Is it possible to marry your “soul mate” but still find yourself clashing over finances and investments? The short answer is yes. In fact, disagreements over money are one of the leading causes of divorce.
Because spending and saving habits are such an integral part of every couple’s daily and long-term interactions, there are many potential areas of disagreement, including:
- Different spending habits. Some people were raised to save as much as possible, while others may have grown up with a “seize the day” mentality. This can lead to conflicts when one partner outspends the other or if one partner is such a strong saver that his or her habits impinge on their partner’s happiness.
- Different tolerance for risk. Studies have shown that men are typically more aggressive risk-takers than women are. But when it comes to long-term results, women—who tend to trade less frequently and diversify more—often achieve better results. Disagreements over how to manage savings and investments can lead to friction, especially during periods of stock market volatility.
- Different dreams for retirement. When one partner’s retirement dream is to globetrot around the world while the other dreams of reading books in the back yard, this can lead to financial disagreements. Travel is costly, so one partner may resent the other if that person wants to spend significantly more of the couple’s retirement nest egg.
So how do you resolve these potential conflicts? As with most relationship issues, communication is the key to success. It’s rare to have both partners agree on every aspect of their financial lives. But when disagreements arise, talking about them openly and seeking out creative solutions can help prevent them from morphing into resentment (or worse). Here are some potential solutions to the challenges noted above:
- Walk a mile in your partner’s shoes. If your partner’s profligate spending habits or miserly ways are making you miserable, try a role reversal exercise. For one month, switch spending habits. So if you’re the big spender, cut back and save. If you’re the saver, enjoy loosening the purse strings and living it up a bit. At the end of the month, sit down and discuss what you experienced and how it made you feel. Understanding each other’s attitudes and actions better may lead to a compromise.
- Meet in the middle on risk management. Sit down with your partner and review how your savings are invested. If you each maintain a separate Registered Retirement Savings Plan (RRSP) or other accounts, you are most likely investing for your own individual risk tolerance. While nothing wrong with this, if one partner is a risk-taker and the other is a worrier, it can be a cause of concern or uncertainty for one or both of you. As such, it is time to discuss your tolerance for risk as a couple. A financial professional can help you examine how your combined assets are invested, what the combined risk of your household’s portfolio actually is, what this means for your goals. With this review, it may be that nothing needs to change, you effectively balance each other out, or you may find some modifications to your individual accounts may be needed. But the ultimate goal is finding peace of mind for both of you over how the household assets are being managed and that they are being managed with a view to keeping you on track to reaching your goals.
- Retire on each other’s terms. Many couples focus so much of their energy on building a retirement nest egg that they often forget to discuss what type of lifestyle they want to live after they retire. Checking items off your travel bucket list often ranks high for many newly minted retirees. But if your partner would rather stay home and watch Netflix than traipse through the streets of Paris, you may need to agree on some creative solutions. It starts with recognizing while you are a couple, you are also individuals. Your differences need to be recognized and rather than forcing your partner to do something they don’t want to do, or holding the other person back, look for ways you can do some things together and allow your partner opportunities to pursue their own interests. For example, the traveler in the couple could take group tours or travel with friends. Or perhaps you could travel together domestically and let the world traveler explore overseas destinations with his or her extended family or friends. Here again, communication is the key to resolving conflicts.
There are many other potential areas of financial conflict for couples, including excessive debt, issues related to blended families, and hiding financial secrets. If you are unable to resolve these challenges on your own, you may want to seek help from a financial professional, a marriage counselor, or both.