Money & Relationships: Make Love, Not War

How will you mark the most important relationship of your life this Valentine’s Day? Will it be with a bottle of Chanel No. 5, a romantic dinner-for-two or, perhaps, something more extravagant like a view of Earth from a space capsule ($90,000 USD), a private art tour of Italy ($150,000 USD), or your very own hand-crafted whiskey ($125,000 USD)?¹

Oh, sorry. Did you think I was talking about your relationship with your husband/wife/significant other? Nope.

The most enduring and long-lasting relationship of our lives is with something far more mundane but fully-loaded: money.

Our relationship with money is formed early in life. Long before we even touch our own finances through an allowance or a part-time job, we observe how our parents and other close family members feel about money, whether they groan when a bill arrives in the mail, happily splash out on gifts and entertainments, or chronically argue how and where it gets spent. Whether we have unconsciously fallen in-line with our family’s money modus operandi or rebelled by doing the exact opposite of what we learned at home, by the time we have control over our own money, our biases are well-established. We may even assume that everyone views money and interacts with it the way we do. Anyone who has ever been in a committed relationship has some experience with the fun that ensues when two people, with very different money scripts, say, “I do”.

It’s no surprise that one of the most common sources of conflict in a relationship is money.²

According to a survey conducted by Manulife of over 2,000 Canadians, one-third reported that finances were the major stress in their union. And, among those who regularly talked about money with their spouse, half of them said the conversations added to the relationship stress. (Couples under 35 reported more money stress than those 55 and over.)³

One outcome of money stress in a relationship is financial infidelity. Sometimes it’s just easier to go your own way than to try to resolve conflicting money scripts.

He thinks that spending $400,000 on a 1957 Les Paul guitar is a perfectly fine investment. She thinks that booking regular spa days is the key to better mental and physical health.

In the Manulife survey, almost 10 percent of respondents admitted to hiding a large purchase from a loved one, and 20 percent said that their significant other had no idea how much debt they carried. Eight percent of men said they had hidden a purchase valued over $15,000. (Not a typo!) Women tend to hide small purchases; men hide larger ones.³

A little private spending may not seem like a big deal, especially if it saves the relationship from the wear-and-tear of regular money squabbles. Still, those small purchases add up and, depending on the family’s cash flow, they can gradually derail major financial goals like saving for a child’s education, travel, investing, as well as retirement planning.

As many financial planners who work with couples can attest, the actual mechanics of money— like spreadsheets, budgeting and saving—are a relatively small part of the conversation. The much larger piece of the puzzle involves understanding individual values about money, and, how to blend those within a family. Money is never about money. It’s really about security, status, guilt, fear, greed, family patterns, goals and dreams. Most of us don’t want to get financially and emotionally naked and this keeps us trapped in our same ole money stories and the same ole family arguments.

Technology may even be abetting our biases by reducing the friction in financial behaviors like shopping or investing. Large financial transactions can now be done with a quick tap on our smartphones practically 24 hours a day, thus removing the potential benefit of a cool-down period to mindfully reflect on our impulses.⁴

How to Re-Boot Your Relationship with Money

Know Thyself (and Thy Spouse)

Who can resist a quiz? A low-risk way to get to know yourself and your partner better is to start with a simple money personality quiz. Do you feel you need to buy something new before a social occasion? Do you check your investment balance daily? Are you or your spouse the first (or the last) to reach for the bill when out with friends? According to a quiz from the Financial Times, there are six main financial personality types: anxious investor; cash splasher; ostrich; social value spender; hoarder; and fitbit financier. Get the conversation started with each spouse taking the quiz and sharing the results with each other. You can find the quiz at the following link: https://ig.ft.com/sites/quiz/psychology-of-money/

Revisit the Division of Labour

Back in the day, the assumption was that financial literacy was gender-based: men took care of the money and women spent it. Common societal beliefs include: women are more impulsive shoppers than men; are less likely to save money, are less confident managing investments; and are more averse to financial risk-taking. Hence, in heterosexual couples, it’s men who often make the long-term financial decisions that affect the entire household.⁵

Today, we know better. Gender is not the key determinant of financial prowess that many of us grew up believing. According to a recent study by CPA Canada, personality traits are the dominant factor in financial know-how. When the study controlled for age, income, education level, and personality, there was no significant gap in women’s financial skills.⁵

One implication of this study is, in a couple, the partner with the greatest financial aptitude and interest should be the one to take the lead in money matters, regardless of gender. In fact, according to the Organization for Economic Cooperation and Development (OECD), one of the best ways to improve a country’s economic development is to close the financial gender gap⁶. If it works for an entire country, it should work wonders within a small family.

Identify Signs of Financial Infidelity

Because spouses are not identical twins, each partner will always have some unique goals. The couple’s financial plan should be flexible enough to accommodate these without derailing the family’s long-term goals. Compulsive financial infidelity is another matter though. It is corrosive to the relationship so it’s important to know the signs before real damage is done. Here are some potential red flags from the Financial Planning Standards Council (FPSC)⁷:

•          Regular cash withdrawals

•          Unaccounted purchases

•          Partner lies about purchases

•          Change in behavior, spending habits

•          Spending more on themselves/others

•          Change in mail, e.g. new credit card notices or new investment firms

•          Less frequent mail from your regular financial institutions

•          Partner is extra vigilant about mail coming in and doesn’t want you to see it first

Paper Chase

It’s much easier to prevent a financial problem in the relationship than to fix one that’s already happened. Review any joint financial obligations such as home ownership, shared credit cards, bank and investment accounts, as well as wills. Know what your legal and financial rights and obligations are within the relationship based on any cohabitation agreements and/or provincial laws. (For example, in Ontario, division of property is treated differently on the dissolution of a marriage vs. a common-law relationship.)

Find Shared Meaning

According to Dr. John Gottman, a relationship expert, founder of the Gottman Institute, and Professor Emeritus of Psychology at the University of Washington where he founded “The Love Lab” that studies couple interactions, spouses can use their money conflicts to better understand their partner’s attitudes to money and how they came to be. Then, together, they can begin to create a shared meaning around money based on mutual goals. In other words, money can be used to bring a couple closer, instead of further apart. (If the subject of money is too hot to handle on your own, consider investing in the services of an impartial third party, such as a money coach, financial planner, or relationship expert.)⁸

Rita Silvan, CIM, is the former editor-in-chief of ELLE Canada magazine. She is a freelance financial journalist and the editor-in-chief Golden Girl Finance (www.goldengirlfinance.com), Canada’s leading digital magazine about women and financial matters. She is based in Toronto and can be reached at rita@ritasilvan.com.