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Money and relationships

Many elements can lead to relationship tensions and even breakdown.

One of the most difficult to change can be disputes or differences over money.

Perhaps strangely, often ‘opposites’ attract when it comes to money and relationships.

“You’ll often see a spender/saver dynamic in a couple,” says Lea Clothier, a Behavioural Money Coach.

The reason for this can be based on deeply set value systems. Money can be tied to, for example, freedom, security, or success.

“Money can represent all three to us, but we often have a dominant main value system around it,” says Ms Clothier.

Value systems and money

Understanding the underlying values in your relationship will give us insight into our behaviour and what is happening when there is tension over money.

Someone who sees money as a means to freedom is likely to be more of a spender, Ms Clothier says.

They are also less likely to stick to or use a budget (which they find restrictive). They may enjoy spending money on experiences and enjoying life.

On the other hand, someone who sees money as all about security may use their money more restrictively.

They are likely to be more savings-focused, manage money more tightly, and stick to a budget.

‘For these people, having a cash reserve gives them peace of mind and reduces financial anxiety,’ Ms Clothier says.

Those who see money as a measure of success may display their wealth through their choice of career, the car they drive, and the clothes they wear.

They may have big financial goals and see money as the tool to achieving these, Ms Clothier says.

Money is likely to be at the centre of or influence many of their major life decisions.

Conflict over money

Four in ten Aussies in a relationship have experienced financial stress in the last 12 months, and women are suffering more, 45% compared with men at 37% according to the February 2023 research conducted by Money.com.au

Nearly half (45 per cent) admitted it had negatively impacted their relationship.

Specifically, a third (34 per cent) admitted their relationship had been negatively impacted, while 11 per cent indicated it had not only had a negative impact but had caused them to discuss breaking up with their partner.

Conflict can happen in partnerships and relationships when people have conflicting money values.

Imagine a relationship where one person is freedom-focused and the other security-focused.

The actions one person takes could be seen to compromise the other’s need for freedom or security.

Where money values are fundamental to us and clash with someone else’s equally strongly held beliefs, conflict seems inevitable at some point.

Understanding each other’s values around money can help reduce conflict and diffuse conflict.

“Many couples don’t manage money together as a team,” Ms Clothier says.

Getting ‘on the same page’ financially means both are taking an interest in finances in the relationship. Ideally, both also have an active role.

Ultimately a shared household spending plan is a great idea, so both partners work together towards joint financial goals.

Keeping some financial independence is also a good idea, perhaps in the form of having a small amount managed separately, so each can choose to spend independently of common money goals and actions.

But this should be transparent: any habit of hiding money will undermine trust.

Financial stability, relationship stability

Financial stress and financial instability are leading causes of stress globally and often contribute to marital and relationship breakdown.

Improving our sense of financial security and stability provides peace of mind and invariably helps to steady many partnerships, Ms Clothier says.

“It can create a platform for individuals to pursue their dreams and for a couple to achieve shared goals,” she said.

Financial stability is also the foundation for a stronger financial future and makes goals and dreams more affordable.

Financial stability is created through two essential elements: communication and cash flow, Ms Clothier says.

Money is a very emotional topic, which can make communicating about it difficult.

Learning to be open and transparent about money matters and communicate clearly about them is essential to remove the tension that money often causes in relationships.

Managing cash flow is the foundation of all financial plans.

“It’s about being mindful of every dollar that flows into your life and intentional with the very dollar that flows out,” says Ms Clothier.

When we have a system and process in place to manage our cash flow and ensure we are spending less than we earn, paying off debt as quickly as possible and building a cash buffer, we can begin to focus our attention on growing our wealth investing it.

Many people go straight to the investing part, only to find they are building on a shaky foundation.

If you are doing this, seek some help getting your fundamentals right – improving your cash flow situation to spend less than you make.

The dealbreakers of money and relationships

A major dealbreaker regarding money that will undermine a relationship, perhaps surprisingly, is poor communication.

Even worse is lacking transparency – which to a partner can quickly erode that most important element in any partnership: trust.

This applies to all stages of a relationship – including the beginning of one.

A partner with an undisclosed historical debt is a partner with a burden that can harm a relationship.

Hiding purchases and spending habits and having secret stashes of money will also destabilise a relationship.

Teamwork and shared responsibility regarding joint finances are essential. It’s constructive, but its absence is a big negative.

Working together on a joint budget, a spending and saving plan builds a sense of partnership – and trust because the goals are shared. Both partners can enjoy the feeling of achievement that comes from successful planning with structure and clarity.

If there’s debt, work out a debt management plan either together or with complete transparency.

“Lacking a plan means that our finances often control us, rather than us controlling it,” Ms Clothier says.

“It also means we are less likely to achieve our goals and dreams because we don’t have the means or method to achieving them.”

Another huge dealbreaker is procrastination.

So many typical money milestones fall on a particular date, so that that avoidance can be very costly.

So don’t put off paying the credit card bills or the insurance – that will create tension in a couple and family.

This also applies to investment. The saying goes: the best time to invest is yesterday and the second-best time is now.

