Our relationship with money can be a complex one, now add love to the mix and lack of communication, it could be a recipe for financial disaster.
That is why it is important to find your financial compatibility early on in the relationship and to do that, you need to start talking as openly and honestly as you can about money as a couple.
Oftentimes the misconception is that because you love one another, automatically you will handle your finances together without any friction.
Here are some important factors to keep in mind as you begin to fuse your financial life together.
Learn about each other’s money personalities
How we handle and manage money gets cemented at a very young age. It has a lot to do with our upbringing and the people who surrounded us.
This means that every person has a distinct way of thinking about and dealing with their finances, and in a relationship, those distinctions can be the difference between being on the same page about your household finances or having money be a constant source of conflict.
There are 5 money personalities that people can identify with:
The Spender
The spender loves to make money and spend it. They convince themselves that they work too hard and therefore they deserve to enjoy their money. They give little to no thought about savings or investments. They are all about instant gratification. They assume ‘something will come up’ as they spend their last couple of Rands! They are normally in debt and even if they manage to pay their debts, they find themselves in the same situation a few months down the line. They fail to cultivate good money habits.
The Saver
There is nothing that gives the saver more pleasure than knowing they have money at all times. They live for balancing their numbers, patting themselves on the back for saving a higher amount than they did the previous month! They feel secure only when their savings are at a specific level. They become miserable and a little grumpy if their savings are not at the minimum amount at which they prefer them.
They are mostly risk-averse, although they save, they do not go further and invest their money in income-producing or growth assets. They find putting money in the bank more secure. They do not want to lose any money.
The Avoider
The avoider would rather not get into the topic of money at all. They can talk about anything and everything money can buy, but will never talk about money itself. They work, earn an income, spend and get involved very little when it comes to meaningful purchases such as investments, retirement or insurance. Their financial life is foreign to them. They do not actively look at ways in which they can improve their money management skills. They live by the matra: as long as I can put food on the table, I am fine. But they are really just fearful that they are not where they want to be financially, so they would rather ignore their financial situation altogether.
The money monk
As the name says, the money monk has mastered their finances. They have a good balance between saving, investing and spending. They are comfortable to talk about their finances. It gives them pleasure to look for new opportunities to make their money work for them. They are prudent but they also enjoy their money. They are normally focused on increasing their net worth.
The Cinderella Complex
They think that there will always be someone to take care of their bills. They cannot fathom making a financial decision for themselves, someone else will. They are not concerned about budgeting, what is a budget anyway! They have no slightest interest in learning about their personal finances or how they can improve themselves financially.
They spend frivolously and they can never have enough money because when its there, it all gets spend.
Decide how you will split up bills
If you live with your partner, decide on how you will split your household expenses. Talking about this helps eliminate expectations that might end up causing fights about money. This requires that the both of you sit down and draw up your household budget together and disclose the different financial commitments you have; from debts, family tax etc. Then decide how much each of you can contribute towards the combined expenses.
Set your eyes on the (same) prize
Life can be unpredictable and sometimes throws curve balls at us. It is important for the both of you to communicate and come up with a plan of action on how you will tackle a tough financial situation.
Financial strain is cited among one of the biggest causes of divorces, but at the core of it, I believe it’s couples inability to have an honest conversation before the situation gets out of hand and come up with a plan.
Setting goals together, whether it is to get out of debt, build an emergency fund, save for a family holiday etc can have a powerful positive effect on the relationship as you achieve your goals together over time.
Ultimately, to build a well-rounded life as a couple, money conversations need not be a taboo. You should be accountable to one another for all your money decisions and communicate your wants, needs and expectations.
*This article first appeared in City Press
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