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Personal Finance

Hey big spender, save some for me

Just because a couple are not financially compatible they can still figure it out, writes Mark Channing

It’s not sex, having the same interests or who does the dishes; the secret to a happy marriage, it seems, is to have a similar attitude to money.

Research published last month by three leading UK charities — Relate, Relationships Scotland and Marriage Care — revealed that differences over money put the biggest stress on relationships.

The survey of 5,000 adults found that financial issues are the biggest source of stress for couples, with 26% saying money is the biggest strain on their relationship. Differences over money were found to be a bigger strain on couples’ relationships than a lack of understanding, differing sex drives or not sharing the same interests.

It’s a similar picture for Irish couples with money issues being one of the leading causes of marital strife.

Of the couples seen in 2015 by Accord, the Catholic marriage-counselling agency, 37% said financial issues were one of the reasons they were in need of counselling.

Mary Johnston, Accord’s specialist in counselling, marriage and relationships, said: “Money is certainly an issue that has huge potential to cause difficulties between couples. It’s important that couples can agree on how best to manage their finances for their own benefit and if they have children, for the benefit of the family.”

Frank Conway, who delivers financial seminars to families and is the founder of MoneyWhizz, a financial education website, believes couples should consider each others’ attitude towards money before joining their finances.

“Money is often the biggest issue that comes between couples. A lot of marriages and relationships have been severely hurt, and in some cases have ended because of different expectations around money,” he said.

With more than 22,000 marriages or civil partnerships taking place in Ireland every year, we give couples advice on identifying their financial compatibility and offer tips on how to jointly manage their money.

Your money personality

Defining you and your partner’s “money personality” can help determine how “financially compatible” you are, and may help avoid financial fallouts.

According to Conway, money personalities fall into five broad categories: savers, spenders, the risk-averse, gamblers and flyers.

“Savers have a caring relationship with money. People such as Warren Buffett, who from a young age nurture a percentage of their income and grow it,” said Conway.

“Spenders on the other hard can have a more neglectful relationship with money. When they have cash, they tend to spend it.”

It may sound cynical, but it’s good to have an exit strategy within a marriage or when you move in together

A couple where one partner is a spender and the other a saver doesn’t necessarily mean they are financially incompatible, or that money is guaranteed to become a bone of contention. Ray O’Neill, a Dublin-based psychotherapist and relationship expert for the RTE show Then Comes Marriage, said: “It’s not that two savers necessarily make a good couple. Sometimes the spender can encourage the saver to live life and enjoy things. Likewise a saver can show the spender the importance of a little bit of caution and a long-term financial planning.”

Conway said “flyers” take a devil-may-care approach to their finances and scarcely worry about their financial situation.

“Flyers are just clueless when it comes to money. There’s nothing malicious about it, they just don’t think about money at all, and don’t see money as a tool that can create security, status or anything else,” he said.

Having a partner who falls into the category of gambler increases the risk of financial discord in the relationship, say experts.

“Gambling can be entirely destructive to a couple’s financial situation. It’s one of the reasons why mortgage lenders spend so long going through bank statements looking for evidence of gambling,” said Conway. “If gambling raises red flags for a mortgage lender, it should probably raise a red flag for a potential partner as well.”

Joint finances

Having both separate and joint accounts can be a good approach for cohabiting and married couples. “Couples have joint expenses so contributing to a joint account is a good way of seeing how a household budget is managed,” said O’Neill. “However, it needs to be equitable — if one member of the couple is earning €100,000 a year, and the other is earning €20,000, the person earning more should contribute more.”

According to Eoin McGee, of Prosperous Financial Planning in Naas, having joint and separate accounts is both good money management and healthy for a relationship.

“Having a joint account streamlines everything and makes everything much easier to manage. With a joint account you can very easily identify the household bills. It helps you keep a track of your budget and there is less chance of missing payments,” he said.

Pension planning was something that McGee said couples should tackle on a joint basis. “One of the biggest mistakes I see couples make is not doing their pension planning jointly,” he said.

“It’s particularly important that women who may take time out of the workforce to bring up children make sure their pensions are funded,” he said.

Resolving conflict

Communication and early intervention can help couples whose relationships are under strain due to disagreements about money.

“If there are financial difficulties in the relationship, address them sooner rather than later. Talk and discuss your finances together and be prepared to listen to the other person’s views,” said Johnston.

“Agree on the priorities that need to be financed first and then discuss how finances that can be used for other things or perhaps saved can be best managed,” she added.

A third party can help couples in deadlock. “Where it becomes problematic, consider bringing in a mediator or a counsellor,” said O’Neill. “They will be able to quickly distinguish if the problem is really about money, or is there another issue at play.”

Exit strategy

It can be a good idea for couples to talk about what would happen financially if their relationship or marriage were to end. “It may sound cynical, but it’s good to have an exit strategy within a marriage or when you move in together,” said O’Neill.

A prenuptial agreement can provide couples with a template of what would happen to their assets in the event of a separation. Prenups, however, are not binding in Irish courts so largely depend on the goodwill of the signees.

“Talking about a prenup before a marriage is generally seen as a terribly cold-hearted thing to do,” said Conway. “However if things don’t work out, they are fantastic.”