Next to sex, I am willing to bet that the most fought about thing in many relationships is finances. It probably doesn’t matter who makes more than whom either. In many relationships, there probably exists a situation where one person is a spender and the other is a saver. Aside from the financial implications of this scenario, relationships involving two people with different ideas about money will rarely work out to be healthy relationships. I’ve known couples who were heavily in debt, but despite the motivation of one of the partners to shed off debt, the other would just add more debt at the same rate that it was being paid off.
In other scenarios, maybe there are two savers, or two spenders, but one of them is just more extreme than the other. What if one spouse is extremely intense about saving money and wants to put away $500 a month, but can only put away $400 a month because the other spouse has decided that they value collectable dolls more than they value putting away that extra $100? Or maybe there is one person in the relationship who is a heavy charity donator or tither. While one person believes that $500 in weekly tithes is important and fundamental to continued financial blessings, the other may feel that having $500 to be used for discretionary spending is the blessing, and should be contributed to a retirement account. Although savings in both situations is occurring, unless there is a compromise, these situations may still lead to preventing wealth if they lead to never-ending fights, unhappiness, or even worse, a divorce.
Being on different financial pages can make any relationship grow sour quickly—this is an addition to the normal everyday complaints. So in the end, “money fights” usually pour fuel on top of small fires until they get out of hand. We’ll try and try to extinguish these fires, but often with little success.
An unhappy relationship may lead us into trying to buy the happiness of our spouse, when in fact “things” are unlikely to make the relationship better; things would most likely accumulate more debt. If we are unhappy, maybe we’ll spend lots of time away from home not working, but in bars or “hanging with the guys or girls.” Many people may shop more to overcome a stressful relationship, or travel more often than usual—all leading to an eventual trial separation or divorce—and it should be pretty obvious how these situations prevent wealth. If there is a separation phase, both parties accumulate bills that have to be paid, whether or not both parties are working. If there is a divorce, legal fees, possible alimony payments, child-support payments, and split assets will be pursued.
Each couple’s situation is unique. The above scenarios involved money fights from savers. In addition to the scenarios above, there are couples who are completely engulfed in debt, yet one spouse wants to remain a spender and is unwilling to accept the reality of the need to reduce spending. Also, there are situations in which the household income is high, but is insignificant when taking into account the spending habits of one or both of the spouses. And then there is the case that my spouse and I had gone through.
The Saver vs. the Non-Saver
I have always tried to be an extreme saver. When I say extreme, I mean so extreme that early into our relationship I would get upset that my spouse would throw away pennies. In the beginning of our relationship, I would always put us on a budget for everything. I would have a set spending budget for gas, groceries, utilities, and more. It was so extreme that even if she wanted something at the grocery store, if it wasn’t on the list, I would convince her not to get it because “we were on a budget.” I can clearly remember her usual mock, “budget, smudget.”
In my mind, it was necessary for this type of restrictive spending. We had come into the marriage with debt just like many young couples, and we accumulated more debt as our marriage matured. But although we had debts, I also wanted us to save. It wasn’t much that I wanted to save, but in my spouse’s eyes savings for the sake of saving generated no interest—especially if it restricted her from having a nice living or dining room set, or car. Short-term savings was okay, but to hoard money was unacceptable.
But the restrictive attitude of the saver can only hold up for so long. A dilemma is presented; whether to save as much as one can or give a little, through compromise, and spend money to make both spouses happy. If one knows what is best, the choice to make both spouses happy, through compromise, is most often the best choice.
Fortunately for me, my spouse had never been a big spender so the choice to spend more money to make her happy was an easy one—sometimes. Still, when we bought her new cars or clothes or whatever, that was money that we did not save in a retirement or savings account. While saving $500 a month would have made me happy, I know it would not have made a difference to my spouse. So instead, I chose to make her happy and did what every married couple should theoretically do, which is to save and share our money through compromise. But, this was not always easy. I had been the sole “bread winner” for the length of our marriage, and because of this my attitude on spending was usually always the most dominant.
Even though we earned a fairly decent household salary, things were still stressful in terms of spending money. Because I was a saver, the wants of my spouse became insignificant no matter how small they were. There were times where I could never justify why we would need to “upgrade” our comforter set, purchase more school clothes for our son, or purchase a new book bag or lunch box for a new school year when he had already had one. I wouldn’t want to spend as much money as she would want for Christmas or birthday presents either, although it wasn’t much more than we were going to spend anyway. In most cases she simply gave up because she knew that she would not be able to convince me to spend the extra money, or she knew that a conversation would end up in a money-fight with me telling her in so many words that I was the bread winner and what I said stood.
So what’s the right answer and how does this type of attitude prevent us from building wealth? The most obvious answer is that the two conflicting spending habits can eventually get to a point where it is unbearable, and the relationship subsequently grows stale. Instead of enjoying each other’s company, money fights will lead to distasteful attitudes that leave the couple not able to stand being with each other.
