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You bought something new, pulled off the tags, then said “What, this old thing?” when your spouse asked about it. Your unemployed brother-in-law just bought a giant flat-screen TV with the "emergency" money your husband lent him. Your credit score took a hit after you forgot to pay your bills — and now you daren't tell your partner.
Disagreeing with your spouse or partner about money is not necessarily a bad thing. It’s also completely understandable. As an individual, you have priorities about what you want your money to do for you that may or may not line up with your partner (or parents or friends). What you need to learn is how to communicate your wishes in a way that’s respectful of the fact that their priorities and wishes may not be on track with yours.
Here are some of the most common “financial fights” that couples have, and our tips on the best way to avoid them in the future:
Fight #1: Saver vs Spender
Why it happens: Very interesting research has shown that – although most of us make impulse purchases from time to time – some of us are wired to be savers and others to be spenders. What that means is that some people find spending money to generate pleasurable brain activity while others find it painful. (Spenders are the majority). And research has shown tightwads and spendthrifts – to quote a 2012 paper published in the Journal of Marketing Research and entitled Fatal Attraction – tend to marry each other, since people look for qualities in their mates that they lack in themselves.
Solution: Realize you’re not fighting over money itself, but over how your money – always a limited resource – is being utilized. Without blaming for what’s happened in the past, sit down and map out what you both want in the future: This year, in five years’ time, in 10 years. Then talk about how you can use your combined resources to get you there. That will give you a road map for how you should be using your resources. Revisit every three months or so to keep you on the same page.
Fight #2: The Power Grab
Why it happens: One of you may earn more than the other, or may have just assumed the dominant role in the finances. Or there is only one earner and that person expects to be in charge of where the money goes.
Solution: First, it’s important to recognize that even if one of you doesn’t earn an income, that person has value to the family. Each person should have some financial autonomy – agreed-upon money that can be used as that person decides without asking. Some people accomplish this with separate bank accounts, but you can also do it with equal access to a joint account. Each person should also have some financial responsibility, whether it’s paying bills, managing a retirement account or being a point person for the accountant or financial advisor.
Fight #3: Caught in a Lie
Why it happens: You paid for something half in cash so the full price wasn’t apparent on the credit card bill. You hid the fact that you had a credit card (and that the debt was growing) or that you messed up paying a bill and your credit score fell. It happens because you’re embarrassed by a financial gaffe, or because you broke the household rules of money that you’d set up and you wanted to avoid a fight.
Solution: The lesson of Watergate applies here: The cover-up is almost always worse than the crime. And the sooner you come clean, the better. That’s because the sooner you admit you opened this credit card, the smaller the hole you’ve likely dug for yourself.
But how? First, you want to set up a financial life where you don’t feel like you have to lie and that means having a little financial independence. Your husband may not respect your love of shoes. You may not appreciate his craft beer hobby. As long as neither is preventing you from reaching your savings goals, who cares? Acknowledge the fact that you love your spouse and this is just part of the package. Try to have a little humor about it.
If it is causing a problem with your joint financial life – like that slip in credit score that could prevent you from getting a good rate on a mortgage – you need a plan to stay on track, and honest, in the future. Perhaps it’s a new methodology for paying bills (putting things on automatic). Then, schedule a monthly “no shame, no blame” money conversation where you can discuss whatever’s on your mind.
Fight #4: Risk Taker vs. Risk Avoider
Why it happens: One of you is more comfortable with the ups and downs of the stock market. Typically, men are more comfortable than women. The problem with leaving too much money in cash (or complete safety) is that it’s not really safe. No, you won’t lose principal, but you will lose buying power to taxes and inflation.
Solution: A financial roadmap that shows how you’re going to reach your goals. You may want to enlist a financial advisor to help with this, but you want to chart your savings rate – the growth on your savings – and see if that will get you to the amount of money you need to meet your goals whether you’re trying to put a downpayment on a home, or pay for college or retire.
If your spouse is intent on taking more risk than you’re comfortable with – by putting more money into stocks, or investing in start-ups or buying Bitcoin – agree on a small percentage of your money that can be used in that way (no more than 5 to 10 percent) and a similar amount that you can save or invest as you wish. Then stick to your plan with the rest.
Fight #5: Lending or Giving Money to Family and Friends
Why it happens: You feel compelled to give or loan money to friends or family members in need. Then that person doesn’t pay the money back on time – or, as often happens, is out and about spending in ways that you don’t approve of given the loan/gift that you gave them. It can cause a problem with the person you loaned/gave the money to as well as with spouses.
The solution: First, forget about loaning money to friends and family in the majority of cases. If you can’t afford to do it as a gift, don’t do it at all – it won’t end well. If you’ve already done it and you want to preserve the relationship, tell the recipient you’re forgiving the debt, but that you don’t want to be asked for more in the future. Then try to put it behind you – without judging how they’re living their lives.