The Truth About Finances and Your Relationship
I know it has been a little too long, but I have been working on some renovations to try to get my goals going. Who would have thought that time is finite! So inconvenient! Anyway, today I am back with a short post about telling the truth.
There will come a time in most people’s lives where they will have the share their finances with another person. This can often stir up a wide range of emotions, and understandably so. Finances reveal a lot about who you are, what you like, your personality and much more. While it can be hard to work with another person to align your spending and saving habits, it is well worth it. Just about every study looking at the causes of relationship breakdown will list finances in their list.
So let me give you a bad example I was just privy to.
A colleague came over to me last week, and we talked about the new iPhone 8 that came out recently. He wanted to get one, and we were talking about the potential benefits and down sides over his iPhone 6. Eventually we made it past the missing headphone jack, and got onto the price.
For me, the price of new iPhones is a large blocker to me getting one. I can’t justify the $1,229 that it would cost me to get what I want. When I asked him if the price was a worry, he said no. Of course I assume he was just getting paid too much, and made a joke about that and how his wife should use the money for other things rather than an iPhone. His response prompted this post.
He said “Oh, she doesn’t now about this, because it comes out of my other account”.
My partner and I talk about finances so often, that the idea of hiding expenses is a bit strange. So I asked some further questions. What I learnt worried me. Apparently he used to have a hidden credit card, but when his wife found a bill delivered to their house, she got very angry. Understandably! This led to the card getting cancelled so there were no more financial secrets from each other.
No long after the card issue was past, he setup a bank account that provides electronic statements only. He automatically sends a percentage of his pay into this secret account, and uses it to fund his “toys”.
I am sure this isn’t healthy from a relationship point of view, but it is also not health from a financial one. When two people share finances, but have different goals, it makes it much harder to obtain them.
The following are some things I do with my partner in my relationship to try to make sure we are on the same page. I am sure some of these will be a little over the top, but as I said, we enjoy talking about finances. We enjoy discussing the value of items and whether they are worth spending the quote amount of money on them. And ultimately we enjoy knowing the other one is able to be open about where they want to spend their money.
Some of these are more than is needed, and some should potentially be more frequent, but for good or bad they are what we do:
- We have set a $100 limit for spending without talking to the other person about it.
- We review our bank account statements every week or two.
- We enter all expenses and income into a tracking system every month.
- We tell each other not to look if we are buying a surprise they could see in bank statements.
- Yes, I know that can spoil the surprise, but we don’t say what it is.
- We review our expense categories each month to see if there are any expenses that are growing too much.
- We review our savings monthly to check that we are reaching our savings targets.
- We review our giving every six months to check we are reaching our goals.
- We do our taxes once a year and check we have appropriate deductions, capital gain/loss carry forward etc.
- We submit our taxes early if we are getting a refund, and later if we have to pay tax.
- We discuss potential investments, bonds, shares etc as they come up, or after we have done some research.
- We discuss the property market at least once a quarter (although I am sure it is much more frequent that this).
- We review our goals every quarter to 6 months.
- We review our investment categories/balance around every 6 months.
- We share interesting financial articles we find with each other.
- We review our superannuation every month, and look at whether changes are needed at least once a year.
Actually, no ugly in this, so here is a cute dog image instead.
Do you have any money discussion rules (or hidden secrets) with your partner, let me know in the comments?
The $100 limit is a great idea. Actually we use $40 but we are older and remember when $40 was $100. Also even though she chose to be a stay at home mom and domestic engineer and I chose to have the outside career we both always considered every penny of income to equally belong to both of us.
Mr. ETT is interested in the outcomes of good financial management, but not so much on the everyday. We both track expenses and I update him on how much we’ve saved for retirement (he has access to all the accounts, he just doesn’t check them.) We each have $300 spending a month we can do what we want with – it started as $400 😳. Half of mine goes to investing and charity. I use the other half for fun stuff, although I’ve still got quite a bit saved. This is a lot of money, but after 10 years where he spent with little restriction, it was the best I could negotiate. We were always totally open, but it caused a lot of friction before I implemented this system. Now, we’re cool.
Also – cute dog picture!
We do our expenses a fair bit differently. We definitely do the whole discussion thing, but we don’t share every dollar equally. If you are curious, I did blog about it before : http://bigkidlittleadult.com/index.php/2017/07/10/couples-finance-income-combination/
There’s no secret from each other, but it’s a bit of best of both worlds, the way we do it. He insisted on it being this way despite being the lower income earner and we both know that if it comes to it, the other will always support in every way including financially if need be.