Until debt do us part: How to talk about money with your partner

This article was originally published November 3, 2017

Sometimes having 'the money talk' can be the most daunting conversation of all in a relationship. With the right tools, even financially incompatible couples can live happily ever after. Financial expert, Rubina Ahmed-Haq stopped by The Goods to discuss conflicts money can create in relationships.

Money can certainly be a tricky topic to broach with your partner. It can symbolize many things like status, intelligence, success or freedom – and if you don't have financial stability, it can make you feel like those things are unattainable, therefore making it even harder to talk about. It is estimated that money issues increase your chance of divorce by 45% in Canada and they're one of the top reasons people do get divorced, just behind extramarital affairs and alcohol and drug addiction. Here are a few of the top money-related conflicts that pop up in relationships, how to solve them as a couple and some of the advice Rubina had for viewers at home.

Merging money   

If you are planning a life together, make sure to have the "merging money talk" before you move in. Rubina suggests creating a joint bank account and a joint credit card that will cover common expenses you share. But it's also important to have your own savings account for your own goals and purchases, so that you still have some financial independence. Sit down and find out how much your life together costs and always have an emergency fund that represents three months of costs that will be there if needed.

Sharing debt  

Almost everyone carries a bit of debt, and maybe you've come into a situation where you've decided to merge your finances, but one of you is carrying more debt than the other. Rubina suggests that if you're the one carrying the debt, try to get it paid off before you move in together so that you can start fresh. Talk about it as a couple. If you aren't in debt but your partner is and your attitude is "it's your debt, you deal with it," keep in mind that your partner can't contribute towards the household as well while they're still in this financial situation – approach it with the attitude that it's a shared debt.

If starting your life together debt-free isn't possible, make a plan to deal with the each other's debt. Lay it all out on the table, what you owe, and how you plan to pay it off.

Income gap

This can be a big issue of one person is making a lot more than the other. The person that's making the money can sometimes start to feel like they're the one who gets to make the financial decisions, creating an imbalance. This shouldn't be a big issue if you combine finances from the beginning and deal with debt together. Sit down and have a conversation about how to make the situation more equal. You have to make sure that both people have enough money in their retirement account and in their emergency fund. 

And make sure to talk about what unpaid work is worth – things like running the house, cleaning, cooking, and raising kids involve a lot of labour, work that would take a lot of money to hire someone else to do and that should be valued. And whatever you do, don't be with a person that makes you feel bad based on your salary. This is a form of bullying no one should accept in a healthy relationship.

Spending habits

Usually there is one person who's more of a spender and one who's more of a saver. Both parties need to adjust expectations so everyone is on the same page, but be sure to prioritize your needs over your wants as you budget together.

If you are the saver, be upfront about what your expectations are when it comes to investing and savings. If you are the spender, talk about how you plan to afford your spending habit. Try having a rule to talk to each other before spending a set amount. This could be $100 or a $1000, whatever works for you both. Honesty is crucial here, so talk to your partner about how their saving and spending habits affect you.

Your money questions answered

Sheila from Hamilton: My fiance and I are stuck in an ongoing debate! We want to buy a home but we're struggling to save for the down payment. He thinks we should bite the bullet and buy now with whatever money we have saved. I think we should keep renting and wait until we have more savings. Who's right?

Rubina: Try to save a 20% downpayment before you buy. This way you avoid expensive mortgage insurance costs, which can be in the thousands of dollars. Calculate affordability at least 2 percentage points higher than what the bank is offering you. If you can afford that mortgage go for it – if not, keep saving.

Liam from Halifax: I've been dating an amazing woman for a few months. We talk about almost everything except our money habits. I'm having a hard time finding ways to bring it up. I know I make a lot more than her and don't want her to feel uncomfortable. How much do we need to discuss at this stage?

Rubina: You might be jumping the gun. I would be hesitant to talk about money unless you are merging your lives together financially. If you know you make more, don't suggest outings she can't afford. And if you do, make sure you pay. The easiest way to bring it up is to just pick a day and say you want to talk about money. But don't broach that until you have to, otherwise it will seem like you're bragging about making more.

Chrissy from Windsor: I have an ex-husband and three kids and we're doing an ok job of co-parenting. But there's one issue that seems to come up often. We don't agree on allowance for the kids and how to manage the money they are receiving. He gives them extra here and there, plus his family often gifts the kids money. Their expectations are now growing. What do I do?

Rubina: Is the money affecting your relationship with your kids? Talk to your ex about the kids' expectations and aim to co-parent on this issue because it's important to send the same signals to your kids about money management. Talk to your kids about boundaries and how the way you handle money is different than your ex. Use any financial discrepancy as a teachable moment for your kids by making them save a portion for later, turning this potentially high conflict situation into a useful life lesson.