Money can be problematic enough when you’re single, alone, and trying to make your ends meet. Throwing another person – a partner – into the equation would just make things dicey. Fact is, both of you will have to sit together and decide where you’re collectively spending your money. Whether it’s just for a simple dinner date or managing bills when you’re living together, money plays a much bigger role than you’d think when it comes to romance.
Why does money matter?
Let’s face it, your lifestyle and habits are usually determined by the amount of money you can spend. When two people get together and make money decisions, it is extremely possible sometimes individual needs have to be forgone for the collective good.
Then, it becomes inherently important to have an open and honest discussion about finances and money issues to ensure that money is not coming in between you and your partner. When you live with someone or pretty serious about your relationship, it is pretty common for you to pool up your finances. It may become “my money and your money” to “our money” sooner than you think,
However, this is not always the case with everyone. There is a significant number of couples who spend entire relationships and marriages with complete financial independence. Still, it may not exactly be in line with what you and your partner expect from the relationship. Money becomes a joint effort as a relationship moves forward. Here are six reasons why money matters more than you think it does.
Irrespective of their working situation, both parties in a relationship should play a role in the personal finances. It is crucial that money does not feel like a paycheck handed from one to the other. It is common for one person in the relationship to take on more financial responsibilities. Still, both should be on board with a plan, and that plan should be well communicated before setting it in action.
This can be challenging if one person in the relationship isn’t as responsible with money as the other. This can be remedied by keeping checks in place, like a monthly allowance system. However, it becomes increasingly imperative to approach the subject early on in a relationship and discuss with complete deliberation on how important money is in a relationship.
Deciding on how to split up bills
Some think “equal splitting up of bills” means a 50/50 split in finances, but often that’s not always realistic for a couple. What if both of you don’t make the same amount of money? This system becomes very complicated very soon, as some expenditures may be entirely for one of you, and being forced to split evenly makes no sense.
Different bills may need different ratios of splitting up, and this should be carefully dedicated. This may seem like it’s taking the romance and trust out of the relationship, but it is crucial to make sure to decide in advance.
Keep in mind that there is nothing wrong with one partner taking most, if not all, of the financial burden. However, there should be no confusion with regards to who plays which role when it comes to finances.
Apart from certain rare cases, one partner tends to earn more income than the other, and they may consider taking a major portion of the bills every month. There is no rhyme or reason to expect both partners to take care of their bills equally, and they could consider splitting their bills in the ratio of their income.
Unexpected need to support your partner
Thoroughly understanding your partner’s financial standings is necessary. Keep in mind; this doesn’t mean you charge in inspecting their bank statements, but communicating on whether your lifestyle is something you can afford is absolutely essential.
Financial hardships are more common than you’d think. It is completely fine (if not humane) to help out your partner in times of need. However, it is important that it doesn’t happen extremely often, that it becomes expected of you to carry the relationship financially.
And yes, there might be times when you need to unexpectedly support the other person in your relationship. Things happen, people lose jobs, big bills need to be suddenly paid, and in these moments, you’ll learn that your money is important in a relationship.
You need to make sure that both of you are on the same page when it comes to routine financial decisions, like your monthly budget or your investment goals. For instance, when your partner is saving for a well-deserved vacation, it wouldn’t be tactful to drop a few grand on a fancy PC upgrade if you haven’t planned for it in advance and cleared it with your partner. One of you may have trouble controlling emotional spending.
These mismatches in priorities are extremely harmful, and while two or three such instances might not ruin a relationship, they will have a pretty serious impact. Whether you like it or not, your spending patterns and habits are going to affect your partner as well. One of you may even have objectively toxic financial habits.
However, that does not mean you can never splurge on yourself. You’ve spent a lot of time and energy earning your money after all. But it is important that you stay within reason and run major spends by your partner.
Similarly, you can’t police your partner and demand them to run every rupee by you, you need to be able to trust their judgment with finances, and that’s much easier when the two of you share similar goals.
Learn about each other’s investment strategies
Investment is one of the most important areas of financial management. Competent investment strategies are often the difference between a happy retirement and having to depend on your offspring for a roof above your head post-retirement. However, there are certain points to keep in mind before investing as a couple.
If both of you want to open a joint brokerage account, make sure that your investment strategies match. There’s nothing inherently wrong with having different financial strategies. However, having different styles may be a breeding ground for conflict and may even end up destroying wealth. Instead, you can choose to operate on separate brokerage accounts or create two joint accounts.
Planning a financial future together
Relationships involve several financial decisions, including housing, cars, vacations (and holiday gifting spending) kids, and investments. If you don’t communicate and have open conversations about your finances, you can very quickly find yourselves fighting about how the other couples spend their money strategically.
Having a roadmap on what financial decisions you make as a couple (along with the when) can be extremely useful to ensure that you both constantly remain on the same page. Tracking your expenses and analyzing your spending is not nearly as complicated as it sounds. With state-of-the-art tools like spend analyzers on offer by leading FinTech platforms like Salt, financial management has become extremely easy if you’re looking for more tips on managing your personal finances, head on over to the Salt blog, where we are making sure that the financial journey is smooth for our readers.