest one to deal with.  They have two kids at school and Jane stays home with the kids while Rob works full time. Jane worries about money and is keen for Rob to have a steady job with a big company. Rob is itching to found a tech startup.

Underlying Jane’s fears is not really knowing what the future might bring and how she will be able to continue being a stay at home mum. Feelings around security are often an important driver in how we feel about our finances.

Again, a plan forms a sustainable basis for alignment. What are their real financial needs over the next few years? With some work on their budget and a solid business plan that Jane understands, Rob and Jane find ways to reduce spending and increase saving.

Jane is now more comfortable. With this approach Rob and Jane didn’t have to choose between security and opportunity but the chance for both.

To Give or Not to Give

The balance between giving to charitable causes and meeting the family’s financial needs is the third area that often leads to conflicts. Often this is based on strongly held religious views.

With a plan and a clear sense of what steps they need to take, the needs of the couple can align around balancing the needs of their family with a desire to help others. They start to see what and when they can afford to give. And with a clear sense of what matters to both of them, they can find areas of giving motivating to each of them.

In these cases the different attitudes helped the couples think more deeply about money and develop a plan that put them in control, and allow them to work as partners to achieve what matters most to each of them.

Is money a source of conflict in your relationship? How could a plan help you both align on on this topic?