Financial Management for Couples When Risk Tolerances Differ
Money can be a point of contention for many couples. Between big expenses like taking vacations, buying a house, getting married or having children, relationships can be filled with tricky financial situations. Even trickier is if you and your partner have different views on financial matters—one of you is a spender and one is a saver. Here are some tips the investment professionals at Cranbrook Wealth recommend to help couples navigate money management as a team:
Have Regular Check-Ins
The first step to managing your finances within a relationship is to talk about money on a regular basis. For some people, this may be easy. But money is a source of stress and anxiety for many people, so you might have to be a little more mindful about when and how you talk about it.
If talking about finances doesn’t come naturally to your relationship, try scheduling a time to talk on a regular basis. Once per month is a good interval for liquid assets, or once per year if looking at longer-term financial assets like retirement accounts and trusts. If it’s a stressful conversation for one or both of you, try to set yourself up for success with your plans around the talk. Put a time limit on the conversation and plan to have a fun date night immediately after as a reward!
Agree on a Budget for Shared Expenses
If one of you tends to spend more money than the other, you should establish guidelines for you both to follow when spending from shared financial accounts. Without guidelines, one partner may use the money sparingly while the other may spend the money liberally, leading to tension and distrust.
Once you have a list of agreed-upon expenses to be routinely covered by shared finances, you can then develop a process for covering things that fall outside of those categories. For big purchases, it might mean having a discussion before deciding to buy something with money in the shared account. For smaller purchases, it might just be your partner giving you a heads up when they’re about to buy something. Regardless of how you choose to spend the money, guidelines and open communication are key to avoiding disagreements and tricky situations around your finances.
Keep Separate Accounts for Personal Expenses
If you do choose to open a shared bank account, it may be a good idea to keep separate accounts for your personal and incidental expenses. Especially if one of you tends to spend more money than the other, having control over separate accounts gives each of you the freedom to spend or save how much you’d like without worrying about what your partner thinks.
Having separate accounts can be beneficial for buying personal items, gifts for your partner or other things that you know your partner won’t use. For instance, you might want to save a little bit of money to spend on a new set of golf clubs, while your partner prefers to save money and invest it instead. With personal accounts, you can both manage a portion of your money however you’d like.
Use a Financial Professional as a Neutral Party
It’s a good idea to have a professional opinion when it comes to managing your money. For couples with different financial habits and tolerances for financial risk, it’s even more important to have a financial professional there as a neutral party. This person can help both of you manage your shared finances, figure out how to save and invest and plan for big life expenses together.
If you need help talking with your partner about money, or to create a wealth management plan that takes into consideration both you and your partner's risk tolerances, contact an investment professional at Cranbrook Wealth.