Money is often as a taboo subject for couples to discuss with “money issues” often being cited as a primary reason for couples breaking up.
However, recent studies by TD Bank in the US appear to indicate that the tide of popular opinion may be changing when it comes to gauging the effect of couples discussing their finances.
The studies establish that, while a lot of factors contribute to making a relationship work, money plays a key role, and regularly talking about money may be a vital element of a happy relationship.
Ryan Bailey from TD Bank on money and the link to happiness said:
“Couples who are hesitant to talk about money should be encouraged to see that doing so could result in a happier relationship.”
Couples of all ages were found to be happier if they openly talk about money, with almost 90 percent of couples of all ages who talked about money at least once a month having happy relationships.
Changing attitudes
The TD Bank studies showed that millennial couples tend to be more open about discussing their finances and happier in their relationships as a result than other generations with almost 75% discussing finances weekly, against Gen Xers (ages 35-54) at 63% and Baby-Boomers (Ages 55 and over) at 56%.
Dr. Jane Greer, a psychotherapist and relationship expert, talking with CNBC Make It, had this to say about the more open attitude of younger couples towards finance:
“We’re in a better place than we used to be because younger couples are more willing and open to talk about their money — and to address it directly, right out of the gate,”
While Jason Thacker from TD Bank had this to say about openness in a relationship around financial matters:
“Being open, honest and understanding each other’s priorities when it comes to money is crucial to your overall financial health and success as a couple.”
The studies showed that financial autonomy also plays a role in relationship happiness with 32% of Millennials more likely to use separate, rather than combined, accounts against 27% of Gen Xers, and 19% of Baby-Boomers. Although, we imagine that there is a larger percentage of couples in long-term relationships with older generations, and this would impact the percentage of combined account use. It is encouraging to see that 70% of all couples shared decisions around large purchases. We want to work with couples to raise this to 100% given the importance of larger purchase decisions.
Money and your relationship
When it comes to relationships, Dr. Greer reveals that sharing financial chores facilitates fairness and joint decision-making. This also opens conversations about needs and goals thus helping to maintain the balance and equality in a relationship.
With regards to the dynamics of honesty and empowerment in financial decision making, Dr. Greer said:
“The more open and honest you are, the more empowered you feel to be able to make financial decisions and choices that are important to you rather than winding up feeling controlled or resentful of your partner.”
When it comes to Millennials topping the financially related happiness stakes, it’s not all sugar and spice though.
36% fight about money at least once a week compared to 15% for Gen Xers and 7% of baby boomers. Even though disagreements about money can be hard within a relationship, it is important to have these conversations. Frank discussions ensure both parties are committed to the same goal and can also stop resentment.
Ryan Bailey from TD Bank puts it in a nutshell:
“When arguments arise related to things like overspending, having an open discussion about budgeting and aligning on how to divide or share their finances is important.”
Plan together to stay together
The couple that plans together stays together, or so we like to think. However, this doesn’t stop couples having wildly different views about spending, saving, lifestyle, supporting children, retirement and estate planning.
Developing good money habits through regular discussion helps remove the taboo around talking about money.
There is no wrong way to talk about money. It is about finding the format that works best for you as a couple. A few suggestions, to help get the ball rolling are:
- A monthly marriage meeting to see that you are on track with your joint goals
- Committing to a shared saving goal and setting up monthly payments
- Agreeing on the reward for achieving your savings goal together to keep you both motivated
- Having an honest policy! If someone splurges they know it is ok to share and you can get back on track together
- Identifying subjects where you ‘agree to disagree’. You bench these for a later time and focus on the big picture.
- Setting career goals together so you can both focus on growing your income
When you are confronted with a life change as a couple, such as a move, a death or a birth, you need to talk about the impact on your finances as a couple. Like any good habit, talking about money naturally will take time and require commitment from you both. However, it can help you be happier as a couple as you move towards your shared goals. Another upside is that you will also be aware of 100% of your accounts and investments. We often speak to couples where one person controls the finances. This isn’t a problem as long as you both know where your money is and how to access it.
Meeting as a couple
We understand the importance of planning a future as a couple. This is why we will always try and meet with both of you before you join us as a client. Your documented financial plan will, therefore, reflect the views of all decision-makers in your household.
