3 Steps to Enthusiastic Win-Win Money Decisions

Communicating with your partner isn’t always easy…especially when it comes to money. Many couples with the best intentions disagree, argue, and even part ways over finances. Studies on money and relationships show this clearly:

• 42% of couples who discuss money at least once per week are “extremely happy” compared with 27% who discuss money less than once per month.
• 4 in 10 couples say debt brought into their relationship has a negative impact.
• Nearly half of debt-concerned couples agree money is their biggest relationship challenge and two-thirds argue about money.
• 54% of couples disagree on how much should be saved for retirement, with 49% saying they have “no idea” what they will need.
• 73% of individuals have different money management styles than their partner.

I’ve witnessed this personally, as well. Outside of my career in wealth management, my wife and I have counseled more than 500 couples. Money is often a cause of relationship stress and conflict. Our focus with couples is helping them learn to reach enthusiastic agreement, a win-win in as many decisions as possible. Simply compromising, which can lead to feeling that there’s a winner and a loser, isn’t enough. Couples should strive for decisions they are both excited about. With this approach, we’ve seen many couples work through money communication discomfort and even look forward to making financial decisions together.

These 3 steps can help you understand your partner better, work through conflict, build strong money communication habits, and reach win-win agreements.

1. Discuss your Money Story. We all have a unique money story and yours is likely very different than your partner’s. Understanding each other’s money story is crucial in being able to navigate money issues. Your money story includes family of origin styles. Who handled the money and bill paying? Did your family talk about finances? Was money a taboo subject? Did your family pinch every penny or were they lavish spenders? This shapes your money personality and, when different than your spouse, it can lead to conflict. One spouse is a saver, one is a spender. One shops for bargains, the other wants top quality. One makes quick decisions and is less patient, the other is careful, deliberate, and more patient. These complimentary traits likely attracted you to each other initially but bridging the gap between styles requires awareness. When understanding and open communication are added, these differences can make you a better team!
2. Make a Money Plan. You might call it a budget, spending plan, or something else, but decide together, in advance, how you will make money decision together. This often includes the following questions:
   • What do we have? What income do you make and what have you saved? Before deciding what you should spend, you should know what you can
   • What is important to each of you? You might enjoy the daily trip to Starbucks while your spouse has an eye on a top of the line grill that requires some saving. You might not feel the same way but understanding what gives financial joy to your partner helps build enthusiasm for helping them achieve it.
   • What is your “ask my spouse” limit? Agree on a purchase limit that each of you can make unilaterally so you know, in advance, when consulting your partner is necessary. Unplanned purchases are among the most common money disagreements. Preplanning your spending provides a stable decision framework and gives you valuable practice in listening, compromising, and reaching a mutually enthusiastic decision.
3. Work through Money Conflicts. Despite the best laid plans, you will reach points of conflict, so you’ll need a conflict game plan. When you reach a point of sharp contrast, try these steps:
   • Remember that conflict doesn’t mean disaster…it’s simply the “work” part of teamwork! You can disagree without becoming adversarial, though it might feel that way at first.
   • Use active listening. Let your partner share their perspective uninterrupted. Then, repeat your partner’s words back, followed by “Do I have that right?” Once you get a resounding “Yes!”, it’s your turn. This puts each of you in the other’s shoes and fosters mutual understanding.
   • Determine who has a higher level of passion in this decision. Lean toward the one with the higher passion. One couple I encountered was deciding how to purchase a car. He wanted to finance the purchase and invest their cash, while she had deep debt anxiety and wanted to pay cash. After discussion, they concluded that his stress wouldn’t be affected much either way, but hers would. Paying cash and avoiding the monthly bill for five years would be much healthier for her. Having a financial plan that shows you the impact of your decisions on your bigger goals enhances this significantly.
   • If you’re stuck, don’t rush…seek counsel. A split decision is not a good decision. When you’re not finding success resolving your disagreement, find a third party to coach you. This could be a trusted friend, family member, financial advisor, or counselor. This is not admitting defeat…far from it! This shows a true commitment to reaching decisions in your overall best interest.

One final tip

Discuss dreams, not just disagreements. Setting goals together and finding points of agreement as part of your regular communication habit helps persevere through conflict. Think of these discussions like deposits in the bank and conflicts like withdrawals from the bank. The more positive money discussions you have in the bank, the more prepared you’ll be to handle conflicts. By using habits like these, you can do more than survive financial conflict. You can recognize and appreciate your differences and even learn to thrive through conflict.

Sources – Fidelity, MoneyHabitudes