Money Mistakes…and how to fix them

Research has shown that the more often couples argue about money, the more likely the relationships are to end in divorce. Think about the biggest issues that cause friction in your marriage. For most people, ‘finances’ and ‘money’ will be towards the top of the list. When you chose to marry your partner, it’s likely your decision wasn’t based on your financial compatibility. However, after the honeymoon phase has worn off, this concept can become critical. There are ways to deal with this before it becomes a massive issue for your relationship.

Talk about money

While this seems like a really basic idea, it’s amazing how rarely we discuss our finances with our partner. The key here is to start early. If you don’t talk about money until there’s a problem, it’s more likely to become an argument rather than a discussion. You’ve made the decision to spend your lives together, so there should be enough trust in the relationship to let the other person know about how much you earn or the hidden debts you’ve been slowly paying off. If these things are discovered later in the relationship, it will undoubtedly cause issues.

Understand each other’s financial goals

We tend to gravitate towards partners with whom we’re aligned in many ways – except in regard to money. This can cause great issues in a marriage as each person does not understand what drives the other. There is no right or wrong answer in regard to your financial goals; it is more a matter of understanding what is important to the other person. If you define your financial goals and work towards them together, you are more likely to meet, and even exceed, them.

Align your spending habits

Studies have shown that many couples have opposing spending habits – a spendthrift will often marry a reckless spender. These couples tend to have an unhappier marriage than those who have aligned their spending habits. A budget can help ensure your spending habits are compatible with one another. It can allow the reckless spender to have some ‘play money’ while ensuring savings are still increasing.

The joint account

Some couples jump enthusiastically into the concept of joint accounts while others resist them just as wholeheartedly. While this isn’t an essential concept to reduce your financial arguments, it can be a more effective method of managing your money. One suggestion is to have three accounts: one joint account; one for you, and; one for your partner. Your salaries can be paid into your individual accounts and you each then transfer a certain amount (or percentage) into the joint account. Bills and joint expenses are deducted from this account, with your personal accounts providing you each with your spending money.

Understand your financial situation

Take the time to understand your finances and how they are affecting your relationship. You should each know how much money is coming into the family home, and where your expenses are going. Determine what the most important strategy is for you. Do you want to pay off your home loan, invest in property or shares, contribute more to super, or save for a family holiday? When you both start to understand your money, you can start to make the best decisions for your family together.

These are just a few simple strategies to put in place to help make money a part of your relationship, not the dividing factor. Remember, start talking about it early and be honest with each other. By understanding each other’s situation and financial habits early in the relationship, you can help to avoid conflict later.

[1] http://www.news.com.au/finance/money/money-mistakes-that-ruin-marriage/story-e6frfmci-1226987350995

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