Four Financial Realities of Being in a Relationship

One of the most common themes I see in questions I receive from readers is an uncomfortable sense of what financial roles are in a relationship. A person lives with someone/is engaged to someone/is married to someone and is unsure about how to handle their partner’s debt/spending/shared purchases. That sentence covers the core of a lot of the questions in the reader mailbag.

There are a few key elements that seem to often come up in my responses to these questions as well, and those elements really form a strong foundation of how people in relationships should think about and handle their money.

It really boils down to four key principles that really flow together.

Talking about money in a relationship is absolutely essential. When you’re in a relationship intense enough that you’re sharing many of the costs of life, you have to be able to communicate clearly about those costs, as well as the income you both have with which to cover them and the plans you each have for the future.

Why?

The debts and expenses of your partner are also your debts and expenses. If you owe a debt and have to make a monthly debt payment, that takes money out of the shared pool that you both have with which to cover your monthly expenses. If you spend money somewhere, that money is removed from the overall pool that you have to cover your monthly bills.

Let’s say you’re out and about on the town. You tell yourself that your partner is going to be able to cover the rent this month, so you convince yourself it’s okay to spend some money. Because you spent that money, you’ve eliminated your ability to help pay the rent.

Now, what happens if your partner isn’t able to pay the rent? You’re suddenly in a serious pickle, one that’s caused not only by a communication failure, but by the reality that your spending, bills, and debts affect your partner’s spending, bills, and debts.

Whether you like it or not, if you’re in a relationship, your finances are shared, whether in actual practice or not. Your actions affect your partner and vice versa.

The third principle is something of an extension of this one.

Hiding debts and expenses from your partner affects them in many ways and is deeply dishonest and damaging to your relationship. Since your spending alters how your partner is able to spend money, hiding a debt or an expense from your partner is essentially the same thing as taking money out of their pocket without telling them why.

It undermines financial stability. It undermines the trust in your relationship. It ensures that your partner is unfairly being asked to shoulder an additional burden without even knowing why.

Usually, the root cause of this is a communication breakdown. You’re afraid to tell your partner because you’re afraid of the retribution you envision in whatever form that may take. You can’t bring yourself to admit a mistake to your partner because that shows weakness.

All of this culminates with a simple statement about the stability of one’s relationship.

If you can’t talk about money with each other, then your relationship is on tenuous ground.

A relationship is about mutual support. If you can’t talk about your financial situation because it shows weakness, then you’re not mutually supportive. You’re antagonistic and combative. If you can’t talk about your financial situation because you fear retribution, then your relationship is at best combative and at worst abusive.

If you can’t communicate through your mistakes and honestly evaluate your full financial situation together on a regular basis, your entire relationship is on tenuous ground. You need to take a serious look about whether this relationship is something you should be continuing, because there are some deep trust issues (and other problems) running right through the relationship you’ve built.

The solution to all of this is simple, and it’s right there in the first principle. Communicate. Talk about everything with your partner. Admit your failings, and don’t brow-beat your partner over his or her failings. You’re both human beings. You’re both going to make mistakes. The entire purpose of a relationship is to be there for each other through both the high points and the mistakes. Otherwise, there’s no point in having a long-term relationship.

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  1. Johanna says:

    But wouldn’t these “elements” apply just as well to roommates – people who live together and share a lot of their expenses (rent, utilities, sometimes groceries) but are not in a romantic relationship? I mean, if your roommate says he’s going to cover the rent, and then he can’t cover the rent, and you can’t cover the rent either, you’re in just as much trouble with the landlord whether your roommate is your significant other or not. But surely you’re not saying that roommates are being “deeply dishonest” if they don’t share every detail of their spending with one another? At least, I’ve never shared every detail of my spending with any of the roommates I’ve had. Because it’s none of their business.

    I’ve never been in a relationship that’s even gotten close to the point of sharing living quarters or sharing finances, but it seems to me that financial privacy isn’t any more antithetical to a romantic relationship than it is to a roommate relationship. Whether that’s a little privacy (each person gets $50 a month to spend as they please, no questions asked) or a lot of privacy (as long as you can pay your share of the rent and the electric bill, nothing else is your partner’s business) depends on the couple.

  2. Des says:

    I think most of this has nothing to do with money. If you are hiding almost *anything* from your committed partner, you are on tenuous ground. Privacy in our marriage extends to the bathroom – and that is it! Everything else is fair game. I may not tell my husband about every minute of my day, but if there are minutes I am overtly hiding, something is wrong. If I find myself specifically not wanting him to know about where I spend my money, or who I talk to, or what I’m looking at online, or even what I eat (as ED sufferers know) then something is headed in the wrong direction.

  3. Sonja says:

    I have seen more than one marriage dissolve over money issues. In each case there was one party who seemed to hold the attitude that it was fine to spend next week’s paycheck this week. The basic incompatibility on this one aspect has a domino effect on hiding spending – or on the flip side having “secret savings accounts” – and putting the partnership/marriage on shaky ground. I would add that roommate relationships are really different. You are not emotionally involved, don’t have expectations beyond splitting bills, and can usually find a new roommate pretty easily.

