We are all created differently. Our differences is what helps us grow, change and adapt. By learning from each other, we not only see the importance of relationships, but appreciate others strengths as they help us in building our weaknesses. Your strength may be someone else’s weaknesses and many times we tend to be attracted to people that complement our strengths and weaknesses. Money is no different.
Generally speaking, we can categorize people into groups: saver and spender. I hate grouping people, or making generalizations, but in some circumstances like these, it will have to do. Of course not all spenders are bad with managing their money and saving, and not all savers are hoarders of cash and hate to spend.
With that being said, I will generalize and conclude that in my household, I am the saver in the relationship and Mr. MMC is the spender. This has its benefits and drawbacks of course. As I learn each day to let go of some coin from time to time (…okay I am not that bad), he learns the importance of saving more than the 10% recommended to secure our financial future.
However, we still struggle with money disagreements from time to time as our money personalities clash. Most especially now that we are debt free, I am finding it more important to loosen the ‘aggressive savings strategy’ a bit and allow for some much needed spending. It takes a lot for a natural spender to agree to 2.5 years of spending on just the necessities while paying off $120k of debt. I must give Mr. MMC some credit, he did very well.
So now we are learning how to strike a balance between our money personality differences. For me, its re-learning that it’s cool to spend on things like eating out a few times a month, spending money on fun and possibly pricey vacations (or any vacation at all that is not a staycation) and splurging on things like clothes and electronics. Mr. MMC is has agreed that it’s important to save more than 10% of each take home pay (we current save around 30%). That windfall income should be used to significantly boost up savings (50% of our windfall income goes to savings) and that ‘life inflation’ is a real thing that needs to be checked or it will steal financial independence from right under our nose.
So based solely on my experience with money and my long term relationship with Mr. MMC, here is what I have learned to deal with money personality differences in relationships:
- Have a common goal that you both buy into and can work towards
I think this is the most important. Without a common goal, the spender is justified in spending whatever they want and the saver has no basis as to why they are saving. I mentioned in a previous post our savings goals for 2016. This is the bench mark I use to ensure that we are saving as needed. These goals have been reviewed by both Mr. MMC and myself and he has bought into achieving them as well. As the saver in a relationship, I believe this your best line of defense when things get financially out of hand. It’s important to remind the other your savings goals and why you agreed on these numbers in the first place. It’s not a perfect and there will still be quarrels I am sure, but it’s an unbiased ‘third opinion’ that you can fall back on when things get financially out of hand.
- Understand each other’s money personality
If you have been in a relationship long enough, you probably have a good idea of who is more of the spender and saver. In my experience opposite personalities (not values) attract and so one is more of one personality than the other. Mr. MMC and I have been together for nine years, so I have a pretty good understanding of his money personality.
If your relationship is fairly new, here are some ways you can determine one’s money personality:
- Are they enrolled in a company retirement saving program at work?
- When they gets paid, how often do they whip out the debit card within the first 3-4 days of pay day?
- When you talk about saving for retirement, what is their first reaction like? Are they receptive to the idea or do they change the subject?
- How is their credit like? Do you see them dipping into their overdraft or credit cards often to make ends meet?
- If they get a raise/bonus/promotion, do you immediately notice an increase in their standard of living (life inflation)?
- If you openly ask them how much they have in their long term savings, are they receptive to the question or do they try and change the subject?
These questions are not comprehensive and are just of my opinion and experience in understanding relationships in the area of money. Every situation and circumstance is different, but this is what I have observed.
- Get them involved in the day to day finances
Okay this point is near and dear to my heart and as a saver, you need to do this. Let me first explain the way financial planning works in our household because it will be different for everyone.
Every year for the last 4 years we have taken this approach and it seems to be working for us. Keeping in mind that all of our accounts that can be joint are joint (with the exception of our credit cards, and TFSA accounts).
In the last week of December, after Christmas & Boxing Day but before the New Year we sit and prepare our next year’s savings goals. Based on this we develop a 12 month budget for the following year complete with all anticipated income, expenses, and savings amount. Depending on how our budget is looking we sometimes need to bring our savings goal higher or lower. It is not a perfect science but it works for us. That’s the big picture. We agree to the numbers and spit shake on it… (kidding about spit shake).
As the year progresses in terms of the day to day, what naturally has occurred is that I would take care of the day to day expenses. Paying the bills, setting fun money aside, taking money out for groceries and other expenses. Mr. MMC would focus on the monies allocated to saving/investing. He manages the money transferred for investing and invests on behalf of our family. That generally tends to work for us. I know what types of stock we are invested in, but don’t really care much about the details. He has an idea of how much we spend on this and that but could care less overall. We both have a buy in on the spending and saving/investing but it’s kind of worked out that way for us.
The problem happens when the spender, Mr. MMC is detached from the everyday spending and paying of the bills that he forgets and starts spending like we are millionaires (I am exaggerating, but you get the idea). Even though he has agreed to the budget, with time, the human mind forgets. If this has every happened in your relationship, here are two approaches you can try to get things back on track:
Remind the other person that this purchase is not budgeted for or is beyond the monies we have available. In my experience, this approach almost never works and you end up sounding like an overbearing person or a nagger.
Let them manage the day to day finances. I find this approach way more effective. When you find yourself explaining to your partner why you can’t make a purchase, even though you both agreed on the budget either, agree to modify the budget, or get them to pay the bills and manage the day to day expenses for 2-3 months. By having to physically go in and make the various payments, they will see that your concerns were justified….you hope.
- Learn to compromise
Realizing that your differences bring out the best in each other, and working within those differences to achieve your financial goals is important. Yes, I would like to save more than we do now, but not at the expense of my relationship. So to deal with this I learn to compromise. Luckily, Mr. MMC is a finance guy (more with long term investments though) and knows the importance of saving and investing for the future. However, we can all find ways to compromise for the ones we love…or else what’s the point.
Categories: Money & Relationships