Has money ever caused an argument in your relationship? If so, you’re not alone. A staggering 88 percent of people between 25 and 40 who live with a spouse or partner cited financial decisions as a source of tension in their relationships, according to a survey by the American Institute of CPAs and the Ad Council. Financial issues were a daily cause of stress in one-fifth of relationships and a weekly cause in about one-third. What can you do to prevent flareups over finances? The Pennsylvania Institute of Certified Public Accountants is here to let you know.
Did you run up hundreds of dollars in credit card bills, but you hope to pay them off quietly over the next few months without your partner knowing? Or maybe you already have a load of outstanding debt that you haven’t ever mentioned? Keeping secrets about significant financial challenges is one of those things that will add stress to a relationship. The truth will eventually come out, and it probably will cause an argument. Then, you will both have hurt feelings and a big financial problem to deal with. It certainly can be tough to confess about a big money issue, but being honest can minimize the confrontation and leave you in a better position to tackle the challenge together.
Make Financial Planning a Priority
When you haven’t taken the time to budget or set financial goals, it’s hard to know if you’ve overspent or failed to meet your objectives. Spending that seems impulsive or excessive can lead to arguments. Before this happens, determine how much income you each bring home every month, then subtract your total regular expenses for items such as housing, utilities, phone, cable, groceries, transportation, and savings. Decide together how to handle the money that’s left to prevent any misunderstandings about spending. Also, consider spending limits where any purchases over a certain level should be discussed beforehand.
Recognize Your Personalities
As part of your conversations about money, consider your personalities as they relate to your financial tendencies. If one of you prioritizes financial security and the other values comfort and convenience, there likely will be conflicts. When one spouse is worrying about buying a first house and the other one is looking forward to the next vacation as the most important financial concern, there are bound to be misunderstandings. Discussing your differences can help you understand each other and reduce the chances for conflict. Map out a financial plan that includes both short- and long-term goals and assign them priorities to help you decide how much you want to save for various goals. This conversation will help you understand each other’s objectives and plans for the future, and will help you identify ways to achieve them together.
Decide Whether to Combine or Not
One way to sidestep some financial arguments is by maintaining separate checking, savings, or investment accounts. This can give both partners a greater sense of control over their finances and a way to manage their money as they see fit. This may work well for couples who are already established financially and don’t want to change how their money is handled. It can also be a good choice early in a relationship when partners may want to keep some financial independence. But with separate accounts, it’s important to establish how financial responsibility will be shared and to maintain a joint budget so you both can monitor household finances.
Remember, there is no reason why you can’t have it both ways. If you’re leaning toward, or have, separate accounts, consider also having one joint account for maintaining household bills or other shared expenses or savings.
Your CPA Can Help
No matter what your financial concerns, your local CPA can offer expert advice and ideas. Turn to him or her with all your financial questions. To find a CPA in your area or for more financial tips, visit www.picpa.org/moneyandlife.