  4. lurker carl says:

    #2 Des – After decades of marriage, injuries and medical conditions, infant and infirmed; with four generations of family passing through my home there is no such thing as privacy in the bathroom.

  5. lurker carl says:

    A room mate is a business arrangement and should be treated as a tenant. They are leasing a portion of your home, there should be a credit check to insure they are able to afford the expenditure. Sometimes you have to be their hardnosed parent and collect your rent on payday.

  6. Nancy says:

    We have a rule in the house. If you are going to spend more than $50 on one thing you have to discuss it with the family. (That’s what cell phones are for!)

  7. Tom says:

    Come on, Johanna. Yes, the principles can apply to roommates, but the “deeply dishonest” part comes from the understanding that a relationship with a significant other is typically on a different emotional level than a roommate. A significant other who lives with you fills many roles, including roommate, thus interactions carry a greater emotional impact

  8. I was reading your book today at the gym (while I was working out) and came across the part where you were scared to tell your wife about the $100 worth of books you bought. It really made me think my husband and I truly need to sit down and have a discussion about finances monthly instead of the occasional “did you pay the cable bill” question.

  9. SwingCheese says:

    @4: LOL, lurker carl!! We have three generations under one roof here, and I’m almost positive that we’ve all walked in on each other in the bathroom at some point!

  10. Debbie M says:

    Communication is not always so magical. Let’s say, that through perfect communication, you discover that one of you likes to minimize debt, have a large emergency fund, save for retirement, etc., as advised on this blog. And the other one likes the just-in-time philosophy, shuffling expenses so that nothing bounces, like some financial version of tetras. Making it to the next paycheck is an exciting victory! Or worse yet, they claim they want safety and back-up plans, but they don’t want them enough to actually change their habits.

    Communication is a good first step. But unless you then come to an agreement on your strategies, then you’ve got a lot more steps ahead of you. Steps like each experimenting (temporarily) with things the other prefers. Figuring out ways to both get what you want, either at the same time (by, say, splitting up your money) or cyclically (one after the other). Finding ways to humor each other (you don’t admit they have a point, but you let them do what they want anyway).

    And just plain dealing with irrationality. If one person irrationally gets bent out of shape seeing a big pile of savings that they’re not allowed to spend, I can see secret savings–they could even agree that there will be savings but that the irrational person will not be told where it is so they can’t torture themselves by continually checking on the balance. Note that the irrationality could be on the other side, too–any purchases over a certain dollar amount may freak out one person, so maybe the other person makes sure there’s enough money and buys those things using cash or a separate credit card so the other person doesn’t have to see that big, scary number.

  11. Tracy says:

    I absolutely agree that communication and being on the same page with how finances are handled is essential, no matter what route you decide to go. And that hiding a problem is one of the worst things you can do.

    But some of the rest of your thoughts don’t flow.

    “The debts and expenses of your partner are also your debts and expenses. If you owe a debt and have to make a monthly debt payment, that takes money out of the shared pool that you both have with which to cover your monthly expenses.”

    First, that assumes that the couple DO decide to ‘pool’ money, instead of maintaining separate finances and splitting different bills. Which is common enough that I wouldn’t nitpick about it, except than the same section goes on to say “Let’s say you’re out and about on the town. You tell yourself that your partner is going to be able to cover the rent this month, so you convince yourself it’s okay to spend some money. Because you spent that money, you’ve eliminated your ability to help pay the rent.”

    THAT does not describe pooled money, that describes separate finances, with each part of the couple contributing individually to certain expenses (or in this case, not contributing)

    “Whether you like it or not, if you’re in a relationship, your finances are shared, whether in actual practice or not.”

    Not really, not anymore than roommate’s finances are ‘shared’. I think there have been enough examples given where that’s not the case in previous posts on this subject that your continuous assertion that it’s reality is just problematic.

  12. Johanna says:

    @Tracy: I think that what Trent is trying to say is that even if you try to have separate finances on paper, in reality your finances are essentially shared (because your inability to pay the rent affects your partner and vice-versa), so just stop fighting that reality and merge your finances already. But as I said, I don’t think that argument really holds water.

    Here’s another thought: Romantic partners trust each other not to be unfaithful. Once they’ve established boundaries for their relationship (which usually, but not always, include the idea that hooking up with other people outside the relationship is not OK), they trust each other to go about their lives without violating those boundaries. I think most of us would agree that if one partner in the relationship demanded that the other account for his whereabouts at all times to prove he wasn’t cheating, that would be evidence of a problem in the relationship (whether the suspicious partner is right to be suspicious or not).

    So why can’t the situation be the same with money? You establish some very basic guidelines (how to divide and pay shared expenses, whether and how to save together for shared goals), and then you trust each other to operate within those guidelines, without having to constantly prove that you’re doing so.

  13. Tracy says:

    @Johanna

    *nods* Yeah, I know what he was trying to say, it’s just that like you, I don’t agree with it. I think that even if specific expenses are shared, that doesn’t necessarily mean that entire finances are shared.

  14. kristine says:

    re:bread- Don’t killowat costs vary widely across the country?

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