Some regret over financial behaviours and decisions is inevitable and painful, but communication over shared goals can help prompt action rather than avoidance.

Another look at communication

In countries where the cost of living is high, money is one of the most emotive regular topics we face.

Shame, guilt, fear, anxiety, jealousy – all big emotions – are all common around money.

We can feel anger, too and even slip into useless or even damaging fantasies over finances.

And most of this happens in one place – inside our heads.

Learning to be open and transparent about money matters and communicate clearly can remove significant triggers for tension and disagreement.

It’s important to remember that a lot of financial behaviour is habitual.

“Most of us don’t bring much awareness or mindfulness to what we do with our money on a day-to-day basis,” Ms Clothier says.

Our money habits, particularly negative, can be detrimental to our finances and cause conflict in a relationship.

If you or your spouse notice some unhelpful financial behaviours, it’s important not to launch into judgement, blame or attack. Instead, offering support to see what is driving the habit or behaviour is more beneficial.

It’s important to explore – with honesty – if there are ways that one or more bad money habits, we have either individually or as a couple could be reduced or replaced with something healthier.

Suppose money is a source of regular conflict in your relationship. In that case, it may pay to consult with a financial counsellor, money coach or financial adviser who could support you to get back on the same page with your finances.

Often, they can provide perspective, an objective view, great support and practical tools to work together and master the art of managing money as a couple.

It’s important to note again that money challenges can reveal significant underlying issues, such as the need for security, freedom, or success.

Suppose the behaviour of one or other partners in a relationship is controlling or obsessive in pursuit of these values, leading to major relationship clashes. In that case, marriage counselling or couples therapy might also be helpful.

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Money, relationships and stress

Whether we like it or not we live in a world that runs on money, especially in OECD nations.

Everything has a cost and our capacity to pay market rates is constrained – and balanced – by our ability to earn and save.

What we want and what we can afford is limited by this. Fluctuating financial stress is somewhat inevitable in this continual ebb and flow.

One of the benefits of relationships – whether romantic or other kinds of partnerships – is that the costs for many things can be shared.

That can make life noticeably cheaper for people committed to shared objectives.

People in relationships can and do share the costs of everything from meals to furniture, from vehicles to houses, parenting costs and even business running costs.

Shared finances are traditional in romantic relationships, for good reasons.

“Working together as a financial ‘team’ and pooling resources makes more financial sense as a couple than having separate accounts – for one there are fewer bank fees and the opportunity to accumulate savings is doubled,” says Clinical Neuropsychologist, author and speaker Nicola Gates.

“Joint accounts also help maintain a sense of equality.”

The resulting financial enmeshment however creates difficult complex complications when relationships ad partnerships seek to disentangle.

A significant number of romantic relationships fall apart purely over money issues – as many as one in eight, according to comparison website Finder.

Why can money become a big issue in relationships?

Financial security is a basic human need, and an essential aspect of health according to the World Health Organisation but how we each interpret that varies significantly.

“Finances can become a big issue in relationships because we all have our own emotions around money, wealth, savings and have different financial behaviour,’ says Ms Gates.

“When couples have different emotional relationships with money and have different financial behaviour conflict can easily arise.”

This is exacerbated by a trend towards each adult in the relationship to manage their own finances and the couple dividing expenses.

Whilst this can work there is a huge risk that it leads to inequality and potentially disadvantages one partner.

Most of us would agree relationships work best when both partners feel respected and equal.

“Resentfulness can arise if there is significant inequity, and separate accounts also divide spending power, halves cumulative saving potential, and potentially disadvantage one member of the relationship,” says Ms Gates.

The biggest money issues in relationships

Money issues become divisive in relationships when there is a loss of transparency and honesty.

Some of this comes down to misguided priorities.

Ideas about personal freedom are so compelling that people can mistakenly seek to exercise personal freedom beyond where it is helpful.

For instance, they make what they see as personal financial decisions without consulting or even considering their partner.

Unwittingly this person could be corroding the sense of teamwork that relationships thrive on.

“I know someone where the joint financial goal was to save for a long holiday together but the one partner could not restrain from acts of immediate gratification and could not save for the long-term goal,” Ms Gates says.

“As a result, there was only money to purchase one airline ticket and the holiday did not occur.”

Separate accounts can also lead to perceived or actual financial infidelity when one partner hides money, or debt, from the other.

Financial infidelity ranges from lying to your partner or spouse about money to hiding things such as cash, bills or a purchase.

“Any lack of trust and transparency regarding finances is an issue, from secret spending or hidden savings, or debt is dishonestly hidden, as they all break a commitment to honesty,” says Ms Gates.

Sadly, it is not rare behaviour.

According to a poll of 2000 Americans by the National Endowment for Financial Education, a massive 43 per cent of adults with combined finances in a relationship said they’ve committed an act of ‘financial deception’.

Financial deception will undoubtedly erode trust in a relationship.

More than a fifth of respondents admitted directly lying about money, while 39 said they hid a purchase bank account, statement or cash.

