Becoming a Financial Team
Money chat. It’s not always the most popular conversation topic. In fact, many people still consider it rude to talk about money with friends and even family. Within the realm of our intimate relationships money has significant implications for the power dynamics within the relationship because money represents so much more than a currency of value exchange. It represents feelings in relationships - like love, power, respect, stress, control, and possibly humiliation.
So when we do discuss money - it’s often fraught and highly emotional.
In fact, it’s one of the most frequently argued about topics and the number one reason for divorce in the early years of a marriage. I had observed the impact of poor communication around money on relationships through my work in the banking sector. So I knew it was something I wanted to get right in my own relationship.
Naturally, the topic of money came up fairly early in our courtship although it was for more pragmatic purposes like how were we going to split or pay the bill and what budget did we want to set for a joint holiday. When we moved in we began sharing some bills like the rent, electricity, the internet but it was all still pretty much ‘what’s mine is mine and what’s yours is yours’ until we got engaged.
Getting engaged really changed our approach from ‘me over here and you over there’ to a sense of ‘us’. Sure we had a wedding to plan but we also began to consider what a life together might look like and wondered how we could give our relationship the best chance at success. A big part of that was how would we manage money as a team?
Know thyself …
The first part of coming together as a team was sharing with each other our money story. After 5 years of dating we had a reasonable idea about each other's money stories (our unique thoughts, feelings and behaviours towards money) but we had never really talked about it in any great detail.
So we took the time to share with each other our different experiences with money, what messages we received growing up about money and how it was discussed at home, we talked about our first jobs, what we had saved for and how we like to spend and manage our money as individuals.
Like many couples, we have totally different money personalities. My husband could be classified as a Money Avoider in that writing a budget, opening a bank statement or filing a tax return are a very low priority on his ‘To Do’ list. He’s also much more of a risk taker than I am and generally believes that everything will always turn out just fine. He knows he has some money but how much exactly he’s never quite sure. My money personality, on the other hand, is a combination of Money Saver and Money Accumulator. I am quite conservative with my money and like to know exactly what’s coming in and going out. I feel safest when I have good balance of savings, money to spend and money to invest. Writing a spending plan (budget) or tracking down the best deal on car insurance gives me a literal thrill (nerd alert!).
So we know we are different but we leverage these differences to make a team that compliments each other. I play the role of family CFO, administering the day to day money management because I love doing that. We make the big plans together and when I’m over analysing or worrying about something he brings the confidence and tells me to ‘go for it!’. He also reminds me to just relax and enjoy myself - that the best things in life are free and not everything needs to be planned.
Would I like him to take a more active role in the money? Sure. Does it really matter? No because we make all the big decisions together, communicate regularly about finances and trust each other implicitly.
What are we bringing to the table?
Before we walked down the aisle we took the time to share with each other what we were bringing to the relationship. That meant telling each other our financial status, values and hopes for the future. We shared what we earned, what we were spending, what we owned and what we owed. We both had some assets (property, shares and cash), we both had some debt (HECs, credit card), we both earned an income although not equally, and we both paid our bills, had our fun money and still saved cash. In essence, we were quite compatible.
I acknowledge that asking someone to tell you their exact financial position is akin to asking them to take their clothes off and stand completely naked ready for inspection - you feel vulnerable, right?! My advice would be to do it when everyone is in a good mood, sober and to be kind to each other. Be curious but not judgemental of each other. If you’re struggling to navigate this conversation on your own then consider enlisting the help of a relationship counsellor or financial advisor to facilitate the chat.
How do we manage the day to day?
Starting a life together meant living together and with that came managing joint expenses, joint experiences and joint goals. So how do we organise our money on a day to day basis?
The approach we take is that we do the important stuff together but maintain some personal independence too. Let me break this down:
Income - we both get paid into our own personal accounts.
Joint Expenses - we pay these out of a joint account that we both can see, access and contribute to. This for things like the mortgage, utility bills, general insurances, groceries and so on.
Fun Money - we maintain our own accounts containing money that we can spend on whatever we want. These are personal accounts. I label mine ‘fun money’ whilst my husband calls his the ‘beer money’ account. These accounts pay for our personal purchases like clothes, personal care, entertainment, gifts and whatever else takes our fancy.
Joint Goals - we then have a couple of joint accounts that we contribute savings too. Some are for short term goals like a holiday or car upgrade whilst others are longer term goals like when we are building up a home deposit or a share portfolio.
Emergency savings - we both have our own OMG accounts (emergency savings) and a joint one too. So when I decided to quit my job and take some time off before starting another one I lived off my personal OMG account. When there was a surprise strata levy for some building repairs in our apartment block we used the joint OMG funds.
So that’s how we do it. That’s not to say that this is the approach everyone should take. It’s just the one that works for us. Personal finance, after all, is personal to everyone. You do you, my friend!
Setting joint goals…
So being the financial enthusiast (read: nerd) that I am, it probably comes as no surprise that I like to take the lead when it comes to managing our money day to day but that’s not the case when it comes to the big stuff like joint goals.
For us, getting married meant that we were now a team and a family so we wanted to work toward our shared goals like buying and owning our own home, building an investment portfolio, making a success of our careers & businesses, and making sure our retirement was on track together.
Given that we were both over 30 when we got married, we had already made some progression toward these goals as individuals so we had to work out how we would come together on these goals. For example, I had been building up my home deposit independently whilst he already had an investment property. We could either both own investment properties or we could own a home together. We opted to own a home together, again just a personal choice. So my deposit helped pay down his mortgage and we transferred the title & mortgage into joint names so that we were both owners. We then began to build up the deposit for our new home together.
Another tricky area can be deciding how much you each contribute to your goals if you don’t earn the same amount of money. For us, we go 50/50 on bills but for savings we put in amounts that are proportionate to how much we earn. We figure that at different points in our life together each of us will take turns being the breadwinner and it will all even out in the long term. We felt that this was fair and are happy with this approach. Again, this isn’t a hard and fast rule that everyone should follow - it’s just what works for us.
Checking in…
Finally, the most important part of coming together as a team was our commitment to regularly check in with each other. The barefoot investor recommends having a financial date night once a month. I would love to say we were that disciplined but we’re not.
We tend to check in as big decisions come up. Sometimes it is just chats in passing, other times we set a date to sit and have a longer discussion just depending on the importance of what we're discussing. For the big discussion we do it in a fun and comfortable setting - like over dinner and with a glass of wine or perhaps over brunch in a favourite cafe.
We are also big on rewarding ourselves when we reach a goal or have good financial behaviours. So when we bought our second place together we celebrated with a fancy AF dinner. When we are having a good month with spending or have a financial windfall we treat ourselves with an experience. It’s all about balance.
So that’s how we do the money thing as a couple. We’re not perfect and we don’t have all the answers but one thing is for sure and that is that we’re a team. I would love to hear from you! What do you do as a couple? Did this resonate with you?