Love and money: How to manage finances as a couple

If stories of infidelity fuel TV dramas, polls remind us that in reality, money is the most important cause of lovers’ quarrels.

In this article :

• Strategies for a healthy balance between love and money
• 3 budget management techniques
• 2 apps to make it easier

 

There’s no perfect recipe for budget management as a couple, but there are practical ways and key behaviours that can contribute to the financial harmony of a relationship.

Breaking the taboo through communication

Breaking the taboo requires both partners to unpack their financial baggage in a straightforward manner. It’s not always easy, but it’s vital! On this matter, a survey reported that more than one-third of Canadians admitted to financial infidelity.

Disclosing your credit score on the first date is definitely premature, but when a more serious relationship is taking shape, it’s best to be transparent.

In many ways, the couple is also an economic partnership that requires both parties to have access to valid financial information.

Setting a strong basis for dialogue

It’s more than a matter of budget and revenue.  Partners need to openly discuss their mindsets towards savings, career ambitions, and long-term financial goals.

For example, a person who is terrified of debts will certainly have difficulty sharing his or her life with someone who lives stressfree paycheque to paycheque.

When an argument escalates over a simple expense, the actual amount of the purchase is rarely the real issue. The disparity in risk tolerance and long-term goals is likely to be the deeper cause. The same principle applies when a partner questions the other’s career reorientation or new business idea.

Hence the importance of addressing money issues in-depth and early. It’s not about being with someone who shares the exact same vision and values, but rather identifying common grounds to build on and differences to reconcile.

Planning money dates

It’s not the most romantic idea, but scheduling times to talk about finances is an effective way to have level-headed conversations. A Monday morning of December, in the midst of preparing lunches and shovelling snow, is definitely not the best moment to decide whether to withdraw from an RRSP to buy a home or not.

Money dates are not only a time to track expenses and plan a budget, they also allow to take stock of long-term goals and agree on the commitments each has to take.

 

Budgeting: 3 methods and 2 practical mobile apps

Can we really talk about financial health without mentioning the budget?

The 50-50 approach

Equal expense sharing is a simple method, ideal for new couples with only a few common expenses.

Until money issues have been addressed in full transparency, this is the preferred approach.

The Pro Rata Approach

As the relationship progresses, and especially when both spouses do not have the same level of income, the proportional approach allows for a more equitable split of responsibilities.

Each partner contributes to the expenses as much as they can afford to, depending on their financial situation.

The big pot approach

When a couple decides to build value together, pooling the money coming in and going out on both ends becomes the optimal formula.

It allows for simpler management while offering the possibility to implement mutually beneficial tax strategies and financial planning.

It is at this stage that trust, transparency, and communication become essential.

Specific topics that should be addressed:

• Life Insurance
• Disability Insurance
• Protection mandate
• Life projects (real estate, travel, business)
• Saving for retirement (RRSPs) and children (RESPs)

Apps such as Splitwise and HoneyDue can be very useful.

Seek external support

What may seem like an irreconcilable discord at first glance could be resolved with the help of an impartial advisor.

A good financial advisor will be able to present pragmatic and optimal solutions. Most importantly, he or she will allow both parties to adjust their expectations based on what is achievable.

Need help for your money and your couple to work together? Contact an MCB Group advisor!