It’s worth fully considering the seriousness of financial infidelity; in many scenarios, such acts amount to financial abuse, which is today recognised as a type of domestic violence.

A definition of financial abuse occurs when a perpetrator uses or misuses money which limits and controls their partner’s current and future actions and their freedom of choice.

It can include using credit cards without permission, putting contractual obligations in their partner’s name, and gambling with family assets.

The link between personal financial freedom and financial infidelity does not automatically mean any financial independence is unhealthy for people in relationships.

So long as absolute honesty and openness – in all things – are foundation stones of a relationship, then some independence is not a risk.

“If you choose to have separate finances make sure you talk about contingencies when one of you is in financial stress.”

These situations might include losing employment, being ill, supporting parents, raising children, or returning to study.

“Consider how to support a feeling of independence for the non-earner such as giving them an agreed amount so they don’t have to ask,” Ms Gates says.

What can we actually do if our partner has big money problems?

So, what happens when one partner cannot manage their finances, cannot save or has hidden transactions and money?

Sooner or later this behaviour will place enormous stress on that individual, then their partner and then eventually the relationship.

Can a relationship survive in those circumstances?

Yes, it can, but again, the answer lies in each partner’s willingness and ability to open up and work together for mutual benefit.

“Honesty, communication and total transparency are essential,” Ms Gates says.

How individuals, partnerships and couples manage financial stress when one partner is in acute stress will be determined by the quality of their relationship and how they communicate and support each other.

“How a couple manages the tough times is the best indicator of how close they are and how well they can communicate and problem solve as a team,” Ms Gates says.

If there has been dishonesty, trust issues will need to be resolved and to do that, moving to shared finances or 100 per cent transparency will likely be needed.

In a society that needs money to survive, it makes sense that people sharing a life – or a business – must have shared solutions to the challenges posed by the need to continually make and spend money.

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Financial stress a perennial reason couples split

It’s February already and in a lot of relationships that means money worries will be to the fore.

It’s well known amongst lawyers that returning to work after the holidays brings up dissatisfaction amongst couples.

The pressure of being forced together more often, especially with the added burden of home-schooling during the pandemic, has only increased tension for many couples.

The first working Monday of the year is even known as “Divorce Day” by some lawyers because of the increase in enquiries about separation after the stress of Christmas and the New Year.

Dig a little deeper and you’ll see a correlation between that stress and the bills coming in following holiday spending. A lot of it is financial stress.

Money stress has long been a source of relationship pressure.

“Arguments about money is by far the top predictor of divorce,’ said Kansas City associate professor Sonya Britt, from the university’s family studies and human services program, in 2013.

“It’s not children, sex, in-laws or anything else. It’s money – for both men and women,”

Britt, who specialises in “financial conflict within relationships” ran a study of 4500 couples as part of America’s National Survey of Families and Households. It was published in Family Relations, a journal of applied family studies. The study accounted for income, net worth and debt and found “it didn’t matter how much you made or how much you were worth.

“Arguments about money are the top predictor for divorce because it happens at all levels.”

Britt also found arguments about money took longer to resolve and recover from than other disagreements and used harsher language.

Her research seems to be backed up by people who sought information on relationship therapy in Australia.

An online survey of 2050 people who visited Relationships Australia’s website in late 2015 found nearly 85 per cent thought “financial problems were likely to push couples apart”. More than three quarters of the respondents were women.

This was a big increase on the last time the counselling provider surveyed web visitors on money issues, in 2011. Back then 71 per cent thought money dramas could split couples.

The survey drilled further into why money worries might lead to separation – and the answers were varied. But several of the main causes related to stress; 25 per cent thought financial problems caused “too much stress”, while another 15 per cent answered: “a lot of people can’t cope with the stress”. Nineteen per cent said money troubles “caused fights” and 12 per cent said such issues “caused blame”.

But the biggest single reason cited in the survey was the more diplomatic “people have different priorities/expectations”, which is another way of saying people disagree about money – presumably how much is enough, as well as how to spend and /or save it.

One finding in particular from the survey showed how mixed up couples are about money: around three quarters of female respondents reported that their male partner managed finances, exactly the reverse of how male respondents answered the question.

In other words, while everybody seems to think they are in charge of the money, nobody seems to be communicating well about finances.

This was backed up by a different set of questions Relationships Australia asked respondents in 2019 – the degree to which couples discussed finances.

Prior to making a commitment to their current of most recent partner, 56% of survey respondents reported they had not discussed how they would manage their couple finances if one of them no longer had an income.

A significant majority of women (74%) and men (69%) reported they had not discussed how they would divide their finances if their relationship ended.

“A mindful approach to money is without doubt a more successful one and a key to living mindfully is being able to accept reality for what it is – good, bad or neutral,” said Andrew Fleming, CEO/Founder of Financial Mindfulness.

It’s not a great leap to see that this can stretch to couples keeping secrets from each other about their finances.

“When we can accept reality, we can admit where we are at with money, not be so intimidated by it and we can discuss financial problems within relationships too.”

“That takes a lot of stress out of relationships, and everyone benefits from that.”