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.