Money is cited to be one of the leading cause for divorce. According to a study done by Prof. Jeffrey Dew at Utah State University, couples who reported disagreeing about finance once a week were over 30 percent more likely to get divorced than couples who reported disagreeing about finances a few times a month.
When we got married, money was a touchy subject. When we were not saving anything, both of us thought the other person was in the wrong. After having more than a few disagreements, we decided to take control of our money instead of the other way around.
It took us a few years to completely stop arguing about money. This is what worked for us
Set common goals to work towards
Nothing worked better than setting up our financial goals. Initially we were saving whatever was left over at the end of the month. Most months that turned out to be nothing. When I blamed my husband for buying some hobby stuff that could have gone to savings, he couldn’t understand what the big deal was. If we didn’t save this month we will save the next right? And I would persuade him to eat out 3-4 times a week, then complain we didn’t have any money. Only after we set clear goals and automated our finances using targeted savings accounts for each goal, did we became aware of our entire financial picture. It was easy for us to decide between eating out now or a vacation to Hawaii in 3 months as opposed to the prior decision used to be eating out or some-random-extra-cash-at-the-end-of-the-month. Clearly a much poorer incentive not to eat out :).
Develop a spending plan that works for both
After we set up goals, we set up a budget and failed miserably. It took us a few tries to come up with our current spending plan that allows some cushion for stuff we both love. I still buy my favorite frappucino but I know my limit. He can buy his hobby stuff as long as it is within his fun money allowance.
We also have a limit of $50 above which every purchase has to be talked over. If it is important and can wait, we start a new goal to fund the purchase. If it cannot wait, we know exactly where we are taking the money from and it gives us an extra layer of thinking-it-through time.
Have financial dates
Every month we go over our spending, net worth and discuss any important financial decisions we will be taking that month, like selling some stock or deciding where to go on our next vacation and how to save for it. Initially when we were still arguing about money, these were not fun, but now I look forward to these, because it has moved away from arguments to exciting discussions about our future.
Hold each other accountable, point out mistakes but don’t judge
My husband finds it a lot easier to shut off his spending. He doesn’t need much. So it was much much easier for him to control his spending than it was for me. He is also my best friend, so by talking about my frustrations we were able to come up with better alternatives that didn’t require me to be a cheap stake but stopped me from being a spendthrift.
Be honest with each other
I don’t think this needs any explanation.
If both partners are working towards the same goals, communicate and be honest with each other, everything else will become just a technicality.
What do you do to keep from fighting over your finances? How do you and your significant other work on your financial front?