How To Deal With Money in Relationships

Can big differences in income be problematic in relationships? Should the person who makes more money always pay? Is it good to have a joint savings account?

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They say love and money make the world go round. But put the two together and they make for a confusing combination.

“It's a very common thing for couples to have problems regarding their finances, and a lot of problems in marriages root from financial problems or are affected by it. The problems encountered range from as simple budgeting and disbursement of funds, to something as serious as crippling debt problems,” said Justin Barnuevo, a financial advisor based in the Philippines.

Finances can be especially tricky for couples who date outside of their socio-economic class. Not only do they have to contend with public perceptions and judgments, like ones that assume the person who makes less money is an opportunist or the one that makes more money is more controlling, but they also have to do the actual work of figuring out how to navigate their love in the context of their financial differences.

As a financial advisor, Barnuevo has counseled both individuals and couples about their finances. For the latter, he has observed that solid financial planning helps them build strong foundations for their relationships.

According to him, single people should build good money habits as early as possible. “Whatever habits you have as a single person would be the same habits you would be bringing into the relationship, and are going to be affecting the family dynamics in the future.”

Once an individual becomes part of a couple, then communication and transparency need to be added to the skillset. “They must first be very open about it with their partners. Things that get discussed and talked about have a higher chance of getting solved, especially things regarding family finances,” said Barnuevo.

“This means couples really have to talk about their finances. This is why it's best if both have already started building their good money habits early on. But it's also great to learn it together, and the best time to do it is when they start their relationship. The earlier they can sort the financial stuff out, the more they can focus on the more important things in life, like growing as a couple.”

But where do people start?

We asked Filipinos what questions about money and relationships they’d ask a financial advisor. Below, Barnuevo answers them to help couples get started in building their money habits as they grow their love.

How can couples decide who pays on dates, especially when one of them makes a lot more money than the other?

Barnuevo: Given that most couples aim to settle down and cohabitate, a time may come that their date expenses would be from a common fund, should they decide to do that. They can, in the meantime, pay for their own when they go on dates regardless if the other one earns more. Both of them must stick to what is allotted for leisure expenses on their cash flow sheets. They can also put big date expenses on hold if it won’t be practical for their budget or maybe they can opt to go for cheaper dates like trying out new hobbies and cooking at home and spending time with each other's families.

How can couples from different socio-economic backgrounds begin to talk about and plan their finances together?

To establish a good atmosphere for communication and avoid unnecessary tension, couples should have these uncomfortable conversations about money right off the bat. Regardless if it's just the beginning of their relationship where a lot of couples would just rather have fun and light conversations all the time. A lot of clients that I handle pool their funds together, and in their budget or cash flow, indicate their leisure fund that can be used for dates. This requires a lot of trust, so an early jump on the uncomfortable conversations at the beginning of the relationship goes a long way.

Is it good for couples to have a joint savings account?

Barnuevo: There's no standard answer to this one as this will depend on what the couple prefers. Some want to pool all of their money into a common account, others would like to have some sort of “financial independence” by maintaining just their personal accounts. No matter what the setup is, they must still talk about their monthly cash flow and decide on who pays for which bill or expense.

Should the partner who earns more pay for things more often?

It will depend on what the couple agrees on, but if we want to be practical about it, it's safe to assume that most of the time, the partner who earns more would most likely end up paying for things more often. This mostly applies to married or cohabiting couples.

Couples who are dating and have not settled down yet may want to pay for their own expenses on most days and should not be in any way obliged to pay for the other unless they really want to. Kanya-kanyang bayad muna (each person pays for what they consume). Most of the couples I help who have great success with their money management turn out to be the ones who practiced this during their dating phase.

Based on your experience and training, can big differences in income be problematic in relationships?

Not really. I have dealt with a lot of couple clients where one partner's income is way higher than the other’s. As long as they talk about their cash flow and responsibilities in the household, things turn out fine.

A lot of factors may come into play in situations like this and we can talk about the possibilities all day. My suggestion will be the same: talk to each other and don't be afraid to seek professional advice from a financial planner you can trust.

As for the income bracket, I think it does not matter. As long as the partners are on the same page when it comes to their goals in life, value systems, and there's mutual love and respect, income bracket difference isn't a hindrance.

Should the parents of someone’s partner know how much they earn?

Others are open about it, others are private. As long as knowing how much they earn does not affect the couple's cash flow in any way, that should be fine. I personally don't see the benefit of telling someone (aside from your partner and your financial advisor) how much money you earn.

Interviews have been edited for length and clarity.

Source: Romano Santos, VICE​