What’s too big of a money secret to keep from your partner? Is it an impromptu fancy meal with your pals? A new guitar? Something bigger?
“I know someone personally who bought a condominium and car without telling his wife. Because the wife wasn’t involved in any financial decisions, she didn’t find out these assets existed until they were getting a divorce.” That’s Lamees Wajahat, a 27-year-old digital creator in Mississauga who recently moved in with her partner and is learning to navigate finances in her own relationship.
It only takes a scroll through Twitter or Reddit to see how many financial infidelity stories involve one partner concealing assets or large amounts of debt. In TD’s 2021 Love and Money survey, 8% of Canadians admitted to keeping a money secret from their partners. Of those, 29% said they had secret accounts, and 22% said they’re hiding debt. And the consequences are real. According to another survey by the American Institute of CPAs (AICPA), two in five partners are likely to end their relationship due to financial infidelity — more than any other reason. 1.
Luckily, Wajahat had her mom as a guide. Wajahat’s mom took an active role in managing the family’s finances. “Because I saw my mom do it, now I do the same in my relationship.” In the dating phase, Wajahat asked her now-husband the uncomfortable questions: How much debt did he have? What were his assets? “It was an awkward conversation, but if I’m making the commitment and investment, I need to know what I’m signing up for,” she says.
Money can be a taboo. Unlike Wajahat, some people avoid the conversation due to fear, embarrassment, or because they feel they don’t know enough about the topic. Once you start having the conversations, however, they can really help your relationship succeed. A study by the United Nations points out 2 that couples who talk to their partner about money regularly are happier in their marriages.
So how do we get comfortable with having the money talk? Here are some tips that will help get you started:
Understand how your partner makes financial decisions
We all grow up with different saving, investing, and spending habits shaped by the people around us. Habits created in our childhood by our families can follow us into adulthood. For example, if your family experienced financial instability when you were younger, you may prioritize paying off debt. But if your partner had a financially secure childhood, their priorities might look different. This can create conflict. “Some people don’t make what would mathematically be the best outcome because there’s this element of personal comfort,” says Nicole Ewing, Director, Tax and Estate Planning at TD Wealth.
One way to understand how our partners make financial decisions is to ask them about a core memory from their childhood. What does that memory mean to them? How did it make them feel? “I was only allowed to either buy an ice cream cone or a drink. But if I got the ice cream it would make me thirsty, then I would also want a drink” says Ewing. It’s a distinct memory where Ewing realized that indulging in food she enjoys is worth the money. Although she’s since upgraded from an ice cream cone and drink to fine cheese.
Remember: Teamwork makes the dream work
If you’re not communicating about your finances, “you might not be taking advantage of tax benefits in the most effective way possible,” says Ewing. An example could be adding charitable contributions under the higher earner’s taxes for a higher credit. Another one might be taking advantage of unused room in a Tax-Free Savings Account (TFSA). If you have extra cash on hand and your partner has room in their TFSA, this could be an opportunity to help grow your combined savings tax free.
Ewing worked with a couple who knew before they got married that the husband’s business would take off. He and his wife decided that she would stay home to raise a family. Because she had the financial know-how and was comfortable having hard money conversations, she was able to negotiate a proper prenuptial agreement. She requested her husband contribute to a Spousal Registered Retirement Savings Plan (RRSP) and provide an annual payment to her bank account. In this case, the wife was open and direct about the sacrifice she was making and what would be required to financially secure herself.
Unlearn unhealthy money habits
Opening the door to new packages every day might give you or your partner a temporary serotonin boost, but it’s probably not great for either of your wallets. Or maybe you’re the type of person who saves every penny, almost to a fault. In that case you might be denying both yourself and your partner certain life experiences. These are examples of what Anthony Damtsis, Deputy Head of Behavioural Finance at TD Wealth, describes as “norms.” They’re financial practices that become habits as we grow older.
So how do we break away from unhealthy norms? Damtsis says once you understand how your partner makes financial decisions, you can work with each other to create new money habits. “Write down new norms that you want to practice together and create systems that help make it easy for you to practice them,” says Damtsis. Maybe that involves organizing your finances so your expenses come out of a joint account. Consider how you want to contribute to the joint account. Maybe it’s an automatic payment to take off some of the mental load, or maybe it’s a date in the calendar to sit down and do it together? As a couple, figuring out these details can help you achieve your goals faster.
Money talks aren’t romantic. But there are ways to make the conversation less dreadful, maybe even enjoyable. Your next date night can include discussing something exciting you’re saving up for or sharing childhood memories related to money. After all, working on your financial intimacy can be integral to your relationship’s success.
- https://www.businesswire.com/news/home/20210204005261/en/Relationship-Intimacy-Being-Crushed-by-Financial-Tension-AICPA-Survey. Accessed on January 25, 2023 ↩
- Skogrand, Linda, Alena C. Johnson, Amanda M. Horrocks, and John DeFrain. “Financial Management Practices of Couples with Great Marriages.” Journal of Family and Economic Issues 32, no. 1 (2010): 27–35. https://doi.org/10.1007/s10834-010-9195-2. Accessed on January 25, 2023 ↩