Money & Relationships: Rules That Work

Love may be blind but life isn’t! Long term domestic partnerships are not the garden path of roses leading to a velvety beach that romantic novels, movies and dating websites want you to believe.   As a married man for over 12 years, and also, raising a kid together, I think I have earned the right to comment about domestic partnerships. 🙂  This post is about a topic that any person with a ‘significant other’ must confront at some point on their journey towards financial independence.   

Money – Root Cause of Relationship Stress

Most couples, even the adorable-hand-holding-PDA-exhibiting-park-strollers, must have argued at some point or another.   It is very likely that those arguments are about money.   In fact, money is the No. 1 cause of divorce in marriages and is also the leading cause of stress in all relationships.

Don't you tell me how to spend money!

Don’t you dare tell me how to spend money!

The quest for financial independence (FI) when you are single is much easier than if you have a family.  The moment you have a significant other, even the simplest of decisions can get difficult.  Singles can quickly adopt cost-saving decisions like cutting cable, eating out once a month versus once a week, shopping at a thrift store vs at a mall, or buying used vs new.  These ‘simple’ decisions can become major conflict areas for those in committed relationships.  As a married man who has been through such unpleasant discussions in the past, I know of no easy way to solve these problems, especially if one spouse or partner associates negative intent on the part of the other partner to even suggest such cost-saving ideas.  Some might even to go the extent of feeling these sacrifices are not worth the long-term partnership they got into.  You can read Men are from Mars, Women are from Venus all you want but if you are facing a direct confrontation on your core belief (say, frugality), things can get rocky real fast.

If you value the relationship and having a stable family over your own belief in frugality, you will have to introspect and come up with a workable compromise to move forward.    I have often seen a person who has a stable and long-term personal relationship is also likely to have satisfactory professional relationships.  This is because some of the skills needed are transferable, while you are handling an angry boss or your upset spouse!  

First, Choose Wisely
Love may be in the air but your financial future shouldn't be!

Love may be in the air but your financial future shouldn’t be!

I cannot emphasize this enough!  If you are single, consider the money dimension carefully in choosing your partner. The traditional dating avenues and methods don’t prepare you well.  I prefer eHarmony because financial compatibility, among other factors, has a role in their matching process. Having found my life partner this way, I can confirm the merit of the detailed compatibility process eHarmony follows. Having the right partner makes a hugely positive difference in your FI journey!

Even if you have carefully chosen your partner, both of you may still have different spending patterns.  Even if both want the same end-result, the methods can vary.  For example, you may want to de-stress with a relaxing massage or a collegiate game after a hard work week, but your partner feels going to a dinner and movie together is a better way to de-stress.   While the end objective (relaxing after work) for both is aligned, how to get there also causes spending difference between partners.  This is where your relative compatibility matters.

I am pretty and priced ($95) for perfection to keep TFR couple happy!

I may be high street fashion but I am priced ($99) for perfection to keep TFR couple stay married!

Ten Money Rules for Couples

Here is a method (‘rules’, if you will) that has worked for me and my wife:

  1. All spending decisions beyond an agreed threshold (say, $100) will be jointly taken.  We will not keep track of who’s crossing the threshold frequently as long as every decision beyond the threshold is jointly taken.  Anything less than the threshold does not need explicit joint approval.   But this doesn’t mean buying $99 shoes every other month – sensible frugality trumps blind threshold rule.
  2. Rule 1 applies regardless of how much money each partner earns in a relationship.  In other words, the spending threshold does not depend on earnings of the partners.  Mrs. TFR brought in this rule knowing that Mr. TFR will probably out-earn her!
  3. We agree that each spouse is mature enough not to cheat around Rule 1, for example, by masking a $180 spend decision as three $60 decisions to avoid discussion.
  4.  When it comes to family emergency, Rule 1 is relaxed and each partner can decide on their own as the one-off situation demands.  They only have to inform the other partner at the earliest, and not seek approval.   This also applies to urgent health-related decisions when one partner is unreachable or is traveling out of town.
  5. When it comes to spending money on our kid, the threshold is set much lower (say, $20), because we don’t want the kid to take advantage of either parent’s love.   This takes care of small trinkets, toys or snacks but not expensive items.   Any major decision (like school, bike, summer camp or other extra-curricular programs) will cross Rule 1 threshold anyway and will require joint decision.
  6. We let each other’s competencies decide on other financial matters.   Investments are Mr. TFR’s arena, and household items and routine expenses/services are primarily decided by Mrs. TFR.   We keep each other informed but trust one another not to do things that violate the larger 10! goal.
  7. Whenever we argue on spending, we try to learn from that argument and see how the rules can be adapted to handle the situation so a future argument on the same point can be prevented.
  8. We don’t allow the advice of any friend or relative to overpower our mutually agreed decision.  We may consider a different viewpoint but one partner is not obliged just because the advice-giver is the other partner’s  ________ (fill in the blank:  friend, uncle, schoolmate, best pal etc).    When you bring a third party into your 2-way financial relationship, it is usually a recipe for disaster (both financially and otherwise).
  9.  We never bring our past financial mistakes while discussing a new financial decision, but in the back of our minds, it remains as a learning that influences our present decision. We just don’t want to openly bring it up as it rakes up past arguments and re-opens healed wounds.  For the same reason, one partner should not start ‘attributing’ expenses (saying “you spent it”) to make the other partner feel guilty.
  10. We don’t say ‘I love you’ after a financial decision because we want those words to have deep meaning.  The underlying point is that we are supposed to take care of each other, so it shouldn’t make one partner feel obligated to say those words whenever a financial decision is taken in favor of that partner.  This somehow cheapens those words in our view.

Well, there you have it.  If you notice, these 10 rules are just one spending rule (Rule 1), but all others are structured around Rule 1 to make decision-making smoother in our relationship.  This is far from perfect, as we still discover about each other every day after all these years.   This works for us also because the thrifty spouse (me, in this case) values stability of relationship over blind pursuit of financial goals.  This fits my overall belief in the 10 factors and also, to focus on reasonable expansion of income over continual shrinking of expenses.   Also, I believe achieving FI alone sucks as you need someone to share both the journey and rewards with.

These rules can also work for you if the relatively thrifty partner values relationship over money (to a reasonable extent, which these rules define).  eHarmony can find you a compatible life partner, but beyond that, you still need to jointly come up with rules like the above to make the FI journey easier.

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7 thoughts on “Money & Relationships: Rules That Work

  1. The Green Swan

    Great post! It may not be sexy or a romantic topic, but money must be discussed relatively early in a relationship. Compatibility on the money front can very easily make or break a relationship, I totally agree with you.

    I really like rule #5. While our little one is only 2, this will come into play eventually. It’s good that we start thinking about this early as well so we have a game plan and our fair to everyone.

    Thanks for the post!

  2. Vicki@Make Smarter Decisions

    I really love #9 and it is so easy to bring things up – especially if you get angry with one another. I agree with GS that being on the same page (maybe not the same paragraph or sentence!) is incredibly important. I like these rules and we have one similar to #1 as well. It’s amazing how fast money can get spent with two people if there isn’t a common language or goal.

  3. ZJ Thorne

    One of the greatest things my girlfriend does is to audibly support my financial goals. I know that she values restaurant meals more than me and so we will eat out more than I would on my own. But, she is flexible about the expense of a restaurant and is happier to cook with me more often than she normally would on her own.

    1. TFRadmin

      ZJ, That’s the trick. You both will never agree on everything but that’s not the point. How well you work out mutual rules to navigate the disagreements is what makes both the relationship and the FI journey work well. Best wishes.

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