Money: A taboo topic
When we decide to spend our life with someone, it can seem like a burden to think about our finances, we rather be caught in the whirlwind of emotions. Over time, our life evolves. We buy a house, start a family, and it can be tempting to avoid discussing money matters to maintain the harmony of the couple. Yet it’s only if you make concrete plans for your future that you can avoid experiencing financial – and romantic – difficulties long term. But how can you address the issue with your spouse without creating tensions between you and in the family?
Communication is the key to financial success
It is entirely possible to discuss your personal finances and plans for the future without it starting a fight. It’s all about timing: don’t wait until you’re in a precarious situation but set goals together and discuss wealth management and finances when your situation is stable and your relationship is going well in order to be prepared for all the eventualities. It also prevents unwanted feelings to complicate communications between you and your spouse.
Once you have decided on your short term and long term goals together and determined how to achieve them, the work is not done! It’s important to continue to meet regularly, at least once a month, to review your goals, determine your progress and discuss your finances to make sure that both of you are still in agreement and on the right track.
Some statistics!A survey conducted in the United States in 2012 found that 27 % of married or common-law couples say that money is the issue most likely to cause a fight in their relationship. Why is the subject so sensitive? 58 % of couples report that they have a divergent view of what constitutes a ‘need’ versus a ‘desire’. 49 % of couples blame unexpected expenses while 32 % say it is the lack of savings that is creating stress.
The family budget
When it comes time to build your family budget and split common expenses like the mortgage, rent and monthly bills, it can be difficult to figure out how to proceed. Some couples decide to share the bills, either equally if they have a similar salary or prorated when one spouse earns less than the other one. Other couples choose to divide the bills so they each pay approximately the same amount each month.
The important thing is that the arrangement you choose is fair to both you and your partner. After all, nobody wants to be stuck in a situation where one member is living the easy life while the other one is having a hard time making ends meet.
How can you split joint expenses?
Only a joint account
You can decide to both put all your income in a joint account that will handle both your personal and joint expenses. The advantage is that it is easier to keep track of the spending and it encourages a relationship based on principles of openness and transparency. On the other hand, if you value your financial independence, this option could create conflict, so it’s important to talk honestly with your partner if you are considering this option.
Personal checking accounts and joint account
You can also choose to keep your personal checking accounts and to use the joint account only for the joint expenses. That way, you get to keep your financial independence while contributing to family expenses. If you choose this method, it’s still important to discuss what you are planning to spend on personally to ensure that the family budget allows it and so you can maintain an open relationship with your partner.
Having fully separated accounts
Other couples will choose not to use a joint account at all, preferring to manage their finances separately via their own personal checking accounts.
Important! The way you choose to organize your finances can affect your personal credit. It’s important to discuss this with your partner beforehand to avoid unpleasant surprises that affect your personal financial situation.
The Financial Consumer Agency of Canada offers two very useful tools to help couples organize their finances and plan for their future:
When to contact a professional
In some cases, it might be helpful to contact a professional like a financial adviser or a notary to ensure that you don’t make decisions without being informed of the long-term financial implications or even simply just to ensure the impartiality in the couple’s decisions. The presence of a neutral person can also help defuse tensions while discussing sensitive topics and help you find some common ground.