How much did you spend on this? Did you actually buy that? You can’t get that, it’s too expensive! Sounds familiar? Well, you’re not alone. In 2018, money arguments were the root cause of more than one in ten divorces, despite the whole ‘for richer or poorer’ part of the vows. Money can be a really stressful topic, which can be made worse if you and your partner don’t share the same beliefs.
Building a strong and successful relationship is hard, but with good communication, shared goals, and a bit of practice, you could be able to stop falling down the rabbit hole of arguing about money. Interested in the cost of breaking up? It might be more than you think!
Having ‘the money chat’
Communication and honesty are the keys to success in any relationship, whether that’s romantic, platonic, or even business. Being open can help to avoid uncertainty, know where you stand, and start paving the way for future discussions. If you’re not happy to talk money with the person you hold most dear, you may want to think about why that is – are you embarrassed, cautious, hiding how much is in your Stocks & Shares ISA, or is there another reason entirely?
Just as having a good understanding of your own income and outgoings is vital to financial success, understanding how your household’s finances stack up could help prevent future arguments. And the only way to do this is to sit down and talk it through.
What’s mine is yours
As nice as the sentiment behind ‘what’s mine is yours’ is, often it doesn’t always work out for everyone. For example, if you have different hobbies, if one partner earns more than the other, or if there’s debt from before the relationship started. This approach of putting all your money into one account could lead to one partner starting to hide money from the other, which is a ticking timebomb for an argument.
Instead of putting everything together, why not try and work out what’s mine, yours, and ours? This way, you each have your own money to play with, meaning that you don’t need to ask permission for everything you spend. Plus, you could have a ‘house balance’, where you both put a percentage of your salary to pay for things like mortgage/rent and bills. And, by doing it as a percentage it makes it fairer if one partner earns significantly more.
Getting to grips with salary differences
Chances are, one of you will be paid more than the other, but whether the difference is £100 or £100,000, it’s important to learn how to be ok with the inequality. The one thing that could help is understand that you’re both on the same side – in a relationship you should be working together, not against each other. If the partner with the larger income is using their money as leverage to try and control the relationship, it can lead to a toxic marriage and countless arguments.
Work as a team, define the “mine, yours, and ours” balance in your relationship, and if the pay gap is significantly different then why not work on percentages? For example, 50% of each persons’ salary goes in the ‘ours’ budget, 30% is yours to keep, then 20% could go towards savings and investments.
Dealing with debt
Debt can feel crippling, but talking about it and tackling it head on is more often than not a better approach than ignoring it or trying to hide it. If you talk about your debt with your partner, then it can not only help to relieve the stress, but it could also be included in your household finances – giving you a clearer picture of how to pay off your debt.
It’s worth noting that you don’t have to take on your partner’s debt just because you’re married or in a civil partnership. The only reason you’d be required to take on debt is if the debt is in both of your names – if you do choose to take on joint debt then you may be liable if they can’t keep up with the repayments.
Understanding each other
Not everyone is the same, and although you may love everything about your partner there are almost certainly going to be a few thinks that irk you. One of those things could be how they spend their money. For example, if your partner likes saving money rather than spending it then you could think of them as a cheapskate, but if they spend money rather than save you could see them as reckless.
Understanding the way your partner is with money can help set expectations and even address issues before they arise. For example, with spenders it may be a good idea to set financial goals – like building up their savings, or even paying into a personal pension to prepare for the future. Savers on the other hand, may need to understand what matters to you and set aside a chunk of money each month for doing things you both enjoy.
Children and money
Deciding whether you want children or not is normally the first part, and can be an argument in itself, but if you do have kids then it can put a strain on your finances. For a start, if one of you chooses to reduce your hours to spend more time with the little ones then your household income will probably be impacted. Then you have everything from food and clothing through to Halloween outfits and Christmas presents to consider.
According to recent data, a couple will spend more than £150,000 to raise a child from birth to their 18th birthday. However, not many 18 year olds leave home straight away or even or start to paying their own way, so in reality you could be spending even more on them. Instead of getting into an argument – with them or your partner – about buying their first car, or helping them buy their first home, you could start saving into a Junior ISA from when they’re very little. For example, if you have a one-year old child, then by putting £50 into a Stocks and Shares Junior ISA for them each month could give them a nice little nest egg of around £13,746.
Who manages the bills?
Having one person managing the budgets and bills may work for some couples, but not everyone. And it’s also worth giving that job to the person who has the knack for it – for example, if one of you is more of a saver than a spender. However, arguments can happen if the person in control of the budget is too restrictive, or not balancing the budget well enough. If this sounds like your relationship, then it may be worth swapping it up a bit and maybe divvying out the tasks. One of you could be in charge of things like insurance and holiday savings, the other could tackle household bills and the going out budget.
Finding a balance that works for you may take a little getting used to – especially if you’ve always left the bills to your partner or vice vera, but in the long run it could help to avoid some rather petty squabbles.
Nobody likes arguing about money and using the first rule of communication and honesty can help to avoid a lot of unnecessary stress. But another great approach could be to use common sense. Even if you’re following all of the above suggestions, there may be big expenses that you want to make – and can afford – that you should probably run past your spouse first.
For example, I recently bought a £3,000 mountain bike. I could afford it, I’d saved up for it, and I’d talked about it for months – to the point where my partner was fed up with hearing about it. But before I pressed ‘buy now’, I told my partner I was doing it as a courtesy. After all, I could hardly sneak it in the house without her noticing and I’m sure the grin on my face would have given it all away anyway.
Using your common sense and talking to your partner, even if you’ve already made the decision (it helps to show you’ve thought it out) can save an earache and an argument. Don’t think of it as asking permission – that can be a shortcut to a row, instead why not think of it as simply keeping them in the loop.
Shout about your financial achievements
Let’s be honest, how many times do you ask your partner about their day and just have stories of what’s happening with their friends and colleagues? Why not shout about your financial achievements as well! You could say, never guess what? I put £5 into my Investment ISA today, or, I hit my halfway milestone towards a new car. Little things like this may not seem significant but talking about them keeps your partner informed. This back and forth communication could also provide you with more motivation to hit your financial goals
Talking openly and working as a team could be the answer you’re looking for when it comes to avoiding arguments about money. Why not give it a try and see how you get on?
3: This is the projected value for a Confident Plan (Medium Risk Plan). This is only a forecast and is not a reliable indicator of future performance. If markets perform worse, your return could be £X10,774. If markets perform better, your return could be £17,559. Values correct as of 08/07/2020
The tax treatment depends on your individual circumstances and may be subject to change in the future.
Please remember the value of your investments can go down as well as up, and you could get back less than invested.