Either way, unless both people in a relationship are heavy savers and agree upon a savings strategy, someone has to give at his or her own expense. This can be very difficult to do, because it plays on the emotional psyche of the saver. When a spender wants something, without discipline, there is little that their significant other can say or do to stop the spender from buying what he or she wants. And on the contrary, when a saver wants to squeeze in every last penny, because of discipline, there is little the other person can say or do to stop them, unless the spender spends all or most of the money. Either way, someone will be frustrated. Who is right? Is there even a right or wrong person?
The only way to combat financial friction in a relationship is through compromise. It is easy in theory, but hard in practice. There are several scenarios in which compromise may work. Let’s look at three such scenarios; one scenario involving one working spouse, and the second and third scenarios involving compromises in a two-family income situation.
In the first scenario, there is one working spouse. Regardless of what the non-working spouse does, whether it is because he or she can’t find a job or simply desires to stay home with the kids, a compromise between the two workers has to be ascertained. This compromise comes in the form of agreeing upon how to split discretionary income between each member in the family. For this to happen, both people in the relationship have to first sit down and discuss how much money is coming in and how much money is going out. Chances would have it that one of the two don’t really care, but sitting down and discussing incomes and outgoes gives a chance for questions to come up and expenses to be clarified. If after the conversation it is determined that there is no discretionary income available, perhaps the spender will scale back his or her spending—hopefully. However, if it is determined that there is, say $1,000 a month for discretionary spending, compromises should then be made.
After determining what’s available for discretionary spending, the question between the couple should be, “How are we going to split our discretionary spending so that it is fair for the both of us?” In the best scenario, amounts should be determined and then split between saving and spending. For example, $500 monthly could be saved while $500 monthly is split between the two partners, giving them each $250, as spending money. If one person needs more money and it is mutually agreed upon, maybe it could be worked out that $500 monthly is saved and one person receives $200 monthly to spend while the other gets $300 monthly. In either case, boundaries should be established and both parties should be free to spend without one person scrutinizing the purchases of the other. If it must be done, split the money using cash.
The previous case also works well when both parties are working, which brings us to our second scenario. Despite who makes more than whom, if both partners are working and the salary of one worker is just enough to cover all the household expenses but not save, it is best to use one salary for all household expenses and the other to save and discretionarily spend. The discretionary salary should be split, and just as before, a mutually-agreed-upon amount should be determined such that some is saved and some is spent between the two partners.
In the last scenario, one person makes enough to pay off all of the bills and save for the family, but still there are disagreements on how much they should save. For example, I was at a point where I had put so much into savings that I had minimized the amount of spending money between my spouse and me.
I wanted and always will want to save as much as I can for the family because I stress the importance of an early retirement. Consequently, I try to max out our retirement accounts and save intensely for unexpected or irregular expenses that are not in our monthly budget such as yearly homeowner’s association dues, life insurance premiums, flood insurance premiums, flights to visit family, random trips, or anything random with our rental home. To me, these are a must, but to my spouse, they were needs, but the importance of how much they were needed was not fully understood. And to me, her attitude was not unacceptable as many may think. In many relationships, one person simple doesn’t care as much about finances as the other—it’s a fact of life. However, what ended up happening is that the more I saved, the less money remained for my spouse and me to split. Although I was fine with the amount, because savings was my priority for the family, my spouse was not. So in our scenario, and because my son was at an age where my spouse and I were comfortable putting him in an afterschool program, she worked a part-time job. Every penny that she had made was her own to spend. Of course, this is a special case, but it worked for us—we had no debts that we both needed to pay off, and we kept saving at the same rate. I was saving for the family, and my spouse made and spent her own money.
Not every couple can make the compromises that we made, but the point is that one should be made. In certain relationships, one partner would think that it is unfair that one person spends all of “their” money while the other person has to save for both, especially because the savings benefits the two of them. However, the entering argument is that one person is a saver and the other is not. Unless you want to fight about how much you two should save, versus spend, and end up unhappy because of money fights, it is best to let it be, especially if one salary covers expenses and savings goals.
The understanding needs to be that whatever the compromise, money for separate personal spending, that each partner agrees to, should not used to acquire new debt—because ultimately, the debt can become the burden of the both. For example, in our first scenario with one working partner, let us say that between the two partners $250 each was agreed upon for spending money. One partner should not get a credit card or finance a $200 monthly car payment. It has to be understood that the split money is only used for standard expenses.
Once again, whatever the compromise, one has to be made. We cannot build wealth if we are constantly fighting with our significant others about their spending habits. Both partners have to absolutely determine how to spend the house’s money. Dealing with an unhappy partner is not fun and divorces are expensive. Most importantly, life is far too short to spend it fighting about money. We should rather spend it accumulating wealth and enjoying each other’s company.
If this chapter makes you think critically about your finances, please consider purchasing the book, How We Prevent Wealth: A Personal Finance Reflection, or sharing the contents of this page with a friend.
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DisclaimerThe opinions expressed on this blog are mine and represent my views only. I have very strong opinions, but am also an open-minded individual. If you refute my view with supported, educated and well-argued points, I could very well change my opinion.